OpenAI misses revenue targets as AI investments face scrutiny and market confidence wavers

Market slumps as OpenAI reportedly misses internal targets for active users and revenue -- Nvidia, Oracle, AMD, and CoreWeave shares all tremble on the news

OpenAI's apparent missed targets shake up investor confidence. OpenAI has reportedly missed its internal targets for the number of active ChatGPT users, as well as multiple revenue goals. Because of this, The Wall Street Journal reports that CFO Sarah Friar has expressed worries about whether the firm can afford the billions of dollars of future compute contracts it has taken on. The company is banking on explosive growth to fund all these expenses, with Altman and Friar saying in a joint statement toWSJ, "We are totally aligned on buying as much compute as we can and working hard on it together every day." Many corporate investors felt that it was on the right track, with the startup raising $122 billion in its latest funding round, exceeding it $100 billion target. However, one analyst said that OpenAI could run out of cash by mid-2027 unless it continues bringing in massive amounts of investments, like what we saw recently. Even though executives from Nvidia, Oracle, SoftBank, and many other companies invested in OpenAI see potential, the market is beginning to doubt them. As soon as the news of OpenAI's shortfall started circulating, MarketWatch reported that firms with heavy involvement in the AI firm saw a drop in their stock prices during pre-market trading. This included Nvidia (-1%), AMD (-4%), Oracle (-5%), and CoreWeave (-5%). SoftBank closed at 9.9% lower in the Tokyo Stock Exchange, making it one of the worst performers in the Nikkei 225. Microsoft seems to be the only company that's closely intertwined with OpenAI and hasn't been affected by a drop in stock prices. That's because although it has ended its exclusivity agreement with OpenAI recently, it still holds 27% of OpenAI's for-profit business and has invested billions into the startup. While OpenAI kickstarted the LLM race when it publicly released ChatGPT in December 2022, many other competitors have since gained ground. The company has lost market share to Anthropic and its Claude family of models, especially among programmers and corporate users. Google's Gemini family has also started to outpace ChatGPT in several benchmarks, leading OpenAI CEO Sam Altman to declare a "Code Red" late last year. Despite this, Altman has signed deals worth billions of dollars to secure future computing power, including a 4.5-gigawatt contract with Oracle worth $300 billion and a $100 billion alliance that will deliver 10 gigawatts' worth of Nvidia hardware to data centers. The market has seemingly panicked about the news of OpenAI's missed targets, renewing fears that the AI fever among investors could break. Nevertheless, it seems that Altman is pushing to acquire more computing power, arguing that shortages in capacity is what's limiting the startup's growth. Anthropic CEO Dario Amodei once said in a conference that some companies are pushing for infrastructure investments too far, but OpenAI disagreed. In a memo addressed to its investors, OpenAI said, "In hindsight, that caution looks less like discipline and more like underestimating how fast demand would arrive" -- a statement that might now seem overly optimistic. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

An OpenAI Bubble Is Not an AI Bubble

I've questioned before whether Wall Street has the temperament for the artificial-intelligence era. It's hard to argue it does when just one report from the Wall Street Journal, which suggested OpenAI had missed some internal growth targets, was enough to wipe billions of dollars of value off related stocks. For a moment on Tuesday, you'd have thought the sky was falling on the AI boom. It wasn't, of course, and some of the initial shock losses were pared once OpenAI had struck a reassuring tone in a statement that said it was still "firing on all cylinders." Still, the knee-jerk reaction was an indication of how closely the fate of OpenAI is tied to perception of the AI industry's future. Circular financing has made these conclusions understandable, but OpenAI's execution struggles shouldn't be allowed to speak for the sector as a whole. After the Journal reported that OpenAI's chief financial officer was worried its revenue growth couldn't support its expansion plans, the shares of its partners tumbled. Oracle Corp., which is building OpenAI's data centers, fell about 3%. Advanced Micro Devices Inc., which has a deal to provide OpenAI with GPUs, was down 5.5%, while OpenAI's chip-making partner, Broadcom Inc., was down by more than 4%. But the skittishness escaped containment. Intel Corp. doesn't have any direct deals with OpenAI but was down as much as 5%, for example. Power companies linked to the AI buildout also fell. The big slate of tech earnings this week -- with four main hyperscalers reporting on Wednesday -- will now be considered in the context of OpenAI's performance issues. Investors would be wise to consider the struggles of Chief Executive Officer Sam Altman's company as, first and foremost, an OpenAI problem. The company is not the AI industry. The OpenAI bubble was inflated thanks to the company's first-mover advantage from the almost accidental success of ChatGPT. That launch, OpenAI's first huge viral moment, made it the fastest-growing consumer tech product in history -- 100 million users within two months. Extraordinary sums of venture capital followed, and the company is now worth $852 billion. Quickly placed on its shoulders was the fate of the industry. OpenAI isn't a public company yet, but tech stocks are being assessed through its lens. What better way to assess the health and future prospects of the new industry than by looking at the "leading" AI company? The litmus test is outdated. OpenAI has changed. It has contended with internal drama, departure of key talent, complications in acquiring computing power and a competitive landscape that has all but eroded ChatGPT's moat. Anthropic has out-executed OpenAI on enterprise use cases in deep-pocketed industries such as cybersecurity and law. Bigger competitors, which OpenAI humbled at first by beating them to market, have regrouped. They are now turning the screw on their individual, formidable strengths that have been built up over decades -- Alphabet Inc.'s Google with its colossal consumer business, cloud infrastructure and in-house chips; Amazon.com Inc. with the same in different forms; Meta Platforms Inc. with its legacy businesses to lean on if things take longer than expected, as they invariably will. OpenAI called the Journal's report "ridiculous" and "clickbait." There are reasons for optimism if you want to look for them: Codex, OpenAI's answer to Anthropic's Claude Code, is being well received, and on Wednesday OpenAI made further progress on broadening its enterprise customer base with a $50 billion deal with Amazon's AWS. Still, OpenAI's turf has clearly been invaded, and that's what's driving narratives of stalled growth. That's no grounds for panic. ChatGPT's daily active user share of the US chatbot market is 38.3%, according to Apptopia, down from 55.4% this time last year. Google's Gemini has been the benefactor. So, too, has Anthropic's Claude, which received a publicity boost in the wake of its battle with the Pentagon and the backlash caused by Altman's cynical and opportunistic move to step in as an alternative for classified military use. Sign up for the Bloomberg Opinion bundle Sign up for the Bloomberg Opinion bundle Sign up for the Bloomberg Opinion bundle Get Matt Levine's Money Stuff, John Authers' Points of Return and Jessica Karl's Opinion Today. Get Matt Levine's Money Stuff, John Authers' Points of Return and Jessica Karl's Opinion Today. Get Matt Levine's Money Stuff, John Authers' Points of Return and Jessica Karl's Opinion Today. Plus Signed UpPlus Sign UpPlus Sign Up By continuing, I agree to the Privacy Policy and Terms of Service. Consumers are not turning their backs on generative AI; they just have more choice, as do many of the companies whose shares were punished because of their links to OpenAI's fortunes. No doubt, any genuine pullback from OpenAI on computing spend would have widespread repercussions for those waiting on the hundreds of billions of dollars that have been promised. Even so, if the AI revolution is real, and the promised productivity gains materialize, other companies will be more than eager to buy up what computing power is available. The so-called neocloud company CoreWeave Inc. got it right when, in a statement responding to the market's nerves on Tuesday, it pointed out that "OpenAI is a terrific partner, but not our only one." And if the AI revolution isn't real, well then that's a different question, one we're no closer to answering than we were at the start of the week. More From Bloomberg Opinion: * Xi Is Right to Close the Pandora's Box Manus Opened: Shuli Ren * AI May Be the US Economy's Only Hope: Allison Schrager * Is California a Harbinger of the AI Job Disruption?: Justin Fox Want more Bloomberg Opinion? Terminal readers, head to OPIN <GO>. Or subscribe to our daily newsletter.

Big Tech's AI payback might be coming into view

A steady escalation in spending on AI data centres has tested Wall Street's patience this year. But this week, investors seemed to set aside some of their unease to contemplate the potential return on all those promised gigawatts of new computing power. The latest quarterly earnings from some of the biggest tech companies out on Wednesday hinted at a new, higher growth trajectory that may be starting to take hold. Profit margins of the largest cloud computing companies registered an unexpected lift. It would all seem to show that the payback from the AI infrastructure boom may be coming into view, were it not for one inconvenient fact: even with growth rates picking up, the capital spending keeps spiralling ever higher. The financial strain of the data centre boom is starting to show. The combined free cash flow -- operating cash flow minus capital expenditure -- of Alphabet, Amazon, Meta and Microsoft dropped to $22bn in the latest quarter, roughly half the level of a year before. That the picture wasn't much worse owed everything to an extraordinary jump in the companies' earnings. The combined operating cash flow of the four rose nearly a third, an increase of $36bn, preventing the capital spending binge from dragging them, as a group, into negative cash flow territory. The stakes coming into this week were high. The past month had already seen a sharp rebound in stock market sentiment, with the shares in the four companies rising over the past month by anything from 16 per cent (Microsoft) to 25 per cent (Amazon). In the event, Alphabet beat even the most optimistic forecasts, as AI-powered search supercharged its core product and revenue growth at its cloud division accelerated a startling 15 percentage points from the previous quarter, to 63 per cent. The cloud divisions of Microsoft and Amazon also did better than expected, though they were put in the shade by Google. But the numbers were strong enough to underline the fact that the cloud business -- selling computing resources to others -- has become the main flywheel driving Big Tech's AI engine. The question left hanging in the air is whether all the new AI computing power is being turned into the sort of applications and services that customers will be willing to pay a premium for, lifting profit margins and justifying the investment binge. For this quarter, at least, the signs were encouraging. Alphabet, Amazon and Microsoft each registered an unexpectedly robust improvement in operating profit margins. Microsoft chief executive Satya Nadella put the change down to the growing use of AI agents, most notably for coding. Microsoft itself has struggled to show its huge base of white-collar workers is ready for AI. It revealed earlier this year that only about 3 per cent of paying customers for its productivity tools had also chosen to pay for its Copilot AI service. This quarter, however, it said the number of Copilot users had risen a third. According to Nadella, agent-like capabilities are making the service more useful. The tech companies also attributed the margin gains to adjustments in their operating and business models for AI. Google, for instance, said a surprising jump in earnings in its cloud division was due to engineering breakthroughs that had enabled it to deliver AI services far more cheaply. Microsoft chief financial officer Amy Hood, meanwhile, said charging for usage of new AI models, while at the same time continuing with traditional per-seat subscriptions for software, was proving effective. This, she added, has made the transition to AI more positive than the earlier transition to cloud computing -- a time when worries about margins dogged Microsoft for a protracted period. Yet another round of capital spending increases still casts a long shadow. Meta's shares slumped as it warned of higher spending. Its operating margin fell nearly one point, helping to explain its recently announced round of job cuts. The costs of the capital spending boom have barely started to show through in income statements yet. Google chief financial officer Anat Ashkenazi warned that depreciation levels were set to jump as the spending starts to hit, forcing even greater attention to efficiency. The message to tech workers: even as their employers enter a new and potentially phase in the AI boom, job prospects are not looking any more secure.

