OpenAI’s Revenue Run Rate Tops $40 Billion Ahead of IPO

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1:32Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's get back to take a look at the tech space. A lot of news out here every single day, it seems like. Fortunately, we have a lot of smart people we can talk to that can explain all this stuff to us and put it in context. One of them is Matthew Bloxham. He's the Senior Media and Tech Analyst for Bloomberg Intelligence.

2:08He's based in London. Matthew, I want to start in the AI space. Why not? because that's where we always seem to start. OpenAI, one of the lead players there, reported recently by Bloomberg News, is on track to generate annualized revenue of more than$40 billion based on its current performance. That is roughly double its run rate from the end of 2025. These growth rates are just extraordinary here. What does it tell you about OpenAI in this competitive market? Yeah, it tells you that they're still arguably lagging their biggest rival in Anthropik, because I think we heard back in May that Anthropik was doing closer to 50 billion, I think it was about 47 billion.

2:51And we saw some reports yesterday in the Financial Times that by the end of this year, Anthropik's thinking it's going to get to maybe 100 to 120 billion dollars of annualised revenue. So I think, you know, there's still a gap for OpenAI to close, but I think the momentum is probably better than people have maybe worried, because, you know, I remember back earlier in the year, you know, it felt like maybe things weren't going quite according to plan with OpenAI and perhaps some of the internal targets have been missed. And, you know, they made a real effort to kind of develop their enterprise offerings.

3:24So what they offer into corporates has historically really been about the kind of consumer subscription model and looking into advertising. And so I think this tells you that the enterprise offerings are starting to gain some traction. You had some other products like Codex, which is their equivalent of Claude Code and ChatGPT Works, which is more of a kind of generalized kind of multi-application workflow tool. So it seems that they're kind of getting some better traction in the enterprise market. And I think that's what they need to demonstrate to kind of tell a good equity story to the markets when they do eventually come with their IPO.

4:06So if this was better than expected, I'm curious what this means for how people might reassess what Anthropics prospects look like. I know Anthropics said in May that its run rate revenue had crossed$47 billion. And we don't know if, you know, the apples, it's an apples to apples comparison between the two. But now that OpenAI looks to be perhaps doing better than what some people expected, how do you extrapolate that for what it means for Anthropics? I think it just kind of tells you what we already knew really that you know this is a pretty aggressive race between the two companies to kind of really gain a strong foothold in the enterprise market and it kind of gets really just addressed every single type of AI opportunity that there's today and could be kind of evolving and obviously you know yesterday we had that news Anthropic might be buying a small kind of startup for$6 billion to primarily help the kind of efficiency of how technology uses their models.

5:05And then also on top of that, you've got the China models, which are kind of broadly comparable in performance, but a lot cheaper. So there's like multiple dimensions to this competitive race. And there's still a lot for all of these companies to do to execute well and justify what's potentially going to be a very big multiple when they come to market. Matthew, 30 seconds left here. Is the expectation that enterprise customers will have more than one AI service or software or whatever you're calling it? Yeah, absolutely. And I would clearly see that today. Many companies are parallel running Gemini, ChatGPT, Claude.

5:50And I think already you're kind of seeing some kind of discernment about which models work best for different types of applications. So I think just like in every other bit of software, there's clearly going to be a handful of dominant players, but most corporations have a multitude of software providers. They figured out which ones work best for which particular use cases and workflow. And I think that's not going to be any different in AI. Stay with us. More from Bloomberg Intelligence coming up after this.

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7:24There's certainly technology news here. Workday buyout would signal low AI risk. Anurag Rana joins us here. Anurag, talk to us about Workday. What's going on there? So, Paul, if you remember, we came back in, I think, January to February timeframe when we did a big report saying that, you know, all software is not created equal. Everything was down 40%, 50%, you know, at that time, just within a period of one and a half months. And we had picked out SAP Workday, Shopify, and ServiceNow as four vendors that are, you know, best in class in their own category of what they do. And we said, you know, these kinds of workflows are critical for an enterprise, and it's not going to be easy for a large language model to disrupt them.

