Can OpenAI Keep Spending as Growth Slows?

0:00The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slashed repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM.

0:33OpenAI fails to hit revenue and user targets as it sprints toward an IPO. Plus, the Trump administration pays two more companies not to develop offshore wind projects. And ahead of the Fed's rate decision tomorrow, we'll look at the pressure facing central bankers around the world. The Bank of Japan is confronting the same problem that is bedeviling every central bank now, which is that war in Iran has made a mess of their inflation forecast. that has made a mess of their growth forecasts, and they're left with very few good options on how to respond. It's Tuesday, April 28th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today.

1:16With just months to go before a planned IPO and its business in a slowdown, OpenAI's board is probing plans to spend$600 billion on data centers and questioning CEO Sam Altman's efforts to secure even more computing power. We're exclusively reporting that OpenAI CFO Sarah Fryer is worried that future revenues won't be able to make up for the massive outlays. And here with more is Journal Finance Editor Alex Frangos. Alex, the strategy at OpenAI has for a long time been that massive spending would yield massive growth. It seems like that math, though, now might be facing a bit of a stress test.

1:52Well, there seems to be a discussion going on within OpenAI. as to how much money it should be spending. Its business has hit a few bumps in the road. It's losing ground and buzz to its chief rival, Anthropic. They're both racing towards doing initial public offerings as soon as later this year. And when you're going to do an IPO, you want your finances in order. You want everything to look as strong as possible. And there's this debate. They need to spend a lot of money to invest in data centers, but they want the business, the end users, people using ChatGPT and other tools to be actually growing and using it.

2:28And it seems to be that they miss their own targets for how fast they want to grow their new users, how fast they want to grow their revenue. So the question is, what do you do? Do you kind of pull back on some of that spending until things pick up? Or do you keep spending because you think you need to in order to hit those targets? Alex, could those concerns raise questions about the success of this upcoming IPO? That's the trillion dollar question here. And we've seen this before with these big, big tech companies. They have a certain kind of startup culture, break things, ask questions later.

3:01And an IPO is invariably a process where you're getting mainstream investors, people on Wall Street on the other side of the country who are much more buttoned up to buy into your story and your investment thesis. So it has a lot of echoes of when Facebook went public, or when Uber went public, these kind of culture clashes, but also business clashes. Investors generally want, they want a growth story, but they want solid revenue. They want to see maybe even some profit. And that tension there with OpenAI is like, how much revenue are they going to have? Will they be ready to have their debut on public markets?

3:38And I think that debate is going on inside the company as to when that should happen and how quickly. That was finance editor Alex Frangos, OpenAI's CEO and CFO, said in a statement, they are totally aligned on securing new computing resources.

3:54The Trump administration has announced payouts totaling nearly$900 million to a pair of energy companies to walk away from their offshore wind projects under development. Arguing that the projects are untenable without taxpayer subsidies, the Interior Department said that Blue Point Wind and Golden State Wind would end their offshore leases for projects in New York, New Jersey, and California. That comes after a recent deal with French company Total Energies, which is getting a$1 billion payout to walk away from projects off the coasts of North Carolina and New York. But as energy and climate reporter Ed Ballard explains, whether those deals are good for U.S.

4:32taxpayers is up for debate. To critics of the administration, it looks pretty strange to be paying companies not to develop projects at a time when bills are going up, lots of data centers are being built that require lots of energy and electricity is in short supply. An important thing to know about these arrangements is that the companies will get their money back contingent on investing in oil and gas infrastructure. The Trump administration consistently views oil and gas and coal as the most reliable low-cost form of energy. However, it's not quite that simple because one of these companies has agreed to put the money into an LNG export terminal.

5:08And of course, that's not a like-for-like thing. It's not like that is going to generate electrons for the grid. That's more about exporting American oil and gas. The other strange thing about these deals is that these companies are forswearing offshore wind in the United States in future. And that's just legally a sort of strange thing for a private company to do. Assuming that a future administration says offshore wind is okay, what happens then? Cheap foreign cars, including smaller models from Nissan, Hyundai, and Toyota could disappear from American lots if the Trump administration fails to renew or waters down the U.S.-Mexico-Canada agreement.

5:44That warning communicated to Trump's economic advisors comes as the president's team has publicly considered ditching or splitting up the U.S. MCA. He's also upended the 2020 deal by levying 25 percent tariffs on the non-U.S. content of vehicles that previously would have qualified as duty-free under the agreement. The average price of a new car in the U.S. is hovering around$50 ,000, while models made in Mexico, like the Nissan Sentra or the Hyundai Venue imported from Korea, retail for around$23 ,000 and$21 ,000 respectively. According to Edmonds, eight of the ten cheapest new models in the U.S.

