OpenAI ARR Snafu Highlights Flawed Metric

Here’s a news flash: The quasi-revenue numbers for OpenAI that got wide circulation last week were off— way off. Instead of $70 billion in annualized revenue, as we and others reported, OpenAI is generating closer to $50 billion in annualized revenue (sometimes shortened to ARR). A Financial Times report of the lower number on Thursday proved such a shock to investors that stocks of chip firms and neoclouds, including Nvidia, CoreWeave, Nebius and others, fell on the news, CNBC reported. The cause of this debacle is complicated. But it’s a reminder that we all rely too much on annualized revenue as a way to track a company’s performance.