OpenAI and Microsoft's alliance fractures as cloud exclusivity deal ends -- Azure's single-provider monopoly for ChatGPT is officially over

Microsoft and OpenAI have once again renegotiated the terms of their deal with one another, but it might be what's best for both of them. OpenAI and Microsoft have announced an end to their exclusive arrangement, and a re-jigging of how they handle model oversight, revenue sharing, and cloud deployments. Microsoft will no longer pay OpenAI for what it makes from Copilot, but OpenAI no longer has to exclusively use Azure servers for ChatGPT, opening it up for further deals with other cloud service providers. What this means for the ever-nebulous AGI clause that both companies were so keen to retain access to and control over, if and when it materializes, remains to be seen. It's an intriguing move that leaves the immediate future of both companies' AI efforts uncertain, but perhaps it's better than Microsoft's legal department firing all barrels at OpenAI over its recent deal with Amazon. Where's the ROI? One of the biggest questions of the AI industry over the past year and a half has been the source of profit. Not the infrastructure investment, or the circular deals and token IOUs, but the real profit. For the investors who pumped tens of billions of dollars into OpenAI, Anthropic, and xAI, and for the shareholders who ballooned Microsoft, Google, and Meta's stock prices off the back of these mega deals and unprecedented investment plans. Microsoft CEO Satya Nadella hinted at this in January, when he said at the World Economic Forum that AI companies needed to find a clear use for the technology or risk losing the "social permission" to continue the work. That seems to be more of a pressing issue for Microsoft by April, when it announced that Copilot use on GitHub would move to token-based billing -- that is, charging users for the amount of tokens they use, rather than on a per-request basis. No longer would shorter requests with shorter responses cost as much as longer, more in-depth queries. From June, this will result in users paying more when Copilot is verbose in its responses, or when it has to analyze more data before making its suggestions. Microsoft is already doing that with Azure agents, and it's also set to raise the price of Microsoft 365 with its Copilot integration by several dollars a month for most tiers. According to internal documents reportedly shared with journalist Ed Zitron, this move came because Microsoft had faced a more-than-doubling of its Copilot-related costs from January this year. He also claims Microsoft will take further steps to tighten controls and increase earnings from individual AI users, including reducing rate limits and forcing users onto different models, which could more than double costs. Things aren't much better at OpenAI, either. It was projected in January to be on track to run out of money entirely by the end of 2027, and despite announcements of enormous investments in the company, it's projected to burn through tens of billions over the coming years. All while somehow planning to turn a profit by the end of the decade, but to manage that, it would need to earn hundreds of billions of dollars a year. OpenAI's annualized revenue run rate is reportedly sitting at roughly $2 billion per month, or $24 billion a year. OpenAI also performed several major pivots and navigational shifts in recent months. We learned about its chip manufacturing ambitions in February, it announced it was building a GitHub competitor in March, the company warned that it would shutter the Sora text-to-video generation tool in April, and it bought a podcast for over $100 million that same month. Even OpenAI's own financial officer has said she doesn't see how OpenAI can afford its own promised infrastructure spending, as it misses key revenue targets in 2026, according to a new WSJ report. It's very hard to see how any of this takes OpenAI from a heavy-loss-making company to one that's incredibly profitable in just a few years. Don't drop the bag OpenAI was under pressure in 2025. To secure the promised investment of billions from Japanese investment firm Softbank, it needed to convert to a for-profit company and settle its disagreements with Microsoft. It managed that just in time, finally securing a long-term partnership agreement with Microsoft in the Fall. The Softbank money came rolling in, and just a few months later, the deal was renegotiated again. But rejigging the deal may be OpenAI's way of securing the next round of funding -- the $50 billion promised investment from Amazon in February, which Microsoft was none-too-pleased about. But in doing so, it's lost one of its limited revenue streams from Microsoft's Copilot earnings, and will still have to pay Microsoft 20% of its own limited earnings. That Amazon investment could come alongside another $60 billion from Nvidia and SoftBank (though not the $100 billion Jensen originally promised), if all goes to plan. That would also value the company at around $730 billion, making a potential IPO incredibly profitable for Altman and anyone else holding OpenAI shares at the time of a public offering. But even with OpenAI more than halving its compute ambitions from $1.4 trillion in expenditure to $600 billion by 2030, that's still contingent on increasing its own revenue to $280 billion a year by that same date. As of the time of writing, OpenAI hasn't even managed to earn 10% of that, while having close to a billion active users (though crucially, it also missed that milestone by the end of 2025), and it is losing mindshare to competitors like Anthropic. Regardless, OpenAI seems keen to push forward with its IPO plans. At this stage, that may be the only real avenue left for it to get anywhere close to its ambitious goals. Even with shifting goalposts, the timeline for its profitability is shrinking rapidly, and it still hasn't made a clear path toward it.

OpenAI looms over earnings from tech hyperscalers

CEO of OpenAI Sam Altman speaks during the 2026 Infrastructure Summit of government officials, corporate executives, and labor leaders, in Washington, D.C., U.S., March 11, 2026. With the four tech hyperscalers -- Amazon, Alphabet, Meta and Microsoft -- set to report quarterly earnings after the close, hovering over their results is a single company that doesn't even release its financials to the public: OpenAI. The ChatGPT creator, now valued at more than $850 billion by private investors, has become a major market mover over the past year as its revenue and hefty spending are increasingly viewed as a proxy for the artificial intelligence trade. OpenAI would be all over the headlines this week anyway because of a high-profile legal battle between CEO Sam Altman and Tesla CEO Elon Musk. The two ex-friends were among a group of techies who created OpenAI as a nonprofit lab in 2015, and they're now facing off in court after Musk sued Altman and OpenAI in 2024, alleging they breached the founding agreement. Before opening arguments could begin on Tuesday, shares of companies including Oracle, Nvidia, Advanced Micro Devices and Broadcom were sinking from a Wall Street Journal report that OpenAI missed revenue and user growth projections. The report, which OpenAI characterized as "ridiculous," also suggested that OpenAI leaders are worried about the company's ability to keep pace with its massive financial commitments tied to building out data centers. All eyes then turned to the earnings reports scheduled for Wednesday. The four tech giants that are reporting are among the most valuable businesses in the world and all have clear ties to OpenAI, whether as an investor, customer, strategic partner, competitor, or some combination of those traits.

Big US tech stocks swing as investors probe AI spend

The share prices of the biggest tech firms in the US swung up and down as investors considered their immense spending on artificial intelligence (AI). Facebook's owner Meta, Google's owner Alphabet, Microsoft, and Amazon all reported their business results for the first three months of this year at the same time on Wednesday. The companies collectively plan to spend more than half of a trillion dollars on AI this year, with Meta and Amazon making mass job cuts to offset these costs. Meta's shares slumped over 5% in after hours trading, while Microsoft and Amazon were down 2% and 1.6% respectively. Meanwhile, Alphabet share price jumped almost 6%. Investors in these firms have become increasingly concerned about whether the money being spent will generate returns. Wednesday's results revealed mixed bag for the companies on that front. Mark Zuckerberg, Meta's co-founder and chief executive, said in prepared remarks that the company "had a milestone quarter" with users of its apps and a release of a new AI model, but that seemed to be overshadowed by another increase on costs. Its share price slumped after it said it would be spending even more on AI projects and infrastructure than it anticipated. The firm said its planned capital expenditure, the metric companies use to detail their spending on projects that have not yet turned into business growth, will increase to as much as $145bn (£108bn), up from a previous maximum of $135bn. Alphabet's positive performance and specifics around tangible business results from its AI spending saw the stock jump in after hours trading. The company said its profits rose by 30% and noted that its Google Cloud business grew by 63%, an increase it attributed specifically to an increase in AI usage by companies that buy cloud services. Sundar Pichai, Google's chief executive, said in prepared remarks: "Our AI investments and full stack approach are lighting up every part of the business." Microsoft's stock fell by nearly 2% after the company reported its quarterly results. Although the company beat its revenue expectations with an increase of 16% to $83b, and profits rose 23% to $38 billion its spending on AI has hit its free cash flow. That metric, essentially how much money a company has in its bank account, is important for investors. Microsoft's cash flow for the quarter came in at $15.8bn, down almost $6bn from a year ago. Satya Nadella, Microsoft's chief executive, said the company's AI business is growing. He said the annual run rate of its AI business hit $37bn. Such a metric, however, is a projection of future sales based on a multiple of current sales. The company did not specify the base level sales figure the run-rate was calculated on. The company's stock is down nearly 11% so far this year, as questions around its spending on AI and its partnership with OpenAI, in which it has invested more than $10bn, have continued. Amazon's shares fell after it revealed it would make less money next quarter than initially thought, but the results themselves were in line with analyst expectations. The company notched a 15% year-over-year increase in profits, and that its increasingly important cloud business grew 28%, the biggest jump it has seen in more than four years. Andy Jassy, Amazon's chief executive, also boasted of Amazon's expanding business of manufacturing its own AI chips. He said the current annual run rate for Amazon's chips is now $20 billion. Like Microsoft, Amazon did not specify the base level sales figure its chips business run-rate was calculated on. "We're in the middle of some of the biggest inflections of our lifetime, we're well positioned to lead, and I'm very optimistic about what's ahead for our customers and Amazon," Jassy said in a prepared statement ahead of a call with financial analysts. Jassy did not say anything specific about the company's spending on AI overall, but it said earlier this year it would spend $200bn on AI in the coming months, an increase from the $125bn it spent in 2025.

A.I. Spending Sets a Record, With No End in Sight

Google, Amazon, Microsoft and Meta reported more than $130 billion in quarterly capital expenditures on Wednesday as they build A.I. data centers. There's more to come. For the past two years, Amazon, Google, Microsoft and Meta have repeatedly set records for how much they are spending on artificial intelligence. On Wednesday, the four giants did it again. In the first three months of the year, the four companies reported in their financial results, they plowed a total of $130.65 billion into capital expenditures, largely spending on data centers that power A.I. That figure -- which was another record -- was more than three times what the Manhattan Project cost to develop nuclear bombs and 71 percent higher than what the tech giants spent in the same quarter a year earlier. Investors may need to brace for more spending. Meta, for one, raised its spending forecast for the year to between $125 billion and $145 billion, up from its previous prediction of $115 billion to $135 billion. The spending showcased how the biggest tech companies are in the middle of a wildly expensive era of A.I., which many of them see as a once-in-a-lifetime chance to become far larger. And as the frenzy escalates, it's increasingly only the planet's wealthiest companies that have the money to lead this race. That's because Amazon, Google, Microsoft and Meta continue to dominate in core businesses that spew cash, such as serving ads on YouTube or Instagram, delivering items in a few hours or tallying cells in Excel. The companies generated a combined $431 billion in sales in the quarter and made $151 billion in profit. "They can handle it" because of their cash flow, John Blackledge, an analyst with the investment bank TD Cowen, said about the A.I. spending. For much of last year, Wall Street was jittery about whether the tech spending would bring in enough returns, but some investors have backed away from those fears. That's partly because of the recent success of Anthropic's Claude Code, an A.I. tool that lets users quickly generate code without knowing programming and a product that has become a juggernaut. This month, Anthropic said its March sales were the equivalent of $30 billion a year, up from $9 billion at the end of 2025. "The expectations are getting higher and higher," said Arjun Bhatia, who covers tech companies for the investment bank William Blair. The biggest tech companies have also formed deeper partnerships with the leading A.I. labs Anthropic and OpenAI, investing billions in them. In turn, Anthropic and OpenAI have committed to spending hundreds of billions on computing power that the tech giants provide. Last week, Google and Amazon announced plans to invest up to a combined $65 billion in Anthropic, and they will provide the start-up with at least 10 gigawatts of computing power -- or enough to power more than four million homes. Google and, increasingly, Amazon have also seen traction developing their own A.I. chips to power the boom. Google has begun selling its chips to Anthropic, and Meta announced a multibillion-dollar deal last week to use some of Amazon's chips. No company is spending more than Amazon, which has been racing to build data centers to satisfy demand for computing power. It has focused particularly on building Project Rainier, which are massive A.I. data centers for Anthropic. Amazon spent $43 billion on capital expenditures in the quarter, primarily for data centers. Its cloud computing business -- which slowed a year ago, before picking up steam more recently -- generated $181.5 billion in sales, up 17 percent from a year earlier. Microsoft spent $31.9 billion in the first three months of the year, up 49 percent from a year earlier. Azure, its core cloud computing offering, and related A.I. services grew about 40 percent. (The New York Times has sued OpenAI and Microsoft, its partner, claiming copyright infringement of news content related to A.I. systems. The two companies have denied the suit's claims.) Google said its spending was $36 billion in the quarter, more than double the $17 billion it spent in the same period last year. The internet giant has benefited from A.I. in several ways. Its Gemini A.I. system has become the backbone of Google Search, offering quick and complete answers that drive people to make more search queries. As a result, Google can serve more ads that are also more relevant. For the first three months of the year, Google said, sales from search, its largest business, increased 19 percent to $60.4 billion. A.I. has also helped Google's cloud business. The company has signed $1 billion deals with new customers and persuaded existing customers to increase their spending. In the most recent quarter, its cloud sales rose 63 percent to $20 billion. Meta is in some ways an outlier, because its capital spending is for its own use, rather than for cloud computing that it sells to others. As it morphs from a social media company to an A.I. company, Meta is spending amounts similar to Amazon's and Microsoft's totals. For the quarter, it spent $19.8 billion, more than half of the $39 billion that it spent for all of 2024. Meta has developed A.I. to increase user engagement and improve advertising on its social platforms, which include Facebook and Instagram. Revenue increased 33 percent to $56.3 billion in the quarter, a sign that the spending was accelerating growth. Some of the tech companies have justified their building binge by saying they cannot meet all the demand. But analysts said there were risks if the companies became too dependent on two young customers: OpenAI and Anthropic. More than 40 percent of Microsoft's $625 billion in outstanding cloud contracts, for example, come from OpenAI, the company said in January. This week, Microsoft and OpenAI announced new terms that loosened their ties. Betting so much on OpenAI and Anthropic is a gamble. But even if the start-ups flop, the tech giants are likely to weather the losses because of their size, scale and other businesses, said Matt Stucky, who manages tech investments for Northwestern Mutual. "The core business," he said, "is good." Tripp Mickle and Eli Tan contributed reporting from San Francisco, and Natallie Rocha from New York.

