Micron, Nvidia and AI chip stocks fall as report on OpenAI's revenue causes 'undue concern'

By Britney Nguyen

OpenAI's annualized revenue reportedly fell short of expectations - but analysts say that reflects differences in how the figure is reported, not weakness in AI demand

OpenAI, led by CEO Sam Altman, reportedly told investors its annualized revenue was lower at the end of September than they were expecting.

Shares of Micron Technology, Nvidia and other artificial-intelligence-related chip makers fell hard on Thursday, as investors digested a bearish report on one of the AI industry's most important players.

OpenAI reportedly told investors that its annualized revenue was reaching $50 billion toward the end of September - $20 billion short of the $70 billion it had previously projected, according to the Financial Times. The metric is calculated by taking revenue from a short period, such as a month or a quarter, and multiplying it to gauge what a company could earn over a full year.

The ChatGPT maker sits at the center of the AI spending boom - both as a major customer of chips and infrastructure, and as an indicator of ongoing demand for the technology it makes.

Shares of Advanced Micro Devices (AMD) and Nvidia (NVDA) - both of which have partnerships with OpenAI for graphics processing units needed to train the company's AI models - fell 3.9% and 2.9%, respectively, on Thursday. Broadcom (AVGO), which is designing a custom chip with OpenAI, saw its shares drop 4.3%.

Meanwhile, shares of Sandisk (SNDK) and Micron (MU), which have soared so far this year on AI-driven demand for memory and storage products, finished the day down 4.9% and 4.8%, respectively.

Intel (INTC), which has been a main AI beneficiary on surging demand for its server central processing units to run AI agents and applications, saw its stock decline 5.3% on Thursday.

The State Street Technology Select Sector SPDR ETF XLK, which tracks the S&P 500's information-technology sector XX:SP500.45, fell 1.8% Thursday, marking its largest one-day decline since Sept. 14, according to FactSet data.

The OpenAI report "caused undue concern in the market," D.A. Davidson managing director Gil Luria told MarketWatch, because the original report about the $70 billion revenue figure was likely misrepresentative of the situation.

The Financial Times reported that the mismatch was due to OpenAI investors trying to directly compare its annualized revenues with rival Anthropic, which determines this number differently. OpenAI had reportedly seen $40 billion in annualized revenue in August, then told investors it was expecting growth of more than 70% to close to $70 billion.

In Luria's view, "OpenAI is actually accelerating as it catches up with Anthropic at the enterprise market," he said in emailed comments Thursday.

Evan Schlossman, a principal at Neostellar, told MarketWatch that the report was more "a clarification of how revenue is reported, rather than a signal about underlying demand." Schlossman said the market's reaction Thursday emphasizes the importance of understanding how each company reports its revenue before making comparisons.

Looking forward, investors should remain focused on AI adoption, customer demand and how revenue is growing as AI models improve, Schlossman said in emailed comments.

OpenAI did not immediately respond to a request for comment from MarketWatch.

-Britney Nguyen

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(END) Dow Jones Newswires

10-08-26 1808ET