8:10Now, at the same time, you know, what I say doesn't matter. But at the end of the day, if somebody wants to go take them private, I think that really, you know, is the real message that if private equity wants to spend billions of dollars taking them private, then maybe there is value for a lot of these firms out there. And that's what we saw yesterday. They there's a there's some rumor out there that that these guys may be taken private. And, you know, we think if that happens, that really changes the narrative and the software landscape, which has been under pressure for the last two years or so.

8:40And to just follow up on that, Workday shares jumped after a Reuters report that private equity firm Silverlake is in talks to purchase the software provider. And just puts context around that Silver Lake, in my mind, is by far the number one technology focused private equity firm out there. Some of the smartest people. They've got a tremendous history of deal flow. Yeah, it certainly sends a signal perhaps that that cesspocalypse, whatever they were calling it, you know, might be over as a result. So Anurag, if this continues to be something where they're negotiating this and Silverlake, as Paul mentioned, a big name, sending a message, what other companies might also be being eyed for acquisitions?

9:24So we had mentioned some of the others, but they're too large. I mean, just frankly speaking, some of the ones we talked about, I said it's just too big for anybody to take private. But what it does is you just need to, to be honest, take care of one of them. the rest of the industry will come out because right now investors just don't want to be in the software space. The only space for them is to just go buy memory or AI infrastructure or chips and leave everything else aside. And, you know, it's not good for the software industry, mostly because it's a very people-centric industry. So if the valuation keeps on depressed, you know, all these employees will go out, leave, and then go to the model companies.

10:00And so, you know, this is just a good sign for everybody, frankly. Stay with us. More from Bloomberg Intelligence coming up after this.

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10:45You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. A recent poll found that contributing to the president's new White House ballroom was seen as the most damaging thing a company could do with a net negative of 37 points. Let's welcome and dig into that a little bit. We can do that with Gautam Mukunda, a lecturer at Yale School of Management and a Bloomberg opinion contributor on his column entitled Big Business Bought Influence, The Bill Is Due.

11:26Gautam, thanks so much for joining us here. President Trump has done a pretty admirable job from his perspective of courting corporate America and getting their support in many different forms. Put that into context for us, because that's not something you see too often. Yeah, I mean, too often is kind of, it's like a nice way of putting it, Paul, but we've really never seen anything like a president leaning on companies and individuals for donations in this way. You know, every politician fundraises or almost every politician. There's always some sense of scent of favoritism or, you know, that there's a there are reasons people are so suspicious of campaign finance.

12:01But the idea of the president saying, hey, I have this personal project that's sort of borderline legal and you guys are just going to write the check for it. And mysteriously, companies that write these checks somehow keep getting regulatory favors. I'm sure that's just a coincidence. Like it looks bad. It looks really, really bad. And the public, you know, even members of the public who are sympathetic to the Trump administration broadly, they really don't like corruption. And this looks this, you know, this kind of looks like that. To be fair, for the companies that have donated to the Wall Street, sorry, Wall Street, the White House ballroom, is that a personal project?

12:38I mean, at the end, you know, when President Trump leaves office, that ballroom will still be there and it will be the White House will be occupied by whoever the American public elects next. So I guess what I'd say is that is true, but it is also true that the president seems so personally obsessed by this ballroom that he keeps like discussing it in informal sort of meetings with other heads of state, there wasn't any demand for it. No previous president has asked for it. And whatever it is, you know, it is sort of when you see the drawings, the designs, it is elaborate in a way that, you know, is, let's say, unique to the Trumpian aesthetic.

13:10So I think it's fair to say that this is a personal project because there was no demand for it from anyone except President Trump. One could argue that it's understandable why these companies would do whatever they have to do to stay out of the crosshairs of the president, because the president can, in fact, impact your business, your industry. I mean, Tim Cook, he stepped down as CEO, but he's kept his role as chairman. And most people feel like it's simply to manage the relationship with A, China, but B, President Trump. No, Paul, I think that's exactly right. And I honestly have a lot of sympathy for sort of the leaders who are put in this situation.

