OpenAI's reported revenue figures have created significant market confusion, with estimates ranging from ₹36 billion for the full year to ₹70 billion and ₹50 billion for annualized revenue. According to reports from Financial Times, OpenAI informed investors that its annualized revenue reached approximately $50 billion at the end of September, falling substantially short of earlier market estimates. The discrepancy stems from the use of annualized recurring revenue (ARR) metrics, which typically involves multiplying monthly revenue by twelve, though this method can be misleading due to varying definitions of recurring revenue across different months and contract treatments. Just hours later, Bloomberg reported that OpenAI expects to reach or exceed $70 billion in annualized revenue by year-end, though achieving that target would require substantial growth from September's $50 billion run rate.
The lower-than-expected revenue figure stems from an accounting mismatch after investors attempted to align OpenAI's revenue model with competitor Anthropic's methodology, which includes third-party cloud partner sales. As reported by Financial Times, OpenAI investors sought to standardize revenue performance against Anthropic, which includes revenue generated from cloud platform distribution partners including Amazon Web Services and Google Cloud. Conversely, OpenAI excludes sales made through third-party cloud channels from its core calculations. The gap between the two figures comes down to how revenue is counted - the higher figure includes sales through OpenAI's cloud partners, which OpenAI's own number leaves out. Attempts to "gross up" OpenAI's figures to match Anthropic's reporting structure led to initial estimates that OpenAI had reached $40 billion in annualized revenue in August.
The revenue discrepancies have significantly impacted technology sector performance, with most AI-linked stocks experiencing negative reactions following the Financial Times report. According to Financial Times, most AI-linked stocks, including Microsoft (a key OpenAI investor), Oracle, Nvidia, Broadcom, Intel, CoreWeave, and Cerebras eased on the lower-than-expected annualized revenue. The market overreaction created substantial selling pressure, with Nvidia Corporation (NASDAQ:NVDA) dropping about 3%, erasing roughly $170 billion in value, while Broadcom Inc. (NASDAQ:AVGO) fell more than 4%. The iShares semiconductor ETF (SOXX) and the VanEck semiconductor ETF (SMH) eased between 2% and 3% on Thursday. The report notes that when valuations are based on self-reported, unaudited metrics that can vary by ₹20 billion depending on the source, these numbers deserve less weight than they receive and should not affect other companies' performance.
The technology sector has grossly outperformed the market over recent months, but this week's developments have created uncertainty. According to Financial Times, the lower annualized revenue figure potentially cools exuberance around the pace of artificial intelligence demand, which serves as a primary metric for gauging market adoption across the generative AI sector. Financial analysts closely track this benchmark for both OpenAI and key competitor Anthropic to justify surging public equity valuations and sprawling tech infrastructure expenditures. The report suggests that until OpenAI goes public, the revenue forecasts remain largely speculative, creating a challenging environment for technology sector valuations based on unverified metrics. However, if the market overreacted to OpenAI's revenue figures, the selloff may have created buying opportunities for AI-linked stocks.
