OpenAI revenue gap report fuels industry growth concerns

Fed officials signal further rate hikes may be needed

The New York Stock Exchange. [Reuters]
The New York Stock Exchange. [Reuters]

US stocks closed mixed overnight as concerns over AI companies' growth prospects collided with rising geopolitical tensions in the Middle East. A sustained selloff in semiconductor shares dragged NASDAQ down 1.25%.

On Thursday (local time), the NASDAQ Composite finished down 1.25% at 27,193.34. The S&P 500 fell 0.47% to 7,765.36, while the Dow Jones Industrial Average edged up 0.10% to close at 51,231.64.

Doubts over OpenAI's revenue figures weighed on technology stocks. The Financial Times reported Thursday that OpenAI's annualized revenue as of late September stood at around $50 billion, falling short of the $70 billion figure the company had previously presented to investors.

The FT said the gap arose as OpenAI investors tried to create figures directly comparable to Anthropic's annualized revenue. Unlike Anthropic, which includes sales through partners such as Amazon Web Services and Google Cloud in its revenue calculations, OpenAI does not count such revenue.

The report deepened market anxiety about growth expectations for AI companies. Nvidia fell 2.94%, while Broadcom and Micron Technology dropped 4.35% and 4.79%, respectively. AMD and SK hynix's American depositary receipts also declined, falling 3.90% and 4.35%, respectively.

The prospect of a US military strike on Iran also dampened investor sentiment. After the online outlet Axios reported that the US Department of Defense had been ordered to prepare to resume military operations against Iran, West Texas Intermediate crude for November delivery surged more than 5% during trading.

Oil gains pared back after President Donald Trump posted on social media that "we are having productive talks with Iran" and indicated the US would not strike before the Nov. 3 midterm elections.

In the bond market, strong demand at a long-term Treasury auction pushed yields lower. The 10-year Treasury yield, which had climbed as high as 5.35% early in the session, closed at 5.23%, below the previous day's level. Following Thursday's 10-year note auction, a $22 billion 30-year bond auction that day also drew solid demand, helping limit the stock market's losses.

The possibility of further Federal Reserve rate hikes remained a concern for markets. Fed Governor Christopher Waller said additional increases would be needed to bring inflation down to the 2 percent target if economic data came in as expected, though he added that the timing of any hike could be determined flexibly.

Alberto Musalem, president of the Federal Reserve Bank of St. Louis, also said he believed further rate hikes would be necessary within the next six to nine months.


kyoung@heraldcorp.com