OpenAI Hits Back at Growth Fears, Says 'Firing on All Cylinders'

OpenAI backers and partners saw shares sink on the news, with the company's CFO reportedly expressing concern about affording future computing needs if sales don't grow fast enough. OpenAI pushed back against concerns over its sales growth on Tuesday, saying its consumer and enterprise businesses are "firing on all cylinders" despite a report about the AI startup missing internal targets. The ChatGPT creator said it continues to see growth in demand from business customers and its nascent advertising business. "The mood internally is incredibly positive," the company said in a statement. The Wall Street Journal reported late Monday that OpenAI had fallen short of several internal targets as rivals gained ground. OpenAI described the report as "prime clickbait." Shares of several OpenAI backers and partners including SoftBank Group Corp., Oracle Corp. and CoreWeave Inc. sank on the news Tuesday. The Journal also reported that OpenAI Chief Financial Officer Sarah Friar has expressed concern that the company may not be able to afford its future computing needs if sales don't grow fast enough. The share moves underscore OpenAI's central role in a complex web of investments and deals involving leading cloud computing providers and chipmakers. Investors had already been growing increasingly concerned about an AI infrastructure bubble, questioning the plans of OpenAI and other technology companies to spend hundreds of billions of dollars in the coming years on data centers and chips. OpenAI said in its statement Tuesday that the company continues to see its push for more computing capacity as "the great enabler," allowing it to "deliver a better product experience to our customers." Earlier this month, OpenAI told investors that its early efforts to dramatically increase computing resources has given it a key advantage over Anthropic at a moment when its longtime rival is gaining ground, Bloomberg reported. Even before the Journal report, however, OpenAI had begun adopting a more cautious approach to its infrastructure investments. OpenAI recently said it plans to pause a project in the UK. Microsoft Corp. also agreed to rent data center capacityBloomberg Terminal at a site in Norway that was initially intended for OpenAI. In March, Bloomberg reported that Oracle and OpenAI had scrapped plans to expand a flagship AI data center in Texas after negotiations dragged over financing. Oracle, a key data center partner for OpenAI, said Tuesday that it remains "incredibly excited" about working with the AI developer. "We're seeing firsthand how quickly adoption of their technology is accelerating, driven by the strength of their latest models," Oracle said in a statement. CoreWeave, meanwhile, noted that OpenAI isn't the company's only partner. The company said in a statement that its customers include Alphabet Inc.'s Google, Meta Platforms Inc., Anthropic and Microsoft, among others, adding that "demand for compute continues to grow."

The Start of OpenAI's Trial Against Elon Musk Wasn't the Worst Thing That Happened to Sam Altman Today

Elon Musk took the stand in a California courtroom today to ask for OpenAI CEO Sam Altman's ousting. Still, it wasn't the worst thing that happened to the executive on Tuesday. That's because on Monday night, the Wall Street Journal published a report claiming that ChatGPT's growth had slowed toward the end of last year, and as a result, OpenAI had missed its internal goal of one billion weekly active users and its own target revenue for the year. Citing people familiar with the matter, the WSJ reported that CFO Sarah Friar was worried about revenue growth and unsure if OpenAI could pay for its many computing contracts. These concerns have put Friar and a bunch of other executives at odds with Altman, the report claims, as they have sought to rein in costs. Meanwhile, the OpenAI board has questioned Altman on his "efforts to secure even more computing power despite the business slowdown," the WSJ wrote. If the report is true, it clashes with the picture that OpenAI has been trying to portray. OpenAI and many of its peers in the AI industry have long claimed that AI demand would arrive, and to accommodate it, the industry has to rapidly shore up as much computing capacity as possible. This has led to a record investment in AI data centers, a risky bet that some experts have claimed could be overkill, and an industry-wide dealmaking frenzy that has placed OpenAI at the center of it. OpenAI has inked so many multibillion-dollar deals that it sparked worries of circular dealmaking and a potential AI bubble where only one failure (such as if OpenAI were to fail to deliver on its massive financial commitments) could create a domino effect that could take the entire industry, and perhaps even the American economy, down with it. As a result, the market had a proper freakout on Tuesday, sending the shares of any company with substantial ties to OpenAI down, which, in this current climate, is much of the tech industry. So much so that at least one company had to come out and renounce its reliance on OpenAI. The shares of cloud computing companies Oracle and Coreweave both sustained a particularly big hit because both have signed lucrative computing contracts worth billions of dollars with OpenAI. A Coreweave spokesperson tried to appease investor worries, telling Bloomberg that "OpenAI is a terrific partner, but not our only one." OpenAI has also denied the claims in the Wall Street Journal report and said in a post on X that the company has "breakout Codex growth, enterprise offerings on every cloud, the only consumer app that matters, a computer strategy built to accelerate, and the best researchers in the world." But rumors of the AI giant's struggles have been circling for some time now. They mostly began late last year, when Google's Gemini release was deemed by many on the internet to be superior to ChatGPT. Shortly after Gemini's success, OpenAI executives declared a "code red" crisis at the company. Then came Anthropic's agentic AI releases Claude Code and Claude Cowork, both of which have dominated the coding and enterprise markets in the last few months. According to the WSJ, the 2025 revenue target miss was due partially to Gemini eating into ChatGPT's market share. The report also claims that OpenAI has continued to miss multiple monthly revenue targets in 2026 due to Anthropic's success. Meanwhile, OpenAI also raised many eyebrows when its $100 billion deal with Nvidia, which was the first multibillion-dollar OpenAI investment that really fueled fears of circular dealmaking last year, fell apart. As it reportedly prepares for an IPO later this year, the company has taken some steps to reduce costs, like shutting down its AI video-generator Sora, and to increase revenue, with controversial initiatives like ads in ChatGPT. Earlier this month, a New Yorker investigation cited numerous insiders who accused Altman of lying to OpenAI's board and of being untrustworthy in business dealings. Around the same time, a report from The Information said that Altman and Friar were at odds over OpenAI's readiness for an IPO. Similar to the claims made in the WSJ piece, The Information report also said that Friar was uncertain that OpenAI's revenue growth could support its $600 billion spending commitment over the next five years, because the company is expected to burn more than $200 billion before it starts making money. These concerns over spending are also not unique to OpenAI. AI giants were scrutinized for their heavy financial commitments in the last round of tech earnings, especially after analysts warned that it could turn the companies' cash flow negative. Microsoft specifically was also under investor scrutiny for its heavy reliance on OpenAI, namely that almost half of its cloud commitments were solely from the AI giants. The fear was prominent enough that Nvidia CEO Jensen Huang had to spend his company's earnings call doing damage control for AI hyperscalers and repeatedly assuring investors that revenue would follow their investments. Now, the latest OpenAI news only adds more fuel to that fire, as Microsoft, Meta, Amazon, and Google are all set to report quarterly earnings tomorrow afternoon.

OpenAI says it is "firing on all cylinders" after missing revenue and user targets, but market wipes billions off AI stocks

OpenAI called the report "prime clickbait." It said its business is "firing on all cylinders." It issued a joint statement from CEO Sam Altman and CFO Sarah Friar declaring they are "totally aligned." None of it worked. On Tuesday, after the Wall Street Journal reported that OpenAI had missed internal revenue and user growth targets, investors wiped tens of billions of dollars off the companies whose business models depend on OpenAI's growth assumptions being correct. Oracle, which signed a $300 billion five-year partnership to supply computing power to OpenAI, dropped 7.7 per cent. CoreWeave, which has an $11.9 billion infrastructure contract with OpenAI, fell 7.4 per cent. SoftBank, which has committed $60 billion to OpenAI, sank almost 10 per cent in Tokyo. Nvidia, Broadcom, AMD, and Arm all declined between 2 and 6 per cent. The market did not care what OpenAI called the report. It cared whether the money works. The Journal reported that OpenAI missed an internal goal of reaching one billion weekly active ChatGPT users by the end of 2025. The company reached 900 million by February 2026, a number that represents 125 per cent year-over-year growth at a scale where most products have already plateaued. By any normal standard, 900 million weekly users is a staggering achievement. But OpenAI is not operating by normal standards. It is operating by the standards required to justify $600 billion in compute spending commitments through 2030, a figure the company itself revised downward from $1.4 trillion earlier this year. The Journal also reported that OpenAI missed multiple monthly revenue targets in early 2026, losing ground to Google's Gemini in consumer markets and to Anthropic in coding and enterprise. OpenAI's annualised revenue sits at approximately $25 billion. Competition from Anthropic, which crossed $30 billion in annualised revenue in April while spending roughly a quarter of what OpenAI spends on training, has turned what was a comfortable lead into a deficit. The company that defined the generative AI market is no longer the revenue leader in it. CFO Sarah Friar warned colleagues internally that if revenue growth does not accelerate, OpenAI could face difficulty funding its future compute agreements. The warning is not hypothetical. OpenAI has contracted for hundreds of billions of dollars in cloud infrastructure from Oracle, CoreWeave, and others, commitments that assume revenue will grow from $25 billion today to $280 billion by 2030. The gap between where the revenue is and where it needs to be is not a rounding error. It is the difference between a company that can fund its own ambitions and one that cannot. Friar has also reportedly told colleagues that OpenAI is not organisationally ready for the IPO that Altman wants to pursue in the fourth quarter of 2026, preferring a 2027 listing instead. The joint statement declaring alignment came after the Journal's reporting made the disagreement public. OpenAI spokesperson Steve Sharpe called the Journal's report "clickbait" and said the company's consumer business is showing strength in revenue while its enterprise business is "in the best place it has ever been." The company said the internal mood is "incredibly positive." These are not rebuttals to the specific claims in the report. The Journal did not say OpenAI's business is failing. It said OpenAI missed its own targets, that its CFO has expressed concern about funding future commitments, and that competitors are gaining ground. Calling that clickbait is a communications strategy, not a financial argument. The company does have genuine momentum to point to. Enterprise revenue now accounts for more than 40 per cent of total revenue, with nine million paying business users, a fourfold increase since September 2025. OpenAI's advertising business, launched in February, crossed $100 million in annualised revenue within six weeks and is projected to generate $2.5 billion this year, scaling to $100 billion by 2030. OpenAI's enterprise push with GPT-5.5 and rapid model releases demonstrates a company that is shipping aggressively. And 50 million paying subscribers is a consumer franchise that most technology companies would regard as a generational achievement. The problem is not that the business is bad. The problem is that the commitments are enormous, and the business needs to be not just good but historically unprecedented to justify them. OpenAI's financial position is defined by a simple asymmetry: its spending commitments are contractual and its revenue projections are aspirational. The company has committed to approximately $600 billion in compute infrastructure spending through 2030, averaging roughly $100 billion per year. To justify that spending, it is targeting $280 billion in revenue by 2030, which would require more than ten times growth in four years from its current $25 billion run rate. The $852 billion valuation from its $122 billion funding round in March, the largest private round in Silicon Valley history, was predicated on those growth assumptions holding. If they do not, the valuation becomes aspirational too. The competitive picture compounds the pressure. Anthropic's revenue crossed $30 billion in annualised run rate in April, passing OpenAI for the first time, with 80 per cent of that revenue coming from enterprise customers spending more than $1 million annually. The number of those customers doubled from 500 to over 1,000 in less than two months. Google's Gemini gained consumer market share throughout 2025, eating into ChatGPT's growth. And the broader landscape now includes DeepSeek, Mistral, Meta's Llama, and a constellation of open-weight models that compete on price in ways that make it harder for any single company to capture enough of the market to justify $600 billion in infrastructure. OpenAI's thesis has always been that scale wins: build the biggest models, deploy the most compute, acquire the most users, and revenue follows. The WSJ report is the first significant piece of evidence that scale may not be winning fast enough. The market reaction on Tuesday was not about OpenAI's quarterly performance. It was about the cascade of financial dependencies that OpenAI's growth narrative supports. Oracle's $300 billion cloud partnership, CoreWeave's $22 billion in cumulative OpenAI contracts, SoftBank's $60 billion investment, and the broader capital expenditure plans of Nvidia, AMD, and Broadcom all assume that AI infrastructure demand will grow at a rate sufficient to generate returns on the capital being deployed. When the company at the centre of that demand admits, even internally, that growth is not meeting projections, the entire chain reprices. This is happening against a backdrop that makes the timing particularly uncomfortable. The Musk v. Altman trial opened in Oakland on Monday, putting OpenAI's corporate governance and leadership credibility under oath. Anthropic has overtaken OpenAI in revenue while positioning itself as the safety-conscious alternative. Google is embedding Gemini across 750 million users and a $240 billion cloud backlog. And OpenAI's own CFO has reportedly questioned whether the company is ready for a public listing that its CEO is pushing for this year. The company that defined the AI era is now defending its position on multiple fronts simultaneously, and the market's verdict on Tuesday was that the defence is not yet convincing. OpenAI says it is firing on all cylinders. The investors who lost billions on Tuesday would like to see the receipts.