6:22are made by foreign-based automakers. And there could soon be an effective drug for pancreatic cancer, long one of medicine's most brutal diagnoses. In a late-stage clinical trial, a pill from Revolution Medicine's nearly doubled survival compared with chemotherapy, and approval from the FDA could come later this year. Journal Heard on the Street columnist David Wehner says this is the point where a promising biotech usually gets acquired, but that the sheer promise of the drug and its potential future use cases means Revolution could go it alone. Revolution Medicine is now worth around$30 billion, and any acquirer would need to pay a significant premium on top of that.

7:01That's a rare deal in any environment. And right now, most of the obvious buyers simply don't have the balance sheet capacity to pull this off. The deeper point is that Revolution Medicines may not need to sell. The history of biotech has a few examples of companies that were once considered takeover targets and instead went on to build franchises worth tens of billions of dollars. Revolution Medicines has the ingredients for that path, with a pipeline that extends well beyond pancreatic cancer into lung, colorectal, and other tumors. For long-term investors, the question isn't who buys Revolution Medicines, it's what the company looks like when it grows up.

7:39Coming up, it's a big week for central banks looking to navigate rising inflation, and competition for internships heats up as AI reshapes entry-level roles. We've got those stories and more after the break.

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8:13paramount is asking the fcc to let foreign investors take a major equity stake in the company as part of its deal to buy Warner Brothers Discovery. In its petition yesterday, Paramount said that those investors, including Saudi, Qatari, and Emirati sovereign wealth funds, would indirectly own nearly 50 percent of Paramount's equity interests, which, as the parent of CBS, include 28 local TV stations. Current rules bar foreign investors from owning more than 25 percent of companies that hold broadcast licenses unless the FCC determines it serves the public interest. A Paramount spokesman called the filing completely standard and said it wasn't a condition to closing the Warner deal.

8:53Oil prices are gaining again today as peace talks between the U.S. and Iran continue to stall. The higher crude prices have been a boon to some oil majors, with shares of BP up this morning after the British energy giant netted$3.2 billion in quarterly profits as traders capitalized on the volatility caused by the war. And we'll also learn how other companies are faring, not least those exposed to a record drop in consumer sentiment when Coca-Cola, Mondelez, Starbucks, and Visa all release earnings today. And the Bank of Japan is signaling that interest rate hikes are firmly on the table as it stares down an expected jump in inflation driven by rising energy prices.

9:32Our Tokyo Bureau Chief Jason Douglas says that while a hawkish mood is developing on the board, the bank ultimately chose to extend its rate pause, mirroring a dynamic seen elsewhere. Central banks have no good options here, right? You have rising inflation from higher commodity prices caused by the war, and then the risk of slower growth again caused by the war. In Europe, for instance, we're seeing inflation rising and growth weakening. They were thinking about cutting rates. That's probably not off the table, at least for a while until they could see how the economy fares. In Japan, you kind of had the opposite, where there was concern about the currency, there was concern about rising inflation, and they were in a kind of hiking cycle, which has now been put on pause as well.

10:11So I think until the fog of this war clears, central banks are going to be very cautious indeed about policy moves in either direction. The Fed and Bank of Canada's next interest rate decisions are due tomorrow, while the Bank of England and European Central Bank follow on Thursday. All are expected to hold rates steady.

10:34And finally, we reported last week that graduate hiring is showing nascent signs of recovery, though the summer internships crucial for landing that first job are becoming increasingly scarce. Internship postings on Handshake, an early career job platform, were down 16 percent earlier this year, continuing a decline that has started since 2023. On a job site called Indeed, postings were slightly up from 2025's sluggish internship season, but we're still well below previous years. That's personal finance reporter Oyen Edadoyan, who found that competition for those internships was only getting more intense, drawing double the number of applicants from previous years.

11:16Much of the scramble is to do with even higher stakes as AI reshapes entry-level roles. And Oyen says that although AI is one of the reasons companies are cutting internships, the technology is also creating opportunities. Something interesting that came up in the reporting is that not all companies are cutting internships. McKinsey, for example, said it was actually going to boost the size of its internship class. Some experts say that this is because companies are actually seeing younger interns as a way to integrate AI into their workforce. And young people who are maybe already using AI in their classwork or in prior internships could have ideas on ways that the companies can use them in their current workforce.

12:00And if you're currently hiring, looking for a job, or just have questions about the current labor market, let us know. Email us a voice memo to wnpod at wsj.com or leave us a message at 212-416-4328. Just make sure to include your name and your location so we can use it on the show. And that's it for What's News for this Tuesday morning. Today's show was produced by Hattie Moyer and Daniel Bach. Our supervising producer is Sandra Kilhoff. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.

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