Tech stocks drop after report that OpenAI’s revenue is lower than expected
Tech stocks declined following reports that OpenAI's annualized revenue is lower than previously estimated, raising investor concerns about AI profitability. The market drop reflects broader anxiety regarding the sustainability of massive capital expenditures in the AI sector.
Why it matters
The AI industry's valuation is heavily dependent on growth projections; discrepancies in revenue data can trigger significant market volatility across the tech supply chain.
Tech stocks dropped on Thursday after a news report that OpenAI’s annualized revenue is about $20 billion less than previously reported. OpenAI, the maker of ChatGPT, recently told investors that its annualized revenue was nearing $50 billion, according to the Financial Times. That’s lower than the $70 billion figure previously reported by media, including the FT, based on information from investors. The discrepancy could rattle investors already questioning whether demand for AI will be strong enough to help companies like OpenAI and Anthropic turn a profit and justify the industry’s enormous spending on the AI buildout. The Nasdaq Composite sank 1.25%, its worst day since mid-August. The S&P 500 fell 0.5%, weighed down by a drop in the tech sector. The indexes had opened lower but declines accelerated after the FT report published midday.
Also covering this story
4 other newsrooms covered this event. We read each version separately.
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