Technology stocks pulled the S&P 500 and Nasdaq lower Thursday as a report on OpenAI’s revenue renewed questions about whether income from artificial intelligence can support the industry’s enormous spending on chips and data centers. Rising oil prices added pressure, while an afternoon retreat in Treasury yields helped other parts of the market recover.
The S&P 500 finished down about 0.5%, and the Nasdaq Composite fell about 1.3%. The Dow Jones Industrial Average edged up 0.1%, according to preliminary closing data. The split showed how losses in influential technology companies could outweigh gains elsewhere on Wall Street.
The immediate concern centered on a Financial Times report that OpenAI’s annualized revenue was approaching $50 billion at the end of September, below the roughly $70 billion figure previously reported by several outlets.
Annualized revenue projects a full year of sales from a recent operating pace. It is neither revenue already collected over an entire year nor a measure of profit.
There is also an important qualification to the comparison. CNN reported, citing a person familiar with the documents, that the earlier $70 billion figure did not come directly from OpenAI and may have reflected attempts to compare its revenue with Anthropic’s. Those comparisons involved different treatment of sales through cloud providers: gross revenue in one case and net revenue in the other.
That means the discrepancy should not automatically be described as a $20 billion collapse in OpenAI’s business. OpenAI declined to comment to CNN, and the financial documents underlying the reports were not publicly available for independent review.
Nevertheless, the market reaction exposed investors’ sensitivity to the financial assumptions supporting the AI expansion.
OpenAI is privately held, but companies supplying its computing infrastructure trade on public markets. Their prospects depend partly on customers continuing to buy advanced chips, rent computing capacity and commit to new facilities. A lower revenue estimate can raise questions about how those commitments will be financed, even without evidence that orders have been canceled.
Borrowing was already part of that debate. The Wall Street Journal reported Wednesday that Broadcom was arranging approximately $50 billion in financing connected to OpenAI, with Oracle also seeking financing. The report heightened concerns about the capital needed to sustain the buildout.
Bloomberg reported that a semiconductor-stock gauge fell about 3.5% during Thursday’s session. The selling came despite strong operating signals from major chip manufacturers, illustrating the distinction between demand today and investors’ confidence in future returns.
Outside technology, PepsiCo offered a different picture of business conditions.
The company reported quarterly revenue of $25.27 billion, up 5.6%, and adjusted, or “core,” earnings of $2.34 a share, up 2%. However, it reduced its full-year core earnings-growth outlook to 2.5%–3.5%, from the low end of its previous 5%–7% range. Its shares gained despite the reduced forecast.
For households and businesses, oil and borrowing costs remained significant pressures beyond the stock-market headlines.
U.S. benchmark West Texas Intermediate crude settled 3.6% higher at $91.49 a barrel. Higher crude prices can increase costs for transportation and fuel, although changes at the pump depend on refining, distribution and local market conditions.
Treasury yields reversed sharply during the session. The 10-year yield rose early before retreating to approximately 5.23% in afternoon trading. Lower yields can ease pressure on mortgage pricing, but they do not guarantee an immediate reduction in the rate a borrower receives.
The next test comes with corporate earnings reports. Investors will look for evidence that AI suppliers’ sales, customer payments and financing arrangements can support their expansion plans—and whether higher energy and financing costs are squeezing profits elsewhere in the economy.
JBizNews Desk | Wall Street
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