Big Tech's earnings get ever bigger, and ever less useful

Meta, Alphabet and peers are growing smartly, but their value hinges on hard-to-answer questions about AI supremacy Nothing presents a middle finger to investors and stock analysts like four of the world's biggest companies -- arch-rivals, at that -- reporting their earnings on the same day, within minutes of each other. Amazon, Microsoft, Meta Platforms and Alphabet did that on Wednesday. It's not like they had bad news to bury: the foursome collectively reported earnings growth of 60 per cent compared with a year earlier. This high-tech pile-up marks a moment, of sorts. Last time it happened, in October 2020, the Silicon Valley supergroup had a combined market capitalisation of about $5tn. Since then their aggregate value has more than doubled. Amazingly, considering their sheer size, all four are growing like companies a fraction of their size: Meta's revenue increased by 33 per cent, the others by roughly 20 per cent. It goes without saying that AI is now the story. Nobody was watching Big Tech's capital expenditure five years ago. Now, such investment -- dominated by building AI data centres -- moves share prices, and not always predictably. Meta and Alphabet boosted their colossal investment plans for the year to a potential $145bn and $190bn respectively on Wednesday. Meta's stock fell after the market closed; Alphabet's rose. All four are at pains to show that their spending is pushing up revenue. At Alphabet, Google AI-enhanced queries helped send search-ad sales up 19 per cent year on year. Microsoft's AI-related revenue more than doubled year on year, at about 10 per cent of its total top line. Meta managed to raise prices for ads on platforms such as Facebook and Instagram by 12 per cent, year on year. The more AI matters to these companies, the less today's financial results do. All four are firmly focused on goals that sit much further out. Meta's Mark Zuckerberg and Alphabet's Sundar Pichai are both chasing AI with superhuman intellect. Microsoft runs the cloud on which much of it will sit. Amazon is launching satellites into orbit, while its chip business, which powers AI workloads, is growing at a triple-digit percentage rate. Delayed gratification is an ever-greater feature of the wider market too. Goldman Sachs analysts estimate that three quarters of the S&P 500's value now comes from cash flows more than 10 years in the future. While it's not unusual for "terminal value" to make up the majority of a company's worth, the level is near its highest in 25 years. For high-growth stocks it is 84 per cent. That makes long-term questions like "who will win the AI war" much more important than "what happened to last quarter's earnings". But it may not make stocks any less volatile. Goldman shows that for a tech-style company, a 1 percentage point change in long-term growth rates implies a 29 per cent fall in a group's enterprise value. Vague indications of potential supremacy -- or the loss of it -- matter more and more. It may soon get easier for companies to turn the volume down on short-term earnings movements. The US Securities and Exchange Commission hopes to drop the requirement for quarterly reporting, egged on by President Donald Trump. That's a missed opportunity, since AI should make financial reporting much easier. Investors will have to focus more on who wins in the long term, even as they get fewer clues about the answer.

OpenAI's revenue, growth estimates fall short as company races toward IPO: Report

Sam Altman, CEO of OpenAI, at the AI Impact Summit in New Delhi, India, Feb. 19, 2026. OpenAI has fallen short of its own revenue and user growth estimates, raising questions about whether the AI company can meet its massive data center spending plans, the Wall Street Journal reported on Monday. Finance Chief Sarah Friar has expressed concerns over the company's ability to fund future compute agreements if the revenue slowdown continues, the outlet reported, citing sources familiar with the matter. According to the report, Friar is working with other executives to clamp down on costs as the board of directors more closely scrutinizes OpenAI's computing deals. "This is ridiculous," OpenAI CEO Sam Altman and Friar said in a joint statement to CNBC. "We are totally aligned on buying as much compute as we can and working hard on it together every day." Shares of chipmakers and tech companies, such as Oracle, slumped on the report. The setup raises questions about OpenAI's financial wherewithal ahead of its highly anticipated public offering expected later this year. In recent months, OpenAI and hyperscaler peers have shelled out billions to fund datacenters to meet ballooning compute demand. Many of those deals are closely tied to OpenAI. Oracle inked a $300 billion five-year computing deal with OpenAI, and Nvidia has pledged billions to the startup. OpenAI recently launched a major strategic partnership with Amazon and expanded an existing $38 billion spending agreement by $100 billion. This week, OpenAI announced major changes to its partnership with Microsoft, a longtime backer that has invested more than $13 billion in the company since 2019. As part of the changes, OpenAI will cap revenue share payments, and Microsoft will no longer have an exclusive license to its intellectual property.

As AI spending surges, investors say: Show us the returns

Why it matters: Investors are over CEOs hyping AI and ready for CFOs to start explaining the return on their AI spending. Driving the news: Google parent Alphabet, Microsoft, Amazon and Facebook parent Meta all announced plans Wednesday to increase spending on their AI buildouts this year, enormous outlays of cash that could total as much as $700 billion. * The four companies have already spent in the first three months of the year three times what the Manhattan Project cost to develop atomic bombs, the New York Times reported. Zoom in: The spending sprees came with different stories, however. * Alphabet reported an 81% increase in profits, and its AI tool Gemini for enterprise's active user base grew 40% quarter over quarter. Its shares surged 4% in after-hours trading. * Meta, meanwhile, raised its estimate range for capital expenditure to as much as $145 billion from $135 billion, yet its guidance for revenue was only in line with investors' expectations. Its shares fell more than 6%. * Microsoft broke out its AI-specific revenue, saying it was up 123% year over year. Between the lines: Investors want more of what Microsoft and Alphabet delivered: fundamentals that show how the investment in AI is paying off in revenue. * Meta did not break out AI-specific revenue contributions. Threat level: Spending on AI shows no signs of slowing any time soon. * Memory is getting more expensive due to shortages, and even as chips get more efficient, companies have to buy the newest ones to keep up. * While that's great news for chip giant Nvidia, it's unclear when that cycle ends or when AI will be profitable enough that it won't matter. Yes, but: The four companies also put up double-digit growth across multiple lines of business. * Some of that serves as moats that allow those businesses to continue to bet big on their AI ambitions. The bottom line: Get ready to break out AI-related returns on the next quarterly call or be prepared to face the wrath of investors.

Half of Google's and Amazon's 'blowout AI profits' came from a stake in Anthropic -- not from their actual business | Fortune

Four of the largest U.S. tech companies reported earnings Wednesday afternoon, confirming an AI capital expenditure buildout without modern precedent. Combined, they spent $130.65 billion on capital expenditures in the first three months of 2026 -- more than three times the inflation-adjusted cost of the Manhattan Project, in a single quarter. They plan to spend nearly $700 billion this year alone, as much as the U.S. government spends on Medicare. The headline profits suggest that the bet is paying off; Google parent Alphabet's profit jumped 81% to $62.6 billion last quarter, while Amazon Web Services delivered its fastest growth in fifteen quarters. Yet a footnote in each company's earnings release tells a different story about the origins of these profits. Nearly half of Alphabet's record profit -- about $28.7 billion -- did not come from search ads, cloud services or any of its products at all. It came from Alphabet updating the value of the equity it owns in private companies, primarily Anthropic, the AI startup in which Alphabet holds a stake estimated at 14% before the announcement of an additional $40 billion commitment last week. Amazon disclosed a similar figure even more directly. Its earnings release stated that first-quarter net income "includes pre-tax gains of $16.8 billion included in non-operating income from our investments in Anthropic" -- more than half of Amazon's pre-tax income (or profit) for the quarter. Amazon, in response to questions from Fortune, said the markup was triggered by Anthropic's Series G funding round and the conversion of some of Amazon's convertible notes into preferred stock. The company's $8 billion investment in Anthropic is now worth more than $70 billion, according to Amazon. They added that Amazon's investment in Anthropic is separate from its commercial relationship. Alphabet did not immediately respond to Fortune's request for comment. Robert Willens, a tax and accounting consultant who has served as an adjunct at Columbia Business School, told Fortune the accounting itself is uncontroversial. Companies that hold equity stakes in private firms are required to update those stakes' value when a new funding round sets a price. What's different, Willens said, is what's actually driving the markup. When you own stock in a public company like Apple, the value comes from the open market; millions of institutional and retail buyers and sellers. With Anthropic, the value comes from whatever a small group of investors agreed to pay in the last funding round. Alphabet and Amazon are two of those investors. When they put more money into Anthropic, or commit to spending billions on cloud capacity for it, that helps push Anthropic's valuation up. And when Anthropic's valuation goes up, the stake Alphabet and Amazon already own goes up with it. They book that increase as profit; in this case, a substantial cut of their profits, even more than half. In plain English, the more they invest in Anthropic, the more profit they can report -- without Anthropic ever having to pay them a dollar. "It's interesting that they're able to control or influence the value of one of their own assets," Willens said, "and one that they're able to mark to market by engaging in business transactions with that entity. There might be something to say about that." This is not the first quarter Big Tech profits have been substantially shaped by markups on private AI investments. In Q1 2025, Alphabet booked an $8 billion unrealized gain that drew eyebrows until it was attributed by Bloomberg reporting to SpaceX. In Q3 2025, the figure rose to $10.7 billion. Plus Amazon has disclosed Anthropic-specific gains every quarter it's held the stake. What makes this quarter so striking is the scale: Alphabet's $36.9 billion equity gain is more than triple the prior peak of the number, and Anthropic's reported talks at a $900 billion valuation suggest the next markup could be larger still. Willens also recalled that when accounting regulators required companies to start counting these unrealized gains as profit in 2018, "everyone said it would make earnings unnecessarily volatile" -- that investors would struggle to make sense of profit figures jumping around while the underlying business stayed steady. "This, I suppose, confirms the fact that perhaps this wasn't the best idea [Financial Accounting Standards Board] ever came up with."

