What Happens When AI Solves Your Life’s Work

Nathaniel Whittemore (0:00)

So far, the idea that AI would upend and undermine entire industries hasn't really come to fruition. Certainly, we're seeing how people do pretty much everything change. Coding is perhaps the most changed, and yet demand for coders seems to be going up. With a new set of mathematics results from OpenAI, however, some are asking, is this the first field level AI disruption actually happening in practice?

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Uh-oh. Financial figures for the AI industry are being called into question as OpenAI's revenue numbers are revealed to be significantly lower than previously reported. The Financial Times reports that OpenAI has told investors that they hit roughly $50 billion in annualized revenue at the end of September. That's a fairly big gap from the $68 billion that was widely reported last month. So is this just misreporting or something else going on? Well, sources said that the $68 billion whisper number came not from OpenAI itself but from an OpenAI investor. Apparently what was going on is that that investor was trying to get an apples to apples comparison with Anthropic. Anthropic numbers are always quoted as gross revenue before revenue sharing. In other words, when Anthropic tokens are sold through a third party like Amazon or Microsoft, Anthropic is including that in the total revenue, even though by the terms of their deal, some big chunk of that revenue is going straight to the pockets of those third parties. The logic I imagine is to try to provide an overall number of the total expressed demand in the form of Anthropic tokens sold. And that is a useful number to know. However, now that these companies are going public, that's not really a convention that's likely to fly in public markets.

Meanwhile, OpenAI has for their part always used net revenue after those revenue splits. To make matters worse, the FT noted that the OpenAI investor calculated gross revenue based on a short time frame. It's unclear whether they extrapolated annualized revenue from a month, a week, or even a day.

The news was not all bad here. OpenAI also told investors that they achieved 77% run rate growth in the third quarter and 107% growth in their enterprise business, but even that incredible growth was completely overshadowed by the $20 billion gap in revenue.

In many ways, Wall Street reacted as if OpenAI had missed on revenue during an earnings report. Semiconductor stocks were down significantly after the FT published their report, with NVIDIA down 3%, Oracle down 5.5% and the long tail of Neocloud stocks seeing even larger drops.

And yet, even if we recognize that OpenAI is not yet a public company, had not shared the misreported number, and did not in fact miss projections on an earnings report, the reaction still brings up some big questions around the Anthropic IPO.

Once Anthropic's audited financials are available, they are presumably going to be much lower than the numbers Anthropic has been sharing with private market investors by the nature of using non-standard accounting. Ultimately, the narrative battle is growing more intense as Anthropic heads towards IPO. Ahmed as Investing wrote, I don't know all the facts about this OpenAI revenue story, but what's becoming apparent once again is that this entire semi-trade is levered against OpenAI and Anthropic and its fragile AF. Any narrative on slowing growth in the street loses their mind.

Next up, some interesting results from the Information's Latest Subscriber Survey. In terms of audience, the Information has a very tech-forward tech industry type of reader base. They found that two-thirds of their subscribers work at an organization that develops AI applications. Perceived return on investment seems to be rising rapidly, with 35% saying their organization is returning multiples on their AI spend. Another 17% said the returns are positive but less than hoped. 30% said it was too early to tell and 8% said returns were neutral, leaving just 8% who said AI spend had been a net negative.

The split between AI services is shaken up again, with OpenAI back on top. During the last survey conducted during the summer, Claude had overtaken ChatGPT and Google Gemini was also gaining. In this addition, usage of Claude and Gemini both fell, as the information's readers signed back up with OpenAI.