OpenAI’s annualised revenue is about $20bn less than previously signalled, according to financial documents shared with investors. The company recently told investors its revenues were approaching $50bn at the end of September, far short of the $70bn reported by the Financial Times and other media outlets. The metric is the most important indicator of overall demand for AI and underpins vast infrastructure spending and the growth of public equity markets.
US tech stocks fell sharply following the report, with the Nasdaq 100 down 1.7 per cent. Chipmaker Nvidia fell 2.9 per cent, Oracle dropped almost 6 per cent and Micron declined 4 per cent. The discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues, according to a person familiar with the matter.
The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as Amazon’s AWS and Google Cloud, while OpenAI does not. Investors’ efforts to “gross up” OpenAI’s annualised revenue prompted reports that the figure was around $40bn in July, said the person. OpenAI later told its backers that its annualised revenues had jumped more than 70 per cent since July, prompting reports that the figure was about $70bn at the end of September — a number the company did not deny.
However, the new investor presentation shows close to $30bn annualised revenues in July. As a private company, OpenAI is not required to regularly disclose its financials publicly. OpenAI declined to comment.
The ChatGPT maker is in talks with investors about a new private funding round that could value the company at about $1.4tn. Annualised revenues are the critical figure investors weigh to gauge OpenAI’s outlook and its performance compared to Anthropic. The $50bn in annualised revenues reported in September still points to a rapid rate of expansion for the AI company since the summer.
But the gap against investors’ expectations will exacerbate concerns over the trajectory of large, private AI companies whose prospects are central to the US stock market and have helped fuel strong growth in the US economy. OpenAI has committed to spending hundreds of billions of dollars on computing power and infrastructure, funded by revenue from its AI tools as well as vast investment from partners. It also has the backing of tech groups including Nvidia, Microsoft and Amazon.
The loss-making company is in a fiercely competitive race with Anthropic, Big Tech rivals including Meta and Google and smaller groups, mainly from China, that are building cheaper, open AI models. OpenAI confidentially filed its prospectus for an initial public offering in June and was expected to go public this autumn. However, the company has since delayed those plans amid growing concerns about the threat posed by powerful AI.
Chief executive Sam Altman has said the start-up will not “barrel all guns blazing towards an IPO” when AI is rapidly advancing in capabilities. The group is also facing a wave of legal action and government censure over recent hacks by its models.
Source: Financial Times Companies · Summarized by HeadlinesBriefing