OpenAI in Shambles as IPO Looms

Can't-miss innovations from the bleeding edge of science and tech OpenAI is still committed to a whopping $600 billion in AI infrastructure investments over the next four years, a gargantuan spending spree that requires the ChatGPT maker to make massive strides in attracting new users -- and, to put it crassly, make far more money than it currently is. The numbers don't paint a flattering picture, with OpenAI barely crossing the $20 billion annualized revenue line last year. It certainly doesn't bode well, considering the company's rumored plans to go public later this year, a major transition that could shine a bright light on what's sounding like a harrowing financial situation. What was supposed to be a meteoric rise to stardom is off to a rough start. As the Wall Street Journal reports, OpenAI missed its own targets of reaching one billion weekly active users for ChatGPT by the end of 2025 -- a threshold it still has yet to cross -- as well as several revenue targets, further highlighting concerns that the company could risk collapsing under its own weight. It's a foreboding portent for an industry currently burning through tens of billions of cash while revenues have fallen far behind. The Sam Altman-led company has contracts with many other key players in the AI space, tying ties its fate to the rest of the industry as well and further raising the stakes. For a while now, the company's CFO Sarah Friar has been ringing the alarm bells, reportedly warning other executives that OpenAI may not be able to afford future computing contracts if both user numbers and revenue don't start to grow at a breakneck pace soon. That's despite raising a Silicon Valley record-shattering $122 billion in a single round of funding earlier this year. The cash may buy OpenAI a little more time, but considering its extremely ambitious spending plans, the chickens could come home to roost within the next three years, per the WSJ. Meanwhile, access to compute is becoming increasingly difficult. AI companies including Anthropic and Microsoft are already starting to ramp up prices to match rapidly rising costs, frustrating many power users. For now, OpenAI is in a holding pattern, with Friar warning against going public any time soon. The company will also have to defend itself in court as of this week, as a dodgy lawsuit filed by OpenAI's long-estranged cofounder Elon Musk kicks into gear. Meanwhile, the competition only keeps growing. Anthropic recently surpassed OpenAI by surging to a trillion-dollar valuation on secondary markets, highlighting the Claude maker's considerable success in attracting enterprise users with its coding tools. The situation has become so dire, OpenAI is resorting to desperate measures to control the narrative. A provocative investigation linked OpenAI to a website that's using AI agents to publish pro-AI articles that attack the tech's critics. The company also bought the tech bro talk show TPBN last month, a move likely intended to control its waning public image. Nonetheless, OpenAI's leadership remains steadfast in its commitment to building out its AI empire, despite the significant setbacks and slowdowns. "We are totally aligned on buying as much compute as we can and working hard on it together every day," Altman and Friar told the WSJ in a joint statement.

OpenAI Fell Short of Its Own Targets as Compute Costs Piled Up: Report - Decrypt

Experts are divided on whether the stumbles signal a broader AI market correction or a temporary recalibration. OpenAI is facing a reckoning over the gap between its ambitions and its finances, experts told Decrypt, after the Wall Street Journal reported Monday that the company missed key internal targets for ChatGPT users and revenue while CFO Sarah Friar privately warned that ballooning compute costs could outpace the money coming in. Friar raised the alarm after the company fell short of its goal of reaching one billion weekly active users for ChatGPT by the end of last year, a milestone it never hit and never announced, unsettling some investors, the WSJ reported. "When the dust settles, I think companies will find out something they already knew -- a lot of the work still depends on human judgment, collaboration, and contextual understanding that AI can't yet replicate," Alice Li, Investment Partner at Foresight Ventures, told Decrypt. Li sees the current pressure as an internal rebalancing within the tech sector, not a leading indicator of a broader macro downturn. OpenAI has locked in roughly $600 billion in future data-center spending, accumulated through years of aggressive dealmaking under Altman's thesis that compute scarcity was the true constraint on AI growth. Friar told other company leaders she is worried that revenue may not grow fast enough to cover those contracts, the report said. Board directors have reportedly grown more probing about the data-center deals and have questioned why Altman continues to pursue even more computing capacity despite the slowdown. Anthropic has quietly overtaken OpenAI on share trading platform Forge Global, where it now trades at roughly $1 trillion against OpenAI's approximately $880 billion, according to Forge CEO Kelly Rodriques, the first time its rival has commanded a higher implied valuation. Markus Levin, co-founder of DePIN network XYO, told Decrypt that reading a market crash into these numbers misreads the underlying data. He noted that by the end of 2025, roughly 84% of the world's working-age population had still not used generative AI tools, and only around 44.8 million people held paying AI subscriptions globally. "Conflating a slow, uneven adoption curve with an imminent market reckoning reflects a tunnel vision the data is pushing back against," Levin said. The disruption, he pointed out, is real but narrowly concentrated, driven more by tech-sector over-hiring cycles and cost corrections than by automation sweeping through the broader economy. "A rational repricing phase is almost inevitable -- market sentiment tends to move ahead of fundamentals, and expectations need to be recalibrated," Li said. She frames current valuations as priced ahead of time rather than fundamentally broken, with fundamentals likely to catch up if capability development stays on track. Decrypt has reached out to OpenAI for comment. Pavel Bezhin, CFO at AI development company Napoleon IT, told Decrypt the pattern is familiar from prior technology cycles, and the outcome is not predetermined. "In human history, such breakthroughs have indeed often preceded crises and recessions, but they have never been their direct cause," he said. Bezhin pointed to the dot-com crash as the relevant lesson: economic systems built on outdated models fail to adapt, and it is that failure, not the technology itself, that triggers collapse. "If global financial institutions have learned the right lessons from the dot-com crash, discussions about recession and systemic collapse will remain nothing more than cautionary tales," he added. OpenAI's IPO ambitions are caught in the middle of all this, with Altman pushing for a public listing by year-end, while Friar has privately cautioned that the company's internal controls are not yet built for the reporting standards public markets demand. On prediction market Myriad, owned by Decrypt's parent company Dastan, users place a 64% chance on Anthropic carrying out its IPO before OpenAI. Away from the boardroom, Altman spent last week apologizing to the community of Tumbler Ridge, British Columbia, after OpenAI acknowledged it had banned a ChatGPT account tied to the suspect in a February mass shooting that killed eight people without ever notifying law enforcement.

Tech stocks slide following report on OpenAI missing key targets

OpenAI CEO Sam Altman speaks during Snowflake Summit 2025 in San Francisco.Justin Sullivan / Getty Images file Tech stocks slid Tuesday after The Wall Street Journal published a report warning that ChatGPT-maker OpenAI was falling short of revenue and user targets, fueling concerns about whether the tech industry's multitrillion-dollar investment in AI will eventually pay off. Japanese tech conglomerate SoftBank led the declines, dropping 10% in Tokyo trading Tuesday. SoftBank has committed to investing $60 billion in OpenAI. Other names linked to OpenAI also saw significant sell-offs, including cloud computing providers CoreWeave, down 6%, and Oracle, down 4%. Chipmaker Nvidia, which announced an agreement with OpenAI worth up to $100 billion last September, was down about 3%. That initial agreement has since been downsized to as much as $30 billion, the Financial Times reported in February. The broader Nasdaq composite index, which is mostly made up of tech companies, declined 1%. NBC News has not verified the Journal's reporting, which said that some OpenAI leadership is worried about its business trajectory as it heads to an initial public offering, a move that will require it to publish earnings reports. An OpenAI representative pushed back on the Journal's article, calling it "clickbait" and said the business was "firing on all cylinders." "We are on an extremely steep growth curve across consumer, enterprise and developers," said Steve Sharpe, OpenAI's head of business and financial communications. OpenAI is at the heart of a web of deals undergirding the artificial intelligence boom that has helped power the entire stock market higher. Some analysts have raised alarms about how weakness in a key node of the web, like OpenAI, could set off a chain reaction that could threaten the entire AI ecosystem. "Last year I referred to OpenAI as too big to fail," Peter Boockvar, chief investment officer of One Point BFG Wealth Partners, wrote in a note Tuesday. "Not from the perspective of a government backstop but because their tentacles have reached so wide in the data center ecosystem buildout." Several major tech companies are set to report quarterly earnings Wednesday. In commentary released Tuesday, Dennis Follmer, chief investment officer at Montis Financial, a registered investment adviser with $1.25 billion in assets under management, said that given major stock indexes are sitting near record levels, investors will be sensitive to any shortcomings. "In a stock market where earnings expectations are rising even faster than stock prices, any misstep involving AI-related demand or capital budget expenditures from one of the four Mag 7 companies reporting Wednesday could easily give this market second thoughts about how far it has run in the past month," he wrote In a statement, CoreWeave highlighted other partnerships it has struck with other major tech players such as Google, Microsoft and OpenAI rival Anthropic. "OpenAI is a terrific partner, but not our only one," it said. Representatives for Oracle and Nvidia did not immediately respond to requests for comment.

AI investors stay bullish after OpenAI revenue miss

After reports of OpenAI missing its own revenue targets, investors soured on tech stocks on Tuesday, putting the entire market under pressure as a result. But investors in the private AI labs are unfazed. What they're saying: "We're not slowing down just because of a negative article in the Wall Street Journal," Ben Reitzes, managing director at Melius Research, said on Bloomberg Television. * "Investors who are selling on the thesis that this whole AI thing is about to implode based on these new reports are going to be disappointed," Mark Malek, chief investment officer at Siebert Financial, tells Axios. Between the lines: An investor in both OpenAI and Anthropic tells Axios that we're still in the early innings of the AI race, and there won't be one winner. * That same investor sees AI's math problem (the high cost of compute pressuring revenue) resolving when AI labs raise prices. * While that could lead to a near-term dip in demand, the net revenue result will be positive for AI companies. Yes, but: Venture investors seem increasingly skeptical about OpenAI, amid multiple reports of outsize demand for Anthropic shares. * OpenAI "should be scrambling," Malek notes, because competitors like Anthropic and Google's Gemini are taking market share. * Sam Altman's AI lab made everything its total addressable market, while Anthropic focused on enterprise, and Google focused on consumers. Flashback: OpenAI had its "Code Red" moment earlier this year, when the company decided to focus on growing revenue in its enterprise business. * It has taken steps to do that, partnering with consultants to grow Codex subscriptions, for example. * Since then, Codex has hit 4 million users, and the company tells Axios it's "firing on all cylinders." What we're watching: Earnings for some of the biggest public tech companies start on Wednesday, and that should give investors more clarity on demand, capital expenditure and revenue guidance.

Chip stocks drop on report OpenAI missed ChatGPT growth targets - SiliconANGLE

Chip stocks drop on report OpenAI missed ChatGPT growth targets Shares of Nvidia Corp. and other tech firms dropped today following a report that OpenAI Group PBC had missed its growth targets last year. The Wall Street Journal on late Monday cited sources as saying that the company's 2025 user base gains and revenue fell short of expectations. OpenAI pushed back against the report, calling it "prime clickbait" in a statement issued to Bloomberg today. The company added that it's "firing on all cylinders." Shares of Nvidia dropped more than 3% on the news. Advanced Micro Devices Inc., which inked a multibillion-dollar chip deal with OpenAI last year, is down 11%. Arm Holdings plc, Oracle and other tech firms that maintain partnerships with the artificial intelligence provider also logged declines. According to the Journal, ChatGPT's growth started slowing late last year. As a result, OpenAI reportedly missed its goal of growing the chatbot's user base to one billion weekly active accounts by the end of 2025. There's no indication that the company has reached that milestone since. OpenAI's slowing user base momentum is reportedly weighing on its top line growth. According to the Journal's sources, the company "has struggled" with churn among subscribers and missed multiple revenue targets for ChatGPT this year. It's believed that OpenAI's weaker-than-expected momentum partly stems from market share gains made by rival Anthropic PBC. OpenAI Chief Financial Officer Sarah Friar has reportedly told executives that OpenAI may struggle to finance its data center buildout "if revenue doesn't grow fast." The company's board, in turn, has reportedly stepped up its scrutiny of infrastructure contracts. OpenAI has to date committed to purchasing $600 billion worth of data center capacity. About half the sum is tied to a five-year deal that the company signed with Oracle last year. Shares of the database maker dropped by more than 7% in today's trading session. The centerpiece of the OpenAI-Oracle partnership is a sprawling data center campus in Abilene, Texas. According to Bloomberg, two of the eight buildings at the site were operational as of last month. It's believed that the companies recently shelved a plan to expand the campus over disagreements about financing terms. The report that OpenAI missed recent revenue goals comes against the backdrop of the company's preparations to go public. According to CNBC, the AI provider is expected to list its shares as soon as the fourth quarter. OpenAI will reportedly seek a valuation of about $1 trillion. A slowdown in the company's growth may add momentum to the public offering of Anthropic. In December, the Financial Times reported that the OpenAI rival had hired a law firm to prepare its stock market listing. The company is also believed to have launched discussions with potential underwriters.

