OpenAI's latest revenue figures, which came in below earlier estimates, triggered a broad sell-off in AI-linked stocks on Thursday, as investors reassessed whether the sector's massive infrastructure spending can be justified by actual revenue generation.
The Financial Times reported that OpenAI's annualized revenue reached approximately $50 billion at the end of September, falling short of the $70 billion figure that had been widely circulated. The discrepancy stems from how revenue from cloud-computing partners is counted. Some earlier estimates included gross revenue from these partners to facilitate comparisons with rival Anthropic, while OpenAI's reported figure excluded the partners' share of certain sales.
This accounting difference does not necessarily indicate a sudden deterioration in OpenAI's business, but it has raised questions about how investors should compare the financial performance of AI companies and assess their underlying growth. The market reaction was immediate: the Nasdaq Composite fell 1.25% on Thursday, with Nvidia, Advanced Micro Devices, and Oracle dropping 2.9%, 3.9%, and 5.5%, respectively.
The sell-off demonstrated how concerns about a major AI customer can spread to companies supplying the hardware, networking, and computing capacity required to operate AI services. Some of those losses were partly recovered on Friday, with the Nasdaq Composite gaining 0.51%, and Oracle shares rising 5% on October 9. However, Nvidia was still trading down 0.31%.
Spending, Cash Flow, and Valuations Under Scrutiny
Beyond the revenue discrepancy, investors are assessing whether the rapid expansion of AI infrastructure can generate sufficient returns to justify its cost. According to Barclays, Microsoft, Alphabet, Amazon, and Meta spent a combined $165 billion on capital equipment in the second quarter of 2026, up from $88 billion a year earlier. Their combined free cash flow after those purchases was approximately $6.7 billion.
Bain and Company recently said the AI industry needs to generate $6 trillion in annual revenue by 2031 to justify the infrastructure buildout. These figures illustrate the scale of investment being directed towards data centres and related infrastructure, alongside the relatively small amount of cash remaining after capital expenditure. Higher Treasury yields add another consideration by increasing borrowing costs.
Investors are also questioning whether AI companies can sustain their spending plans without placing greater pressure on their balance sheets or relying on continued access to equity and debt markets. Lee Yang, an analyst at Alchemy Markets, identified AI customer revenue, cash remaining after spending, and continued growth in chip orders as important indicators to monitor. Weakness across those measures would provide a stronger warning about the sector's outlook than a single revenue discrepancy, particularly when the reported figures use different accounting approaches.
Firmus IPO Setback Adds to AI Funding Concerns
Concerns about the AI investment cycle also received attention after Nvidia-backed cloud-computing company Firmus Grid scrapped plans for a $5 billion initial public offering in Australia. Investors weren't ready to back the company at the proposed $30 billion valuation. Firmus operates data centres and rents computing capacity, including Nvidia chips, to customers such as OpenAI and Meta.
The proposed valuation was nearly three times the $10.5 billion at which the company had reportedly been valued two months earlier. Firmus has two operational data centres and five more in development. Independent analyst Richard Windsor said Firmus could still raise money privately, but argued that its proposed valuation was too high given the company's early stage and associated risks.
The abandoned listing does not, by itself, establish that demand for AI infrastructure is weakening. However, it adds to scrutiny of the valuations being assigned to companies seeking to benefit from the AI boom. The stakes extend to Nvidia, whose business depends in part on sustained demand from AI developers and infrastructure providers.
The prospect of major public listings by OpenAI and Anthropic has also become part of the market's focus as investors look for evidence that leading AI businesses can support their valuations. OpenAI's revenue report therefore exposed a broader sensitivity within the AI trade: investors are not only watching spending on chips and data centres, but also the revenue, cash flow, and financing conditions needed to sustain that investment.
The revenue discrepancy has an explanation, but questions over profitability, capital requirements, and valuations remain central to the sector's outlook.
This article is for informational purposes only and does not constitute financial advice.
