OpenAI's projected revenue for this year is $20bn less than expected, the company has revealed, raising questions about the break-neck growth rate in demand for artificial intelligence.
The ChatGPT-maker told investors that its revenues for this year would reach $50bn (£37bn), a projection based on sales up to the end of September. However, this is significantly less than the $70bn that it had signalled in information provided to investors last month, which was widely reported.
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Why the Revenue Gap Matters
Forecasts of annualised revenues by leading AI players are closely watched by markets as an indicator of overall demand for a technology that is attracting huge investment. The discrepancy arose from attempts by OpenAI investors to provide a more direct comparison with how projected revenue is measured by Anthropic, the maker of Claude.
Anthropic hit $65bn in forecast revenue by the end of July. It includes revenue from sales via cloud partners, such as Amazon's AWS and Google Cloud, while OpenAI does not. This accounting difference explains part of the gap, but the scale of the shortfall has still unsettled investors.
Market Reaction and Investment Implications
News of the $20bn gap buffeted US tech stocks on Thursday, with the tech-led Nasdaq closing down by 1.4%. Chip giant Nvidia fell 2.9%, Oracle was down 5.5% and Micron declined 4.8%.
OpenAI is in early-stage talks to raise $30bn in a funding round that values the business at about $1.4tn. The revenue shortfall could complicate those discussions, as investors weigh the company's growth trajectory against its lofty valuation.
Key Takeaways
- OpenAI's projected revenue for this year is $50bn, down from the $70bn previously indicated.
- The gap partly stems from different accounting methods: Anthropic includes cloud partner revenue, OpenAI does not.
- Tech stocks fell on the news, with the Nasdaq down 1.4%.
- OpenAI is seeking $30bn in funding at a $1.4tn valuation.
Comparing Revenue Projections
To understand the scale of the shortfall, consider how OpenAI and Anthropic stack up. The table below compares their latest revenue forecasts and valuation metrics.
| Company | Projected Revenue | Valuation |
|---|---|---|
| OpenAI | $50bn | $1.4tn (target) |
| Anthropic | $65bn | Not disclosed |
While OpenAI's revenue is still substantial, the downward revision highlights the challenges of forecasting in a rapidly evolving industry. Investors will be looking for clearer signals about demand and monetisation as the company seeks new funding.
What This Means for the AI Industry
The news comes amid intense scrutiny of AI investments. Companies like Microsoft, Google, and Amazon have poured billions into AI infrastructure and startups. Any sign of slowing demand could have ripple effects across the sector.
However, some analysts argue that the revenue adjustment is a matter of accounting rather than a fundamental weakness. OpenAI's core business continues to grow, and the company remains a leader in generative AI.
FAQ
Why did OpenAI revise its revenue projection?
OpenAI revised its projection to provide a more direct comparison with how Anthropic measures revenue. Anthropic includes revenue from cloud partners, while OpenAI does not.
How did the market react to the news?
US tech stocks fell, with the Nasdaq down 1.4%. Nvidia, Oracle, and Micron all saw declines.
What does this mean for OpenAI's funding round?
The revenue shortfall could complicate OpenAI's efforts to raise $30bn at a $1.4tn valuation, as investors reassess growth prospects.
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