AI chip stocks wobble even as investors get clarity on a key OpenAI issue

By Britney Nguyen

A new report paints OpenAI's financial picture in a more optimistic light

OpenAI, led by CEO Sam Altman, is reportedly on track for annualized revenue of $70 billion on a net basis by the end of the year, according to Bloomberg.

Even after investors got some apparent clarity on OpenAI's financial position, investors are back to being skittish about chip stocks.

OpenAI serves as an important indicator of ongoing demand for artificial-intelligence chips and therefore of the spending on AI infrastructure. As such, investors in Nvidia, Micron and other AI heavyweights pay close attention to data points surrounding the ChatGPT maker's financials.

Chip stocks sold off on Thursday after the Financial Times reported that OpenAI told investors it was approaching $50 billion in annualized revenue at the end of last month. That figure was $20 billion less than the roughly $70 billion figure OpenAI had previously projected, according to the Financial Times.

However, Bloomberg reported Friday that OpenAI is expecting annualized net revenue of $70 billion by the end of the year, mostly on strength in its enterprise business. At the end of September, the company reportedly saw annualized revenue of $50 billion. Annualized revenue is found by taking revenue from a month or another short period of time and using it to determine what a company could make in a full year.

That more upbeat view drove gains for Nvidia (NVDA), Micron (MU) and other chip stocks earlier Friday, but shares later pulled back. Nvidia's stock closed down fractionally, as did Micron's, while Sandisk's (SNDK) slipped 1.7%

On the other hand, shares of Broadcom (AVGO), which is designing a custom chip with the AI startup, gained fractionally.

Because OpenAI is a private company, it isn't required to disclose financial performance and investors often look to make sense of nuggets from news reports. Another reason it's difficult to gauge OpenAI's financial position is that its preferred metrics may be different than Anthropic's.

OpenAI investors had reportedly tried to compare its annualized revenue with that of rival Anthropic, but because the frontier labs calculate this number differently, that led to inconsistencies, according to the Financial Times. Both the Financial Times and Bloomberg reported that while Anthropic includes the gross amount of some sales, such as those through its cloud partners, OpenAI only counts its share of revenue generated from its partnerships with cloud providers.

OpenAI didn't respond to MarketWatch's requests for comment on the reports.

While much of the market has figured out the differences between the net amount and the gross amount, "it's still an expectations issue given the media has always quoted and discussed [OpenAI's] run-rate revenue through a 'net revenue' lens," Jefferies equities trading analyst Jeffrey Favuzza said in a Friday note to clients.

Looking forward, Favuzza said the market will likely "be very excited" once at least one of the AI leaders goes public, which would offer transparency around actual financial data.

-Britney Nguyen

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10-09-26 1727ET