IREN Ltd (NASDAQ:IREN) shares are dropping Thursday as AI cloud services stocks slide. Here’s what you need to know.
- IREN stock is showing notable weakness. Why is IREN stock dropping?
IREN Falls as OpenAI Revenue Report Rattles AI Cloud Stocks
The Financial Times reported that OpenAI’s annualized revenue run rate is roughly $20 billion below what the company had previously indicated. That news has amplified the selling pressure on AI-related names Thursday afternoon.
OpenAI recently told investors that annualized revenue was nearing $50 billion at the end of September. The $70 billion figure that the FT and other outlets reported late last month was far higher.
The report indicates that a gap this big is likely to dim optimism about AI demand growth, even though the $50 billion figure still shows rapid expansion since the summer. The gap will nonetheless deepen worries about large private AI companies, whose prospects are central to the U.S. stock market and have helped drive strong economic growth.
Why OpenAI’s Annualized Revenue Figure Shifted
The revenue gap stems from a measurement dispute. A person familiar with the matter told the FT that OpenAI’s own investors tried to compare OpenAI’s revenue directly with Anthropic’s. The two companies tally annualized revenue differently. Anthropic counts sales through cloud partners such as Amazon’s AWS and Google Cloud, while OpenAI leaves them out.
Investors’ efforts to “gross up” OpenAI’s number prompted reports of about $40 billion in July. OpenAI later told backers that its annualized revenue had jumped more than 70% since July, so investors calculated $70 billion for September. The new investor presentation shows close to $30 billion for July.
IREN rents out GPU capacity to AI customers, so demand for its services follows how much AI companies spend. The report stated that annualized revenue underpins vast infrastructure spending and the growth of public equity markets. OpenAI’s figure, alongside Anthropic’s, is the key gauge of overall AI demand.
A weaker number could make investors doubt how quickly demand for compute capacity will grow. That doubt could weigh on turnkey suppliers like IREN.
IREN Shares Are Plunging
IREN Price Action: IREN shares were down 7.70% at $35.71 at the time of publication on Thursday, according to Benzinga Pro.
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