13:46I think I actually I think I said on your show like a year ago that that Tim Cook did this. He gave Donald Trump this sort of gold statue or go thing as a way and got these deals. And all it cost him was his dignity. And I think that's right. Like if you are a corporate leader, the pressure on you to do this is immense. They're short. You know, the consequences of not doing it are very real. The reason I wrote this column is I want to point out that just because in the short term, this might feel like the right thing to do in the long term. this is going to blow up and it's going to blow up really dramatically in your face.

14:18Like whatever you think the likely outcome of the next set of elections is, eventually someone is going to come to power who does not view this sort of thing favorably, who's going to say, we're going to do some investigations. We're going to have subpoena power. We're going to call you up in front of Congress. And, you know, if there is one email that you sent, one text message that says, well, you know, this is a shakedown and really, I feel like I'm bribing and I don't have a choice, but I have to do it. That's going to come out and it's going to look awful and the the it's not just the democrats are going to be enraged that you were willing to support this sort of stuff the average american the polling data is very clear really really does not like it when there's people are seen to be buying to be buying influence and you are not going to have the allies that you normally think you do and then just to compound that problem the usual response of that sort of for you know for a bit for business for all is like look i'll just write checks to the other side i'll fund both sides and i'll buy my way out I just don't think that's going to work as well as it used to.

15:15It's pretty clear that the rise of small dollar donations and the sort of loathing of that kind of influence trading is becoming so powerful that a lot of I think a lot of Democrats and maybe even some Republicans are going to start saying, look, I don't need your checks. What I need is the credibility that comes from comes from coming after you. OK, so you say that even not saying anything, not doing anything is kind of a decision of sorts to kind of comply with what's happening. Do you see evidence of any company exhibiting the behavior that you would find respectable? So, I mean, as I said, I wrote this column of sorts to give people the idea what you have to do, right?

15:53Like, this is a tough situation. You are in a thing. When the president of the United States leans on you, right, that's an elephant leaning on you. You have to do something. My suggestion to companies is what they need to do and they need to do this proactively is come out and basically say, like, this is such a disaster. This is so awful, you know, that we're forced to do this that we need to come out and say, like, this tool needs to be taken out of our toolkit so no one can ever ask us to do this again. Like, and when you saw previous attempts in campaign finance reform, you know, championed by John McCain and people like him, the business community was usually pretty strongly against it because campaign finance was an enormously powerful weapon in their arsenal of sort of trying to get the government to do what they wanted it to do.

16:35And it might be time to say that that weapon is not worth the cost of having it because of what's happening right now. Do voters really care about this kind of stuff, Gotham? Isn't it just the economy? So the thing is, I don't think that these are unlinked, Paul. So if the economy is going great and everything is perfect and we're, you know, like then I think the temperature goes down. But one, the surface level numbers on the economy are pretty great right now, yet people, voters, they seem to be incredibly unhappy. And we always have this puzzle. Why is it that voters seem so unhappy when the economy seems like it's doing well?

17:10But I think that there is a linkage in most people's mind between things that seem like corruption and favoritism and self-dealing and why they themselves are not benefiting from this economy that all the numbers say is doing so well. And we've seen this, by the way, this is not just in the United States, right? This is the story that more than anything else probably explains why Orban lost in Hungary, that it wasn't just about sort of anti-democratic motions and things like that. There was this real sense of elites, the most powerful people in the political system and the wealthiest people in Hungary, who were sort of sucking up the wealthy economy into their own hands and using corrupt tactics to do it.

17:51That, you know, that doesn't didn't go along well, down well with the average Hungarian. And I'd be surprised if it goes well with the average American. I'm curious, Gotham, what kind of feedback you've gotten from folks in the business world to this column? So an interesting it's been interesting. I'll say is that nobody likes being leaned on by the president. Right. Even people who are pretty sympathetic to this administration will say, you know, the taking truth social and having it all having it like having having people pay $100 ,000 to get early access to the Trump tweets, you know, even if it's not illegal, they think it's gross, right?

