Jabin Bastian
What Happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ:NVDA) fell 2.9% in the afternoon session after the market learned new details suggesting OpenAI’s revenue growth may be lower than previously believed, while broader macroeconomic headwinds simultaneously pressured the tech sector.
As confirmed by CNBC, OpenAI told its investors that it hit roughly $50 billion in annualized revenue at the end of September, significantly lower than the $68 billion figure that was widely reported to the market late last month. A person familiar with the matter told CNBC that the higher $68 billion figure included gross revenue from OpenAI’s partners in order to help investors make a more direct comparison with chief rival Anthropic.
According to the Financial Times, which first reported the discrepancy, the $50 billion annualized revenue figure was included in a recent investor presentation as the AI firm gears up for a highly anticipated 2027 initial public offering. While the CNBC report noted that OpenAI’s enterprise business still achieved a 107% run rate growth during the third quarter, the overall revenue shortfall sparked concern across the semiconductor sector as investors questioned whether the massive capital expenditures driving Nvidia’s chip sales are sustainable at current valuations.
Furthermore, analysts at CNBC observed that this AI-specific weakness was heavily compounded by a sharp rise in the 10-year Treasury yield—which briefly surged to 5.36% today—and climbing crude oil prices.
After the initial drop, the shares shed some of the losses and rose to $230.76, down 2.8% from the previous close.
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What Is The Market Telling Us
Nvidia’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock gained 2.7% on the news that the company authorized an additional $150 billion for its share buyback program, taking the total authorization to $235 billion. According to CNBC, the chipmaker said the increase is the largest share-repurchase authorization boost in history and that it expects to complete the remaining buyback program through fiscal 2028. CEO Jensen Huang said in a statement that Nvidia’s growth is being driven by a “once-in-a-generation platform shift to AI and accelerated computing,” and that strong cash generation lets the company invest in that buildout while returning capital to shareholders.
