💰 OpenAI's new milestone

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Thursday’s top story: OpenAI is expected to make $3.4B in revenue this year, which doubles what it made last year.

🌤️ This Morning on AI Tool Report

1. 💰 OpenAI doubles revenue

2. 🍏 Apple’s odd partnership with OpenAI

3. 📉 Microsoft loses to Apple (again)

4. 🚨 Microsoft cuts ties with OpenAI?

Read Time: 5 minutes

STOCK MARKETS

REVENUE

💰 OpenAI doubles revenue

Our Report: During a company all-hands meeting on Wednesday, OpenAI CEO, Sam Altman, told employees that OpenAI was on track to make $3.4B this year, double what it made last year.

🔑 Key Points:

• He announced that most of this revenue ($3.2B) will come from ChatGPT subscriptions and $200M is projected to come from Microsoft, for giving Azure users access to its AI models.

• OpenAI’s revenue has grown rapidly since it launched ChatGPT—making $1.3B in 2023—thanks to its strategic initiatives, including enterprise partnerships and advancing its AI models. 

• OpenAI clearly plans to maintain this rapid growth trajectory, as it recently hired a new CFO (ex-Nextdoor CEO, Sarah Friar) who will manage OpenAI’s finances and support global growth.

🤔 Why you should care: This comes after Apple confirmed its partnership with OpenAI during its developer conference this week, which will see ChatGPT integrated into its devices and voice assistant, Siri, but this partnership might not contribute to OpenAI’s annualized revenue…keep reading to find out why.

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PARTNERSHIPS

🍏 Apple’s odd partnership with OpenAI

Our Report: Apple confirmed its partnership with OpenAI—which will bring ChatGPT to iOS 18—at the worldwide developer conference this week, and while both sides have remained silent about the details, leaked reports reveal that the partnership isn’t expected to generate revenue for either party, yet.

🔑 Key Points:

• Apple believes that the integration of ChatGPT onto its devices will give OpenAI exposure to masses of users, providing a mutually beneficial arrangement that equals monetary payment.

• Reportedly, Apple’s end goal is to secure revenue-sharing agreements with AI companies and take a cut of what these AI partners make from monetizing chatbot results on its systems.

• It thinks that people are using AI over search engines, which means it will make less from its lucrative agreement with Google, who pay billions to be the default search engine on Apple devices.

🤔 Why you should care: Apple is already in conversations with other Large Language Model (LLM) providers—like Google and Anthropic—to give users more options, but in the meantime, OpenAI could still benefit financially from the partnership, as users who want the added features that ChatGPT Plus provides, could pay $20 to upgrade their subscription (but Apple is likely to still take a cut).

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STOCK MARKET

📉 Microsoft loses to Apple (again)

Our Report: Apple has reclaimed the title of “the most valuable company in the world” from Microsoft, which stole the accolade from Apple in January, thanks to its focus on AI.

🔑 Key Points:

• As of mid-afternoon on Wednesday, Apple’s market capitalization was $3.38 trillion (at $218 per share) surging past Microsoft, whose market capitalization was $3.29 trillion.

• It follows Apple’s announcements at its worldwide developer conference this week, where investors' “questions about Apple lagging from an AI standpoint were answered.”

• And comes after share prices initially plummeted after its keynote speech on Monday, but rallied thanks to investors' belief that there will be significant “demand for a device upgrade cycle.”

🤔 Why you should care: Wall Street investors also believe that Apple has a huge advantage when introducing AI functionality because it owns 60% of the US mobile device market, and thinks the integration of AI “will significantly influence consumer behavior and market competition.”

PARTNERSHIPS

🚨 Microsoft cuts ties with OpenAI?

Our Report: While Microsoft remains one of OpenAI’s biggest partners and investors, reports suggest that it might be stepping back from its partnership to focus on its own, in-house AI technology.

🔑 Key Points:

• In March, Microsoft hired Mustafa Suleyman (former Head of AI at Google’s DeepMind and co-founder of OpenAI) to head up a new AI team to (reportedly) develop its own AI model.

• Insiders suggest that this new model will rival OpenAI’s and that Microsoft will eventually transition from using OpenAI’s technology to using the new, homegrown one.

• The reasons for this shift are unknown, but Microsoft's CEO, Satya Nadella, has vocalized plans to utilize AI to beat competitors, and in-house models could allow for faster innovation.

🤔 Why you should care: Although Microsoft might be weakening its reliance on OpenAI, it’s unlikely it will sever its ties completely, the most likely scenario will be that Microsoft will use a mixture of both AI models.

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