18:31Like, like, like, it sticks in their craw. There's something deeply wrong about it. And I think there's like genuine fear that this is going to escalate that that what we've seen in the first, you know, two years of the Trump for a year and a half of the Trump administration is these things keep ramping up. You don't know where it's going to end. Stay with us. More from Bloomberg Intelligence coming up after this. Our hometown is not a test tube. 90 miles northeast of Nashville, a battle for the future of America plays out in one small town. Developers with right-wing ties have purchased hundreds of acres of land.

19:06We need cities on a shining hill. This is Our Town, a podcast about what happens when a small town becomes the site of a social experiment and fights back. I guess you didn't move in on a bunch of dumb hillbillies now, did you? Listen to Our Town on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

19:46spending money on experimental treatments they believe will help their pets live better and longer lives, including peptide injections, red light therapy, and nutritional supplements. That is the subject of our big take story today on the Bloomberg Terminal. Anna Edney joins us, national health care reporter for Bloomberg News. Anna, talk to us about, we know that pet owners spend a lot of money on their pets, but this is something else. Tell us what's going on. Yeah, we do know that there's a lot of spending going on for pet owners, but one of the things that we talk to people about is kind of outside that traditional food, vet care, things like that.

20:30These are people who are going above and beyond to try to make their pets live longer if possible. And they're looking into some of the things that a lot of humans are doing as well. You know, biohacking is pretty popular these days. And so it's peptides. There's a longevity drug called rapamycin that's experimental in this space. Also red light therapy that we heard about from owners. And they're just trying to cobble together all these different ways of keeping their pets with them as long as they can. Any evidence that any of this works or is I mean, how do we how do we see that, I guess? Yeah, I think that's a million dollar question.

21:18And like I said, a lot of this is experimental. So these are people kind of taking a chance, you know, something that that's normally caution against. But what is happening is there are some clinical trials. So there's a company called Loyal that is a startup, and they're trying to come up with a longevity drug that they can get conditional approval from the Food and Drug Administration on. They're testing that now. There is the Dog Aging Project. I talked to their chief veterinary officer, and she told me that they're studying this drug called rapamycin. It is something approved for use in humans, but for very specific use, it's to help transplant patients not reject that organ.

22:08In smaller doses, there's thoughts that it might work to improve lifespan. And so they're testing that on dogs. They're enrolling a clinical trial now to see what they might be able to find. That's based on some promising mouse data, but we just don't know yet if any of this actually works. Every time I see this figure, it just blows my mind. U.S. pet spending expected to hit a record$165 billion this year. That's extraordinary. But like this pet supplement market, is that a growing part of that overall big pet spending market? Yes, the pet supplement market is a big one. I talked to someone who does research in a lot of this, and she's seeing even the pet supplement market not just growing, but recognizing this trend where people are looking not just for kind of to treat aging issues, but they want to go a step further.

23:13they want to go into longevity. And so she's seeing some of the labels change over time more and more to say, instead of, you know, this is for a senior dog, it's now talking about longevity for a pet so that they can live longer. Certainly the supplements are a huge part of this industry. What are the, what's the veterinary community saying about this? Do they support some of these things or are they saying, Hey, we think this may be going a little too far. I think there's caution for sure. The Dog Aging Project is very much run by veterinarians, the ones who are testing this, some of this stuff.

23:52But overall, even they say, like, we don't know yet. We're testing it because we don't know. And so the Veterinary Association says to be careful when thinking about this. they don't come out right and say, just don't do any of this. I mean, a lot of people are doing it for themselves as well, but they do say that when it's an unproven drug, it can cause problems. And I talked to a vet who said that they see supplements causing problems often in pets. They're coming into the vet's office and they're having issues. They're sick and it's actually the supplements that are causing it sometimes. So they want to get pet owners to stop the supplements before they really try to go diagnose something else, because often that's the problem.

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