OpenAI has told its backers that its annualized revenue was nearing $50 billion at the end of September, according to a Financial Times report citing documents shared with investors. That number is notably lower than the roughly $70 billion figure that had been circulating in investor circles, and the gap has raised questions about how the company's growth is being measured.
The two numbers aren't actually in conflict, the report says. They're simply counting different things. Some comparisons with rival Anthropic, an AI model company, have included sales made through cloud partners like Amazon Web Services and Google Cloud, where the cloud platform acts as a middleman to the end customer. OpenAI's figure, by contrast, excludes a chunk of that cloud-partner “pass-through” activity, so it comes in lower.
What is annualized revenue?
Annualized revenue is a common metric for fast-growing private companies. It takes the most recent month's revenue and multiplies it by 12 to estimate what a full year would look like if that pace continued. It's not a guarantee of future results, but it gives investors a sense of the company's current momentum.
For a company like OpenAI, which is still private and not required to publish detailed financials, these figures are often shared selectively with backers and potential investors. That's why the discrepancy between the $50 billion and $70 billion numbers matters: it shows how easily different accounting choices can change the story.
Why cloud-partner sales make a difference
When a customer buys AI access through a cloud provider like AWS or Google Cloud, the cloud provider often handles the billing and the customer relationship. In such cases, the cloud provider may be considered the “seller of record,” and the revenue can be recorded as “gross” (including the full amount the customer pays) or “net” (only the portion that stays with the AI company).
OpenAI's $50 billion figure appears to be a net number, stripping out the pass-through portion that goes to the cloud partner. The higher $70 billion figure, which has been floated in some comparisons, likely includes that gross revenue. This is a common distinction in the tech industry, but it can be confusing for outside observers.
For investors, the key takeaway is that the two numbers measure different things, not that OpenAI's growth is slowing. The company's underlying business is still expanding rapidly, but the way revenue is reported can vary depending on the source.
What it means for investors
For everyday investors, this news is a reminder that private company valuations and revenue figures are often based on metrics that aren't standardized. When you hear that a company like OpenAI is “worth” a certain amount or generating a certain level of revenue, it's worth asking what exactly is being counted.
OpenAI is not publicly traded, so most investors can't buy its stock directly. But the company's performance has ripple effects across the tech sector. Its success or struggles can influence sentiment toward AI-related stocks, from chipmakers to cloud providers to software companies. For example, recent earnings from companies like TCS suggest AI demand is turning into real revenue, which could be a positive sign for the broader AI trade.
Investors should also keep an eye on how AI companies report their financials as they mature. The distinction between gross and net revenue is not just an accounting quirk; it can affect how we compare companies within the same industry. If one company reports gross revenue and another reports net, the numbers aren't directly comparable.
This is especially relevant as more AI companies consider going public. Investors are increasingly demanding proven profits, and the way a company defines its revenue will be scrutinized in any IPO filing.
The bigger picture
OpenAI's revenue growth is one of the most closely watched numbers in tech. The company has become a household name thanks to ChatGPT, and its valuation has soared as investors bet on the transformative potential of generative AI. But with that attention comes greater scrutiny of its financials.
The fact that OpenAI is sharing these figures with backers suggests it's preparing for future fundraising or possibly an eventual IPO. For now, the company remains private, and its financials are only partially visible to the public.
For investors, the lesson is to be cautious when comparing revenue figures across companies, especially in fast-moving sectors like AI. Always ask whether the numbers are gross or net, and whether they include pass-through sales. A $20 billion difference can be explained by accounting choices rather than a change in business fundamentals.
As the AI industry continues to evolve, expect more such discrepancies to surface. The key is to focus on the underlying trends, not just the headline numbers.
