OpenAI Targets $70 Billion in Annualized Revenue by Year-End

OpenAI is expecting to reach or exceed $70,000,000,000 in annualized revenue by the end of the year. Yesterday, tech shares led losses after reports that its revenue would be lower than some previous estimates around $50,000,000,000. Let's bring in Bloomberg tech host Ed Ludlow. Ed, first of all, what was the discrepancy? What changed over the past twelve hours? Well, the the discrepancy is also in in understanding what annualized revenue actually is. Right? It's not that by the end of twenty twenty six this year, OpenAI will have booked $77.00 dollars of revenue. It's that in very simple terms by the end of this year, OpenAI expects to be making money at a pace that would produce $70,000,000,000 over the next twelve months. The specific discrepancy in the figure, 70,000,000,000, by year end versus exiting September with, annualized revenue at a at a run rate basis of $50,000,000,000 is like accounting. You know, what investors have been trying to do in recent months is make it apples to apples with Anthropic. And the the the difference is quite simple. It is gross revenues where you do or don't count some revenues through cloud partners versus net revenues. But the more interesting thing I think guys, right, is, like, why did markets kinda freak out yesterday about a private company and its ARR? I found that, like, amazing. Yeah. I think everyone is really hanging on to the AI trade as the driver. But switching gears a little here to Apple, also seeing them under a little pressure today. Component sort of shipments were down. Is this Apple specific with the phone cycle? I know I'm due for a new phone, or is this really a greater kind of warning for just electronic prices going up and then the pushback from the consumer? Okay. So the origin of this is a Nikkei report that Apple told some component suppliers they were cutting their order for those components by about 15%, Nikke citing anonymous sources. But Nikke also kinda went a step further to say that this generation of iPhone 18 Pro in terms of contemporaneous demand is down in the region of 15 to 20% relative to the the prior generation in the same period. And, you know, Apple hasn't commented on any of this, but the backdrop is really simple. Higher handset prices specifically attributable to higher memory costs. You know, let's make it really simple story. IPhones cost more. Why do iPhones cost more? Because the memory components in them cost more, and that seems to be putting off the consumer based on Nikkei's report, which Apple didn't engage with. Ed, thank you so much. Looking forward to Bloomberg Tech in about two hours time. That's Bloomberg's Ed Ludlow.