OpenAI Misses Revenue and User Targets as IPO Pressure Builds

OpenAI has fallen short of several internal revenue goals and missed its target of reaching one billion weekly ChatGPT users by the end of last year.

The latest report from The Wall Street Journal has shown that Sam Altman’s company is once again facing serious questions about the strength of its business model, just as OpenAI prepares for one of the most important IPOs in tech history.

In recent months, the company has been at the center of the “AI bubble” discussion, as more details continue to emerge about underperforming features, such as the recently discontinued Sora video generation tool.

Today’s report also said that OpenAI’s CFO, Sarah Friar, has raised concerns about whether the company’s revenue growth would be strong enough to support all of its future computing commitments.

This is not the first time Friar has questioned the strength of the current business model, as she previously suggested that AI could become the next “too big to fail” sector, one that might need to be bailed out by taxpayers if necessary.

The ongoing issue stated in the report is not mainly focused on user growth numbers. Instead, it points to the increasing computing demand required to keep training and running advanced AI models, indicating that OpenAI might not grow fast enough to justify the scale of its spending.

The company has reportedly committed to hundreds of billions of dollars in data-center and computing deals, making revenue conversion one of the most important questions for investors.

OpenAI pushed back against the report, telling Bloomberg that its business is “firing on all cylinders” and pointing to demand from enterprise customers and its emerging advertising business.

The company also rejected the idea of a split between CEO Sam Altman and CFO Sarah Friar, saying both remain aligned on the need to secure more computing power.

Still, the report had an immediate effect on the market, once again proving that every piece of information can have ripple effects on companies connected to AI services like OpenAI.

Shares of companies including Oracle, CoreWeave, Nvidia, AMD, and other chip and data-center names fell after the report, as investors reassessed whether AI spending expectations have moved too far ahead of actual revenue.

Shortly after this, leaks started circulating about OpenAI potentially launching its app-free smartphone, which many feel is another confirmation that the company does not believe its current business model will be sustainable enough.

After all, if and when this newest bubble pops, OpenAI increasingly looks like a company that could be left behind, unless it makes drastic changes to how it operates and what it provides to its users.