New York\u00a0\u2014\u00a0\n <\/p>\n
\n Tech stocks dropped on Thursday after a news report that OpenAI\u2019s annualized revenue is about $20 billion less than previously reported.\n <\/p>\n
\n OpenAI, the maker of ChatGPT, recently told investors that its annualized revenue was nearing $50 billion, according to the Financial Times. That\u2019s lower than the $70 billion figure previously reported by media, including the FT, based on information from investors.\n <\/p>\n
\n 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\u2019s enormous spending on the AI buildout.\n <\/p>\n
\n 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.\n <\/p>\n
\n A source familiar with the documents said the $70 billion figure did not come from OpenAI and likely came from a desire by firms to compare OpenAI\u2019s numbers with Anthropic\u2019s, which includes gross revenue from cloud providers. OpenAI\u2019s is based on net revenue.\n <\/p>\n
\n OpenAI declined to comment.\n <\/p>\n
\n There was selling across semiconductor chipmakers, cloud providers and other tech companies involved in the AI buildout. Nvidia (NVDA<\/a>) fell 2.9%, Intel (INTC<\/a>) fell 5.3% and Oracle (ORCL<\/a>) fell 5.5%.\n <\/p>\n \n The outlook for many tech stocks is based on investors\u2019 conviction that demand for AI will continue to grow. If there are wrinkles in that story, like OpenAI earning less revenue than expected, that could send ripples throughout the supply chain for the AI buildout, said Ross Mayfield, investment strategist at Baird.\n <\/p>\n \n \u201cThere are going to be tremors throughout all of the related sub-industries,\u201d Mayfield said.\n <\/p>\n \n The stakes are higher now because the stock market in recent weeks has been buoyed by gains in tech and AI stocks, while other sectors have struggled under the pressure of rising bond yields<\/a>.\n <\/p>\n \n \u201cThis has become a much narrower market that\u2019s dependent on the AI names to keep it afloat,\u201d Mayfield said. \u201cCertainly, this is going to hit that complex in a big way.\u201d\n <\/p>\n \n OpenAI CEO Sam Altman announced in September that the company would postpone its initial public offering until at least next year, citing concerns about AI safety.\n <\/p>\n