Wall Street is panicking about OpenAI. A veteran tech analyst says everyone's overreacting | Fortune

Sam Altman is having a pretty bad week, and it's only Tuesday. On Monday, jurors were quickly seated in Oakland for his 'hero,' Elon Musk's, $130 billion trial against him. Monday night, a fresh Wall Street Journal report knocked him down further, describing internal turmoil at OpenAI -- slowing user growth, leading to missed revenue goals, leading to a CFO who has reportedly grown nervous about Altman's appetite for compute. Now, as Altman sits in the courtroom awaiting Musk's opening statement, the Nasdaq is taking a hit on the report, falling more than 1% from record territory and pulling down the names tied closely to OpenAI's commercial orbit. Oracle, which inked a $300 billion data-center partnership with OpenAI last year, fell roughly 5%. CoreWeave dropped 7%. SoftBank, OpenAI's largest investor, sank nearly 10% in Tokyo overnight (SoftBank is a Japanese company). Gene Munster isn't buying it. "I think this is a true story -- it is an example of over-analyzing," the veteran tech analyst and managing partner at Deepwater Asset Management told Fortune. "It can miss the bigger picture. The bigger picture: it's still growing, we're still early in AI, and they're still in a great place." The headline concern is real. OpenAI has reportedly committed itself to roughly $600 billion in future compute spending -- a number that only makes sense if revenue keeps roughly doubling each year. ChatGPT's growth has begun to slow as Anthropic's Claude and Google's Gemini eat into its market share in different segments. The WSJ report quoted CFO Sarah Friar's private concern that the company isn't ready for public-market disclosure standards -- stoking fears of an "AltaVista moment" for the original AI front-runner. AltaVista is an old Fortune metaphor, for those who never used it before it shut down in the early 2010s, was the leading search engine of the mid-1990s, launching in December 1995 and handling roughly 300,000 searches within its first 24 hours. It was faster and more comprehensive than anything else at the time -- essentially defining what modern search looked like before Google existed. (Bill Gates had to tell Warren Buffett that he should switch away from AltaVista, Fortune previously reported.) Could that be OpenAI's fate, with Anthropic and its widely used Claude model emerging as the preferred player? Munster reframes the concern: "That comment from Sarah Friar suggested there's concern there. But it was in the context of them just saying, 'We have to grow.'" He pointed out that OpenAI's compute contracts are dependent upon their growth rate. He also flagged an underreported ambiguity in the WSJ piece itself -- whether OpenAI missed its own internal projections or more aggressive stretch targets, and by how much. "Their business is growing rapidly, likely doubling year over year," he told Fortune in an interview. "They're on track to be a multitrillion-dollar public company someday -- not out of the gate, but over time." The firm where he is currently managing partner, Deepwater Asset Management, holds a position in OpenAI through the private markets, and he's "not concerned about it." The question Munster keeps coming back to is whether OpenAI has products that can sustain a doubling pace of revenue for the next few years. He thinks the answer is yes -- and points to a piece of the business that hasn't gotten as much attention as it probably deserves: Codex, OpenAI's coding tool, built on GPT-5.5. Anthropic's Claude has been the darling of developers for months, with reports that companies like Meta are encouraging employees to "tokenmaxx" on Claude. The narrative in tech media has been that Claude is winning the coding race. Munster, whose firm uses both products through an affiliate called Intelligent Alpha, says that narrative is wrong. "If you're serious about developing, you're using GPT-5, you're using Codex," he said. "You're not using Anthropic." If he's right, the implication is that some of OpenAI's recent slack in revenue is just a lagging indicator from a pre-Codex time. OpenAI and Anthropic were both currently valued at roughly $850 billion based on recent private-market share sales, but Anthropic recently surged ahead to be valued above $1 trillion. "It can be a zero-sum game, and they both can be wildly successful," Munster said. "Right now, the focus is on these coding tools. But two years from now, the conversation around AI -- what these models are, what value they're providing -- can be totally different. We're still just scratching the surface."

OpenAI's Reported Missed Revenue Targets Are Spooking Investors Ahead of Its Rumored $1 Trillion IPO

Artificial intelligence giant OpenAI recently missed some self-imposed user growth and revenue targets, the Wall Street Journal reported in an exclusive scoop -- and the markets are not thrilled. OpenAI chief financial officer Sarah Friar has told colleagues that she is "worried the company might not be able to pay for future computing contracts if revenue doesn't grow fast enough," the Journal added, with efforts to keep down costs now sometimes putting her in conflict with CEO Sam Altman's full-steam-ahead ambitions. The reports of internal tensions come in the lead-up to a widely-anticipated IPO by the software powerhouse, which although not yet officially filed for is widely expected to happen as soon as this year. If and when OpenAI does go public, analysts are expecting a potentially record-breaking listing which could see the firm valued at $1 trillion -- although such estimates assume the company maintains its current momentum. "We are totally aligned on buying as much compute as we can and working hard on it together every day," Altman and Friar jointly told the Journal, and the idea that they're dialing back efforts to expand their computing resources is "ridiculous." Nevertheless, the company reportedly missed a goal last year of hitting one billion weekly active users on ChatGPT, its flagship product, and also failed to hit a yearly revenue target for the product just as Google's competing Gemini service enjoyed gangbusters growth. The Journal also cites claims of repeated missed monthly revenue targets this year and high churn among ChatGPT subscribers. Although financial data about privately-held OpenAI is, for now, hard to come by, the company's peers and allies on the public markets offer some insight into how investors feel about the news of the missed benchmarks and internal tensions. In a word: concerned. The Journal's story came out at 9pm ET Monday night. Between then and the opening of trading the next morning, Google Finance data indicates, share-prices at OpenAI partners including Oracle, Nvidia, Broadcom, Qualcomm, CoreWeave, SoftBank, Amazon and Advanced Micro Devices fell sharply. (Notably, Microsoft, which has long had a tight relationship with OpenAI but announced on Monday plans to loosen those ties, hasn't taken a sustained hit.) It's not just public-market investors giving OpenAI the side-eye. The Journal reports that board directors at OpenAI are also beginning to scrutinize its spending on data centers as business pressures rise. What this means for OpenAI's public market ambitions remains to be seen. Last fall, Altman said an IPO was "the most likely path" for his company given its capital requirements, and Friar claimed earlier this month that the company will set aside some shares for retail investors when it goes public, although demurred on the timeline of such an offering. Yet the Journal's story on Monday suggested that Friar may now be growing hesitant about an IPO -- at least a 2026 one -- over concerns about the firm's ability to meet public-company reporting requirements. The extended deadline to apply for the 2026 Inc. 5000 is Friday, May 1, at 11:59 p.m. PT. Apply here.

AI spending boom soars but no returns for big tech giants, warns Jefferies' Chris Wood

The clearest signal that the AI capex arms race may be approaching a peak is not coming from headlines, but from balance sheets. According to Jefferies' Christopher Wood, global head of equity strategy, the scale of spending by US hyperscalers has reached a point where it is consuming an increasingly large share of their cash flows, particularly on chips and memory. Based on the latest company guidance, capex as a percentage of operating cash flow for the four major US hyperscalers has surged from 41% in 2023 to a projected 92% in 2026. A significant portion of this is being directed towards memory alone, which is estimated to account for about 30% of total capex, implying roughly 28% of operating cash flow being absorbed by memory investments this year, he said in his Greed and Fear report. This rising intensity of investment brings into focus a more fundamental question: monetisation. A recent Jefferies report led by Edison Lee highlights that the challenges around AI business models remain underestimated. The increasing cost of staying competitive, driven by higher compute, memory, and power requirements, suggests that sustainable profitability for pure AI model players remains distant. Wood aligns with this view. His base case is that AI may ultimately resemble a capital-intensive industry like airlines, rather than the high-margin, winner-takes-all dynamics seen in the internet era. Even so, the current phase of spending shows little sign of slowing. Big Tech companies continue to push ahead with aggressive capex plans. Microsoft expects to spend $190 billion this year, including about $25 billion attributed to higher component costs. Alphabet and Meta have both raised their 2026 capex guidance to $180-190 billion and $125-145 billion, respectively, while Amazon has maintained its guidance at $200 billion. Among these, investor concerns appear more pronounced in the case of Meta, which lacks the same direct cloud-driven benefits from AI spending as peers like Alphabet, Microsoft, and Amazon. For now, the "picks and shovels" trade remains intact, supported by continued spending and limited pushback from investors on returns. However, early signs of strain are beginning to surface. A recent report noted that OpenAI has missed internal targets for both user growth and revenues, including a goal of reaching 1 billion weekly active users for ChatGPT by the end of last year. The company has also reportedly fallen short of multiple monthly revenue targets in 2026, while facing increased competition. Market share trends reflect this shift. Over the past 12 months to March, Gemini's share of web traffic in the generative AI market has risen sharply from 6% to 25.5%, while ChatGPT's share has declined from 77.4% to 56.7%, according to SimilarWeb data. At the same time, concerns have been raised about financing structures within the ecosystem, where partners such as Nvidia and Oracle provide funding to OpenAI, which in turn uses that capital to purchase compute from them. Competition is also intensifying. Anthropic reported in early April that its annualised revenue run rate has exceeded $30 billion, up from around $9 billion at the end of 2025, now surpassing OpenAI's reported run rate of over $25 billion in February. Taken together, the picture that emerges is one of escalating investment, rising competitive pressure, and unresolved questions around returns. The spending cycle continues, but the strain it places on cash flows and the uncertainty around monetisation are becoming increasingly difficult to ignore. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

The 'Prove It' Quarter: How Meta, Microsoft, Amazon, And Alphabet Backed AI Capex With Real Run Rates - M

Daniel Newman expressed that the artificial intelligence (AI) deceleration narrative is officially dead. The Bull Thesis Validated For months, skeptical analysts and "bubble bears" have questioned whether the massive capital expenditures deployed by the world's largest tech companies would ever yield a proportional return on investment. The latest earnings reports delivered a resounding answer. "The bull thesis just got validated. In a single afternoon," Newman, who is CEO of the Futurum Group, wrote in a post on X. "The 'AI capex is speculative' narrative is dead. The 'where's the AI revenue' narrative is dead. This was the prove-it quarter. They proved it." The numbers bear this out. According to J.P. Morgan, the top four U.S. hyperscalers are on track to collectively drive a "significant increase of more than +$200 bn of additional data center capex in 2026." Alphabet CFO Anat Ashkenazi justified the raised guidance by pointing to "unprecedented internal and external demand for AI compute resources," a sentiment echoed across the board. As Wall Street digests the sheer scale of the revenue being generated, the overarching message from the recent earnings is clear: the AI boom is tethered to reality. As Newman aptly summarized, "Sorry bubble bears. This isn't 1999. Real customers. Real revenue. Real cycle." Show Me The Money: Billions In Realized Run Rates The defining takeaway from this earnings season is that AI is no longer just an infrastructure story; it is a massive software and services business. Big Tech has successfully transitioned from the "build" phase to intense monetization. The realized financial metrics are staggering: Capex Underwritten By Hard Commitments, Not Optimism While the staggering $725 billion in projected 2026 capital expenditures, according to Yahoo Finance, might look like a gamble from the outside, the tech giants proved these investments are heavily derisked by signed, long-term customer commitments. Amazon CEO Andy Jassy highlighted that the company's backlog explicitly requires this capacity. Amazon has already locked in over $225 billion in revenue commitments for its custom Trainium AI chips, alongside a total AWS backlog of $364 billion, which doesn't even include a recent $100 billion deal with Anthropic. "We have high confidence this will be monetized well, as we already have customer commitments for a substantial portion of it," Jassy explained. Similarly, Alphabet reported that its cloud backlog nearly doubled sequentially to $462 billion, heavily driven by enterprise AI offerings and newly introduced TPU hardware agreements. The Era Of Agentic Computing Looking ahead, management teams across all four companies signaled that the next growth phase will be driven by autonomous, "agentic" AI systems that execute multi-step tasks rather than just answering questions. Microsoft CEO Satya Nadella highlighted how deeply embedded these tools have become for enterprises, noting that AI is compressing workflows, improving revenue, and decreasing costs. "We are at the beginning of one of the most consequential platform shifts that will change the entire tech stack as agents proliferate and become the dominant workload," Nadella stated. Meta CEO Mark Zuckerberg emphasized that the focus is shifting toward AI that actively completes goals for consumers and businesses. "I think that AI is going to amplify people's ability to do what they want," Zuckerberg stated, adding that Meta is building both personal and business agents to "work day and night to help you achieve them." Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Image via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

