AI investors stay bullish after OpenAI revenue miss
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After reports of OpenAI missing its own revenue targets, investors soured on tech stocks on Tuesday, putting the entire market under pressure as a result. But investors in the private AI labs are unfazed.
Why it matters: The AI bulls aren't going anywhere.
What they're saying: "We're not slowing down just because of a negative article in the Wall Street Journal," Ben Reitzes, managing director at Melius Research, said on Bloomberg Television.
- "Investors who are selling on the thesis that this whole AI thing is about to implode based on these new reports are going to be disappointed," Mark Malek, chief investment officer at Siebert Financial, tells Axios.
Between the lines: An investor in both OpenAI and Anthropic tells Axios that we're still in the early innings of the AI race, and there won't be one winner.
- That same investor sees AI's math problem (the high cost of compute pressuring revenue) resolving when AI labs raise prices.
- While that could lead to a near-term dip in demand, the net revenue result will be positive for AI companies.
Yes, but: Venture investors seem increasingly skeptical about OpenAI, amid multiple reports of outsize demand for Anthropic shares.
- OpenAI "should be scrambling," Malek notes, because competitors like Anthropic and Google's Gemini are taking market share.
- Sam Altman's AI lab made everything its total addressable market, while Anthropic focused on enterprise, and Google focused on consumers.
Flashback: OpenAI had its "Code Red" moment earlier this year, when the company decided to focus on growing revenue in its enterprise business.
- It has taken steps to do that, partnering with consultants to grow Codex subscriptions, for example.
- Since then, Codex has hit 4 million users, and the company tells Axios it's "firing on all cylinders."
What we're watching: Earnings for some of the biggest public tech companies start on Wednesday, and that should give investors more clarity on demand, capital expenditure and revenue guidance.
- How investors respond to what's widely expected to be continued enthusiasm and spending, around AI could be key.
