US markets pummeled by selling after OpenAI revenue falls short by $20 billion

A report indicating that OpenAI's revenue is $20 billion less than previously indicated has roiled markets, casting doubt on the massive AI (or SI, if one wants to avoid being an enemy of the state) spending.

This is a significant revenue shortfall, and if OpenAI is missing its targets, others are unlikely to be on track either. The intense competition and ease of switching between models make the economics difficult, which has long been the bearish argument. Now that some concrete numbers are materializing, selling pressure in the Nasdaq is escalating.

CNBC has also published a report about the original report, stating that there are 'nuances' regarding the $20 billion figure but that it is accurate. With the ongoing lending and vendor financing among model developers, chip makers, and others, the risk extends beyond OpenAI to the entire ecosystem. As soon as someone questions the notion of an infinite AI machine, everything could potentially be re-rated at much lower levels. Furthermore, the rest of the market is already under pressure and has been propped up by AI and tech stocks.

Nasdaq Comp:

It is never clear which report will trigger a major correction in the AI theme, but at the very least, this episode offers a small preview of what might follow.

The biggest losers include:

• Vistra
• Intel
• Constellation
• Corning
• Enphase
• Micron
• AMD
• Oracle
• Broadcom

Notably, energy stocks are falling as sharply as semiconductor stocks.

The specifics are as follows:

OpenAI informed investors that its annualized revenue was approaching $50 billion at the end of September, which is about $20 billion below the $70 billion figure circulating last month. The discrepancy stems from accounting differences. Anthropic records revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not. Investors had been grossing up OpenAI's numbers to compare apples-to-apples with Anthropic, and that adjustment produced the Street's $70 billion estimate.