OpenAI’s Revenue Hits $40B, Reddit to Join the S&P 500

**Zaid Admani** (0:00)
Public.com presents The Rundown. Your daily market update in 10 minutes. My name is Zaid Admani, and today is Friday, August 14th. In today's episode, we'll break down the good and bad news coming out of OpenAI. We'll also tell you why Nintendo is getting a boost from Pokémon. Then stick around to the end of the show to find out how much money the Knicks made from their championship run this summer. We got a great show for you today.
Let's go.
Well guys, the stock market is officially back at record highs. The S&P 500 jumped 0.7% yesterday, hitting a record high. This was the S&P's 27th record close of the year. The NASDAQ also had a strong day rising 0.8%. Now the reason for this rally is that inflation is cooling. We covered the CPI and PPI reports this week, both coming in below expectations. And those two reports are now changing the conversation on what the Federal Reserve might do with interest rates. No, not too long ago, there was real chatter that the Fed could start hiking rates at the September meeting because inflation was heating back up from higher energy prices due to the Iran War. You know, Fed Chair Kevin Warsh was talking tough on inflation in both the Fed meetings so far under his tenure. But now the market seems to think the Fed might hold off on hiking rates until later in the year. And that could also be the reason why AI stocks are surging right now. The SOX Semiconductor Index has gone up almost 20% since its lows from July. And you know, NVIDIA has gone up almost 20% as well, not to mention names like CoreWeave and Nebius have gone up more than 70% from their lows in July. And speaking of Nebius and the AI trade, I recorded an awesome conversation with Gil Luria. He's a long time Wall Street analyst. We talked about the AI trade, including his thoughts on Neo Cloud companies like CoreWeave and also NVIDIA, Palantir and Micron. This might have been one of my favorite conversations that I've recorded so far this year, so definitely check that out. The episode will be posted on Sunday, so keep an eye out for that. And maybe consider hitting the notification bell so you're notified as soon as the episode goes up.
Let's run through some headlines. Starting with OpenAI. There's been a ton of OpenAI news over the last few days, some good, some not so good. So let's start with the good news first. Bloomberg is reporting that OpenAI's revenue run rate has crossed $40 billion. So what that means is that if OpenAI keeps generating revenue at their current pace for the full year, it would bring in more than $40 billion. And OpenAI's run rate has basically doubled since the end of last year, when they were running at around $20 billion. And here's a part that stood out to me, according to the same Bloomberg report, OpenAI's revenue run rate jumped more than 20% just in the month of July. A lot of that growth is coming from their coding and AI agents along with their enterprise customers and even their new advertising business. Speaking of AI agents, I've been messing around with their Codex app, and I gotta say, it is pretty powerful. You can do a lot of cool stuff with it, and I'm just scratching the surface here. OpenAI also recently released their 5.6 model, which is pretty solid, and rumor has it that they're on the verge of releasing their next frontier model pretty soon. So that's all the good news from OpenAI, but there is some bad news though. The big thing is that OpenAI is going through a pretty significant leadership shakeup right now. Longtime executive at the company, Brad Lightcap, announced this week that he's leaving after eight years at the company, and then yesterday, Chief Revenue Officer, Denise Dresser, announced that she's leaving after being at the role for less than a year. And this leadership shakeup is coming at a time when OpenAI is planning to IPO soon. Remember, OpenAI confidentially filed for an IPO back in June, and according to the last funding round, the company was valued at over $850 billion. So this upcoming IPO is going to be massive, and the fact that these executives are leaving right now is pretty weird, but I'm not sure how much to read into this. Is it a sign that OpenAI's underlying business model isn't fully ironed out yet? What's happening recently is that AI is getting cheaper thanks to the rise of Chinese open weight models from companies like DeepSeek and Moonshot AI. A lot of companies these days are starting to use these Chinese AI models for some workflow to cut down on their AI bill. I think that's the biggest question right now, surrounding OpenAI ahead of their IPO. Like are they actually able to generate a profit and justify a trillion dollar valuation if the price of AI keeps dropping? I mean, sure, OpenAI is growing incredibly fast, but they're also spending an insane amount of money on chips and data centers. So if competition keeps forcing them to slash prices on their models, could they theoretically have a huge revenue growth without necessarily making meaningful profit? We'll have to see how this all plays out. I can't wait to read through their S1 when it drops. So hopefully that drops pretty soon. The rumor though is that OpenAI will probably wait until next year before they actually IPO.