US Stock Market: OpenAI growth concerns spark broad selloff in AI-linked stocks

A broad selloff swept across artificial intelligence-linked stocks after a report indicated that OpenAI failed to meet key sales and user growth targets, raising fresh concerns about whether massive investments in the technology will generate meaningful returns in the near term, according to Bloomberg. A broad selloff swept across artificial intelligence-linked stocks after a report indicated that OpenAI failed to meet key sales and user growth targets, raising fresh concerns about whether massive investments in the technology will generate meaningful returns in the near term, according to Bloomberg. The decline affected companies closely tied to OpenAI through infrastructure, cloud, and semiconductor partnerships. Oracle and CoreWeave, both of which maintain cloud-computing agreements with the firm, saw their shares fall notably, while chipmakers Advanced Micro Devices and Nvidia also posted losses. These companies have been among the primary beneficiaries of the surge in AI-driven demand over the past few years. The development has reignited a broader debate in financial markets about the sustainability of the AI-driven rally. Major technology firms including Microsoft, Meta, Amazon, and Alphabet have committed hundreds of billions of dollars towards artificial intelligence initiatives, fueling gains in related sectors such as semiconductors, energy, and data-center infrastructure. However, Bloomberg noted that these heavy investments have also created underlying anxiety that valuations could come under pressure if expected profits fail to materialize or if spending slows. Recent market movements highlight this tension. While the Nasdaq 100 Index had climbed to record highs following a strong rebound, it experienced a pullback alongside a sharp decline in semiconductor stocks, which had previously surged significantly. The reaction underscores how sensitive investor sentiment remains to any indication of weakness in the AI growth narrative. Concerns were further amplified by reports that OpenAI's leadership has internally discussed the possibility of financial strain if revenue growth does not keep pace with escalating computing costs. Despite this, the company maintains that demand for its enterprise products and emerging business lines remains strong, Bloomberg reported. The timing of the news is particularly significant as major technology companies prepare to release earnings, which are expected to provide further insight into AI adoption, monetization, and capital expenditure plans. Investors are closely watching these updates for signals about whether the current pace of investment is justified. Bloomberg Intelligence analysis suggested that any slowdown in OpenAI's growth could ripple across the broader AI ecosystem. Companies providing computing infrastructure, including Oracle, Microsoft, Amazon Web Services, and CoreWeave, may face varying degrees of impact if demand expectations are revised downward. At the same time, competition within the AI space has intensified. Rivals such as Anthropic have made notable progress, particularly in enterprise and coding applications, while large technology firms continue to advance their own models. This competitive landscape has begun to shift market perceptions, reducing OpenAI's early advantage and contributing to periodic volatility in stocks associated with its ecosystem. Despite the near-term uncertainty, long-term demand for AI infrastructure remains robust. The need for greater processing power extends beyond a handful of companies and is increasingly visible across industries, suggesting that investment in the sector is likely to continue even as markets reassess risks and expectations.

OpenAI Data Center Plans in Question After Revenue Miss | PYMNTS.com

That's according to a report late Monday (April 27) from the Wall Street Journal (WSJ), which says these misses have sparked concern among some executives about whether the artificial intelligence (AI) startup will be able to fund its data center plans. Chief Financial Officer Sarah Friar has told other leaders that she is concerned OpenAI might not be able to pay for future computing contracts if revenue doesn't grow quickly enough, sources familiar with the matter told the WSJ. The report added that OpenAI missed an internal goal of reaching one billion weekly active users for ChatGPT by the end of 2025. The company has yet to announce that achievement, which has some investors uneasy, the WSJ said. OpenAI is also dealing with a loss of subscribers, the sources said. These people said members of the company's board have been scrutinizing OpenAI's data center deals in recent months, questioning CEO Sam Altman's move to accrue even more computing power even as business slows. According to the WSJ, this closer oversight is limiting Altman's ambitions ahead of a possible stock market listing this year. Friar and other executives have begun trying to control spending and establish more business discipline, putting them at odds with Altman, sources said. PYMNTS has contacted OpenAI for comment but has not yet gotten a reply. The company issued a joint statement from Altman and Friar to the WSJ, in which the executives said they were "totally aligned on buying as much compute as we can and working hard on it together every day." The idea that the two are divided or pulling back on landing more computing resources is "ridiculous," the statement added. The report is the latest in a series of news accounts of friction behind the scenes at OpenAI. Earlier this month, The Information reported that Altman and Friar were at odds over the timing of the company's initial public offering (IPO). The report also cited sources who said that Altman had excluded Friar from conversations with investors and from meetings concerning key financial decisions. Both executives denied the report, saying they were "fully aligned." The following week, the Financial Times reported that OpenAI's $852 billion valuation had caused concern among its investors, amid the company's new focus on enterprise customers. In recent months, OpenAI has made a series of moves to further a new strategy, one that involves maintaining ChatGPT's place as the top consumer AI product, while also competing with Anthropic for corporate customers. Some investors say these changes could leave OpenAI vulnerable to Anthropic and Google as it prepares for its IPO, the report said.

Meta, Amazon, Google Face AI Reality Check: Can New Revenue Justify Billions In Spending? - Apple (NASDAQ

Big Tech earnings are set to test whether massive AI-driven investments are translating into real growth, with analysts focusing on revenue signals, spending discipline, and long-term monetization. Brad Erickson (RBC Capital Markets Analyst): Growth Strong, Focus Shifts To AI Execution He noted that markets will evaluate how management teams position new AI products and scale monetization. Erickson added that capital spending remains a key swing factor, with sentiment alternating between support and concern over excess investment. He said strong results could justify higher CapEx, especially as 2027 expectations appear understated. He also emphasized that long-term winners will be defined by cost efficiency and distribution strength rather than model differentiation. Paul Meeks (Freedom Capital Markets): Monetization Becomes The Next Test Paul Meeks, Head of Technology Research at Freedom Capital Markets, told CNBC on Tuesday that earnings themselves are less critical than the broader AI investment cycle. He described the current phase as one of aggressive infrastructure buildout but warned that investors will soon demand clearer returns, particularly as the market looks toward 2027. Meeks noted that early AI gains have largely come from cost efficiencies such as automation, but said companies must now demonstrate revenue generation. Brian Nowak (Morgan Stanley): Revenue Growth Is The Key Proof Point Brian Nowak, Morgan Stanley senior internet analyst, told CNBC on Tuesday that the central question this earnings season is whether AI investment is driving measurable revenue growth. He identified top-line acceleration in Google Search, Amazon Web Services, Google Cloud, and Meta's advertising business as the clearest indicator of returns. Nowak said companies remain on track with near-term data center expansion, with no major delays, though rising input costs such as DRAM could weigh on spending. He added that hyperscalers are likely absorbing these higher costs to scale capacity. He also highlighted Amazon's retail business as an underappreciated beneficiary of AI, citing improvements in algorithms, advertising, and warehouse automation, and said its consumer data advantage could support long-term growth in agentic commerce. John Belton (Gabelli Funds): Strong Trends, But Expectations High John Belton, portfolio manager at Gabelli Funds, told CNBC on Tuesday that Big Tech enters earnings season with solid fundamentals but elevated expectations, making near-term stock reactions uncertain. He pointed to continued strength in cloud and digital advertising, while noting that some of that upside may already be priced in. Belton said accelerating revenue from AI players like Anthropic and OpenAI suggests that monetization is improving, shifting the debate around infrastructure spending. He added that supply constraints, including rising memory costs, could pressure margins for some companies but help moderate industry expansion and prevent overbuilding. Belton expects CapEx plans to be largely reaffirmed, with investors focusing on allocation efficiency, and highlighted cloud growth as a key theme while cautioning that Amazon could face near-term margin pressure despite strong long-term prospects. Price Action: Microsoft shares were down 1.45% at $423.04, Meta Platforms shares were down 0.10% at $670.67, Alphabet shares were down 0.24% at $348.95, and Amazon.com shares were up 0.94% at $262.13 at the time of publication on Wednesday, according to Benzinga Pro data. Photo via Imagn Images Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

US stocks today: Oracle, CoreWeave lead AI selloff on OpenAI growth concerns

Shares of artificial intelligence-related firms dropped on Tuesday after the Wall Street Journal reported that OpenAI had missed its goals for new users and revenue in recent months, raising concerns over the ChatGPT creator's growth prospects. OpenAI CFO Sarah Friar expressed concerns to other leaders over the company's ability to pay for future computing contracts if its revenue did ⁠not grow ⁠fast enough, the report said, citing people familiar with the matter. Oracle's shares dropped 3.4% to $167.3 in morning trading. The AI cloud firm is reported to have signed one of the biggest cloud deals with OpenAI, amounting to $300 billion in computing power over a period of five years. Oracle's shares and bonds have dropped sharply from their recent highs as investors fretted over how the company would fund its data-center aspirations. Its five-year credit default swaps hit a two-week high on Tuesday, according to Markit data. Shares of cloud infrastructure company CoreWeave, which signed a $11.9 billion contract with OpenAI last month, lost 2.8%. Shares of chipmaker Arm Holdings, ⁠which counts OpenAI as one of its customers, shed 6.3%. "We see this from time to time when you have any type of an AI heritage company, when they sell off, then it causes a ripple effect across ⁠the board, regardless of whether it's warranted or not," said Todd Schoenberger, chief investment officer at CrossCheck Management. The scrutiny surrounding OpenAI comes as the AI startup lays the groundwork for an initial public offering that could value it up to $1 trillion, amid other blockbuster IPOs expected this year such as Elon Musk's SpaceX. Japan's SoftBank Group, a major investor in OpenAI, which has gone all in on the ChatGPT maker by offloading its stake in Nvidia and T-Mobile, closed down almost 10% in Tokyo trading. SoftBank had pledged a $22.5 billion funding commitment to OpenAI by end of 2025 through cash-raising schemes, which included potentially tapping its undrawn margin loans borrowed against its ownership in Arm, sources told Reuters in December. OpenAI's reported growth concerns do not mean "that the industry is slowing down, it just means that perhaps there's just more competition," said Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth. Microsoft and OpenAI ⁠on Monday renegotiated a pact that let Microsoft exclusively sell OpenAI's AI models, clearing the way for the startup to forge new deals with Microsoft's rivals. The dour sentiment extended to other semiconductor names, with the Philadelphia SE Semiconductor Index down 3.2% after hitting a record high last week. Advanced Micro Devices, Broadcom, Nvidia were down between 2.1% and 3.8%. All three have partnered with OpenAI for deals that involved providing equipment or investment. Megacap technology and growth names including Amazon.com , Alphabet and Microsoft were also slightly lower, with a slate of earnings from the tech giants due throughout this week. Optimism surrounding AI and expectations of robust earnings has helped Wall Street indexes touch all-time highs this month, despite some concerns over the U.S.-Iran war.

