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Shares of OpenAI investors and partners stumbled in early trading on Tuesday. After the Wall Street Journal reported that the AI giant missed its internal revenue and user growth expectations, concerns grew among executives that OpenAI would not be able to pay future contract payments.
One executive told employees that OpenAI might not be able to fund future computing contracts.
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important facts
After losing some market share to Anthropic, OpenAI missed its internal goal of increasing ChatGPT’s weekly active users to 1 billion by the end of 2025, and also missed some monthly revenue targets earlier this year, the magazine reported, citing people familiar with the matter.
Sarah Friar, OpenAI’s chief financial officer, reportedly expressed concerns to other company executives that the company may not be able to pay for future computing contracts if revenue growth does not accelerate.
Friar also expressed caution about OpenAI’s plans to go public by the end of the year, warning that the company may not be able to meet the reporting standards required of public companies, while CEO Sam Altman wants an aggressive timeline, the magazine said.
“[This] The question arises as to whether [OpenAI] Vital Knowledge analyst Adam Crisafulli said in a note Tuesday.
The report led to some of OpenAI’s largest investors and partners buying back shares, including Nvidia (down 3%), Microsoft (1%), Broadcom (4%), CoreWeave (7.1%), Oracle (6.5%), and SoftBank (11.9%).
chief critic
In a statement to Forbes, OpenAI spokesperson Steve Sharp called the magazine’s report “clickbait.” Sharp said OpenAI’s business is “full steam ahead,” adding that its consumer strength is starting to show in the bottom line and the enterprise business is “in the best shape it’s ever been.”
big number
852 billion dollars. This is an increase in OpenAI’s post-funding valuation following a $122 billion funding round in March, following a $110 billion funding round a month earlier. OpenAI now reportedly plans to spend about $600 billion on computing by 2030, which is lower than Altman’s original estimate of $1.4 trillion, as revenue was expected to exceed $280 billion.
Points to note
OpenAI’s long-awaited IPO application. Earlier this month, Friar indicated that there was “very strong demand” from retail investors, and that OpenAI plans to reserve some of its shares for retail traders once it goes public. OpenAI is preparing for an IPO that would value the AI giant over $1 trillion, Reuters reported in October, making it one of the biggest stock debuts in history.
Main background
The broader AI market has expanded over the past year, with several mega-cap companies planning to spend hundreds of billions of dollars on infrastructure to meet growing demand. Last year, several companies announced multibillion-dollar deals and partnerships with OpenAI, with the $500 billion “Stargate” deal between OpenAI, SoftBank, and Oracle ranking among the largest. Other deals include a $300 billion deal between OpenAI and Oracle, a $100 billion partnership between OpenAI and Nvidia, a more than $22 billion deal reached between CoreWeave and OpenAI, and a $38 billion partnership between Amazon and OpenAI.
Read more
OpenAI misses out on important revenue, users aim for high-stakes dash for IPO (wall street journal)
OpenAI and Microsoft end exclusive partnership and revenue sharing (forbes)
Robinhood invests $75 million in OpenAI – allows indirect investment in AI giant (forbes)