Sam Altman's Problems Mount: Why Elon Musk And Google Relish OpenAI Latest Developments - Microsoft (NASD

OpenAI was hoping its new GPT-5.5 model, released last week to strong benchmark scores, would shift the narrative. The problems are mounting up faster than the company can answer them. The ChatGPT maker missed its internal target of one billion weekly active users by year-end. CFO Sarah Friar has reportedly told colleagues she is worried OpenAI may not be able to pay for future computing contracts if revenue does not accelerate. The company is on the hook for roughly $600 billion in compute commitments and expects to burn through its recent $122 billion funding round, the largest in Silicon Valley history, within three years. Friar has also pushed back on CEO Sam Altman's preferred year-end IPO timeline, saying OpenAI is not yet ready for the financial reporting demands of a public company. Anthropic Stays Ahead On Polymarket Despite GPT-5.5 getting good reviews, Polymarket still gives OpenAI only a 9% chance it has the best AI model by the end of June. Anthropic is at 50%, ahead of Google at 36% on almost $5 million in volume. A separate Polymarket contract gives OpenAI just a 32% chance of completing an IPO by year-end, down from a peak of over 50% in February. The Musk Trial Begins Jury selection began yesterday in Oakland federal court in Elon Musk's lawsuit. Musk seeks damages exceeding $180 billion, the removal of Altman and President Greg Brockman, and the unwinding of OpenAI's for-profit restructuring. Any one of those outcomes would likely complicate the IPO path. Anticipated testimony includes Altman, Ilya Sutskever and Microsoft (NASDAQ:MSFT) CEO Satya Nadella. The case turns on a breach of charitable trust claim, the argument that Musk's roughly $40 million in original funding was intended for an open-source nonprofit. Judge Yvonne Gonzalez Rogers cited Brockman's own diary in allowing the case to proceed, including the line that the restructuring was "the only chance we have to get out from Elon." Legal experts think Musk is likely to lose, but Kalshi now disagrees. The contract on whether Musk wins was over 55% in January and bottomed near 33% in March. With proceedings now underway, it has rallied to 57%, on $408,761 in total volume. OpenAI launched the AI mania that has carried tech valuations for three years. The next few months will determine whether it remains the company defining the era or a footnote in someone else's. Image: Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

OpenAI misses revenue, new user goals in painful stumble ahead of blockbuster IPO: report

OpenAI fell short of internal revenue and new user goals ahead of a potential IPO later this year - raising concerns about whether it will be able to offset massive spending on AI, according to a report. Shares in tech firms Oracle and SoftBank fell 3.4% and 11.3%, respectively, Tuesday as the report reheated fears of an AI spending bubble similar to the dot-com crisis of the early 2000s. The disappointing results have reportedly sowed doubt among top leadership, as Chief Financial Officer Sarah Friar has raised concerns that the company might not be able to pay for future computing contracts if its growth doesn't speed up, the Wall Street Journal reported late Monday. OpenAI CEO Sam Altman, meanwhile, has signed the firm up for $600 billion in future spending commitments on the idea that extra data-center capacity will fuel ChatGPT's growth, sources told the WSJ. In the meantime, the firm has missed an internal goal of 1 billion weekly active ChatGPT users by the end of last year; missed a yearly revenue target for ChatGPT; missed multiple monthly revenue targets this year; and struggled with subscriber defection rates, the report said. "We are totally aligned on buying as much compute as we can and working hard on it together every day," Altman and Friar told the Journal in a joint statement, adding that any suggestion otherwise is "ridiculous." A spokesperson for OpenAI told The Post that "this is clickbait from our friends at the WSJ." "Sarah just raised $122B with a plan that outlines our compute strategy in detail, so think that should be all the evidence you need that there is full alignment in the strategy!" the spokesperson said, adding that "business is firing on all cylinders." The spokesperson nodded to a positive response to new ChatGPT features like ads and AI image generation and fast growth in its coding tool Codex - claiming its massive compute deals have driven these successes. OpenAI and News Corp, which owns The Post, have a content-licensing deal. OpenAI also recently launched ChatGPT-5.5, a powerful model that exceeded industry standards, and is cutting down on costs by scrapping projects like its AI video app Sora. But the company has signed up for so much computing power in the coming years that it expects to burn through the $122 billion in funding in just three years, according to the Journal. In a recent memo to investors, OpenAI boasted that it has clinched more computing power than Anthropic - and seemingly jabbed at the rival firm's CEO Dario Amodei, who recently said some companies had pulled "the risk dial too far" on data-center spending, the report said. "In hindsight, that caution looks less like discipline and more like understanding how fast demand would arrive," OpenAI said in the memo, per the report. But in recent months, after ChatGPT's growth slowed at the end of the last year, board directors have started questioning Altman's efforts to secure more computing power, sources told the Journal. Friar has also expressed reservations about OpenAI's plans to go public by the end of the year, arguing to execs and board directors that the company isn't ready to meet the reporting standards required of a public company, the report said. Altman - who is currently entangled in a legal battle with Elon Musk - has favored a more aggressive timeline for an IPO, according to the report.

Hyperscaler results pose major test for AI-driven US stock market

NEW YORK, April 29 (Reuters) - A pivotal moment for the artificial intelligence trade driving the U.S. stock market to all-time highs arrives on Wednesday with quarterly reports from four massive companies at the heart of the investment boom behind the new technology. Results are due after the market closes from Microsoft, Alphabet, Amazon and Meta Platforms -- four "hyperscalers" expected to spend over $600 billion this year on data centers and other AI-related infrastructure. Those heavyweight companies represent more than $10 trillion in market capitalization and 17% of the S&P 500's weighting, while their recent gains have helped lead the market's rebound over the past month as stocks have shaken off concerns over the U.S.-Israeli war with Iran. "From a market perspective, they still are the straw that stirs the drinks on big index funds," said Chuck Carlson, chief executive officer at Horizon Investment Services. "And from an AI perspective, their spending is what is driving the profits for an awful lot of companies." The four companies are among the "Magnificent Seven" megacaps that have been central to the doubling of the S&P 500 since the latest bull market for the benchmark index began in October 2022. Shares of the hyperscalers have jumped since the S&P 500 hit its low for the year on March 30. But in recent months, the stocks have also come under pressure as investors question whether the companies' capital spending will reap sufficient returns to justify the huge outlays. Capital spending among the four companies plus Oracle is expected to rise from 50% of operating cash flow in 2024 to nearly 90% by 2027, according to analysts at Barclays. The ability for the companies to show the investments are paying off will be a focal point for Wall Street on Wednesday, as they scrutinize growth in areas such as cloud computing and advertising. "I don't know how much latitude investors will give these companies to prove they can convert their investments to cash," said Noah Weisberger, chief U.S. equity strategist at BCA Research. "I would hope it's more than a quarter or two, but I doubt it's more than a year. So somewhere in the next couple of quarters, we're going to have to see not just capex spending, but that turning into revenue growth as well." That the four companies are reporting results nearly simultaneously could make for a particularly vital and volatile moment for the AI trade. "We will get the overall picture from all of them right away so we know directionally how the industry is headed," said Kevin Shea, senior equity analyst at BNY Wealth. "But there could be greater volatility because we'll have up-to-date comparisons on everyone to see who might be winning at a broader level." From an individual stock perspective, options data is pricing in swings of 4% for Amazon to 7.1% for Meta following the companies' respective earnings reports. The options-projected moves for Amazon and Meta are still shy of their respective average moves over their past 12 quarterly reports of 6% and 8.4%. That means investors could still be caught off guard by earnings-related surprises. The hyperscaler spending has boosted the bottom lines of a wealth of companies involved in building out the data centers and other infrastructure needed to support AI applications. Those include chipmakers, whose shares have surged. The Philadelphia SE Semiconductor Index is up some 40% this year alone and has more than doubled over the past year. Chip stocks pulled back on Tuesday after the Wall Street Journal reported that ChatGPT creator OpenAI has missed its goals for new users and revenue in recent months. More broadly, a collection of 50 AI-themed stocks tracked by Bespoke Investment Group gained 27.2% from March 30 through Monday. "Spending has been ramping up for these companies," said Walter Todd, chief investment officer for Greenwood Capital. If they tempered their spending, that would likely mean "a very negative reaction, at least in the short term, in the whole basket of AI names." (Reporting by Lewis Krauskopf; additional reporting by Saqib Iqbal Ahmed; editing by Colin Barr and Deepa Babington)

Global AI Stocks Slide as OpenAI Miss Sparks Investor Doubts

By Joe Stonor, Fabiana Negrin Ochoa and Kimberley Kao Stocks tied to artificial intelligence fell across the globe after OpenAI missed its own targets for new users and revenue, as investor faith in the AI boom wobbled. Shares in Japanese tech investment group SoftBank, which has invested heavily in OpenAI, closed close to 10% lower, while other stocks in the company's orbit also slumped. Oracle--which has a data-center deal with OpenAI worth $300 billion--traded 7.3% lower. Chip makers Nvidia and AMD--which have both signed multibillion-dollar partnerships with the ChatGPT-owner--slid 2.6% and 5.8%, respectively, premarket. OpenAI's Chief Financial Officer Sarah Friar told others in the company that a slowdown in revenue growth could lead to the company being unable to fulfill future computing contracts, The Wall Street Journal reported, citing sources. The stumble spread across other companies in the AI supply chain. In Europe, lithography machine maker ASML--which supplies memory chip makers including SK Hynix and TSMC--fell 2.3%. Fellow Dutch companies ASM International and BE Semiconductor tumbled 3.4% and 6.7%, respectively. Chip designer Arm Holdings tumbled 8.5% premarket, while futures tied to the tech-heavy Nasdaq fell 1.2%. "OpenAI is the poster child for AI and its capabilities and ambitions," XTB research director Kathleen Brooks said. Uncertainty around the company's performance "may threaten the AI investment theme that has driven U.S. stock markets to record highs," she said. Concern around the AI investment narrative is justified given its foundation in two names--OpenAI and Anthropic--due to the circular deals forming around them, Swissquote's Ipek Ozkardeskaya said. "SoftBank, Oracle and leading chipmakers are closely tied to OpenAI's success story, so the domino effect is straightforward," the analyst said. Tech investors are on alert ahead of a clutch of earnings announcements for megacap stocks Wednesday. Alphabet, Microsoft, Amazon.com and Meta Platforms are all due to publish earnings after market close. Write to Joe Stonor at [email protected], Fabiana Negrin Ochoa at [email protected] and Kimberley Kao at [email protected]

OpenAI falls short of revenue and user targets as it races toward IPO, WSJ reports

April 27 (Reuters) - OpenAI has fallen short of its goals for new users and revenue in recent months, sparking concern among some company leaders over whether it can support its extensive data-center spending, the Wall Street Journal reported on Monday, citing people familiar with the matter. Here are a few details: o CFO Sarah Friar has expressed concerns to other company leaders that the ChatGPT creator might not be able to pay for future computing contracts if revenue doesn't grow fast enough, according to the report. o OpenAI missed multiple monthly revenue targets earlier this year after losing ground to Anthropic in coding and enterprise markets, the report said. o "This is ridiculous. We are totally aligned on buying as much compute as we can and working hard on it together every day," CEO and co-founder Sam Altman and Friar said in an emailed statement to Reuters. o ChatGPT's growth slowed toward the end of last year, the WSJ report said, adding that OpenAI fell short of an internal target to reach 1 billion weekly active users for the artificial intelligence chatbot by year-end. o The company has also grappled with subscriber defections, the report added. (Reporting by Disha Mishra in Bengaluru, additional reporting by Chandni Shah in Bengaluru; Editing by Rashmi Aich)

OpenAI loosing money? Report suggest ChatGPT maker going through massive financial pressure

The company may slow expansion and focus on profitable areas while planning for a future IPO. OpenAI is reportedly facing a new internal concern after missing important growth targets, which include revenue with other targets. The shortcoming has raised fresh questions about how long the company can keep spending on computing power. The most loved and widely used product from OpenAI is ChatGPT, but the product is now seeing a slower user growth. Not only that but the revenue generated by ChatGPT is also lower than what OpenAI expected from it. The issues have not started causing tension among the top leadership of OpenAI, especially about the financial stability of the company. Sarah Friar, the CFO of OpenAI, has warned that if growth does not improve, then the company may struggle to meet future commitments linked to its large data centre investments. The board members are also taking a closer look at the situation and are rethinking the company's fast expansion plans. Also read: WhatsApp may soon let you back up chats without Google Drive, here is how A major concern is OpenAI's huge spending on computing systems, as over the past year alone the company has agreed to deals worth hundreds of billions of dollars for future data centres. However, this decision was based on the idea that demand for AI would keep rising quickly. At that time, ChatGPT was also growing very fast at that time and seemed unstoppable. Now, growth has slowed. OpenAI did not reach its internal goal of one billion weekly ChatGPT users. It also missed revenue targets. This is partly because of stronger competition from companies like Google with its Gemini AI and Anthropic. Keeping subscribers has also become harder, which adds more pressure on its finances. Friar has said internally that without better revenue growth, it may be difficult to pay for long-term computing contracts. Some board members are now questioning whether it is wise to keep securing large amounts of computing capacity right now. Also read: Oppo Find X9s vs Vivo X300 FE India: Launch date, specs, price and other leaks. Even with these concerns, OpenAI leaders say they are still committed to expanding their computing resources. They think getting resources early can help them stay ahead as demand for AI increases. The company has raised a lot of money, which helps for now. But since it has made very large commitments, that money could be used up in a few years if the business doesn't grow faster. OpenAI is now reportedly trying to balance its big ambitions with more careful planning. Furthermore, reports also claim that the company is stopping some of its projects and focusing more on areas that are growing quickly, like coding tools. OpenAI is also planning to go public soon, which further makes managing the issue more important.