An OpenAI Revenue Report Hit Chip Stocks As Oil Jumped 4%

A report that OpenAI's yearly sales pace is running about $20 billion below the figure investors had been passing around pulled chip stocks and the Nasdaq lower on Thursday, though the Dow finished slightly higher. Oil rose about 4% as tanker attacks reached waters near Qatar and a hurricane cut U.S. Gulf of Mexico output. PepsiCo lowered its profit forecast, and its shares rose anyway.

Fast Facts

• Claims for unemployment benefits fell by 2,000 to 197,000 in the week through October 3, a run below 200,000 that Axios called rarely seen in modern history (Read More)
• Chipotle shares rose 6.2% on Thursday after a Financial Times report that Starbucks, run by former Chipotle chief executive Brian Niccol, has explored buying the burrito chain (Read More)
• The Federal Reserve announced an enforcement action against American Express, citing among other things a failure to sufficiently detect and report suspicious activity tied to money laundering (Read More)
• President Trump backed the credit-card bill banks fear most, which could upend the card fees merchants pay and banks use to fund rewards (Read More)
• Microsoft, Adobe and several IT firms are being suspended from sponsoring foreign-born workers for green cards, Vice President JD Vance said (Read More)
• For about $8 billion in cash, SpaceX agreed to buy a nationwide block of low-band wireless spectrum, a step toward its own phone network (Read More)

Global News

• The World Trade Organization raised its forecast for growth in global goods trade this year to 3.9% from 1.9%, crediting the investment boom in artificial intelligence (Read More)
• Australia's Firmus, a cloud-computing company backed by Nvidia, scrapped what would have been the country's largest stock market listing in almost 30 years, citing market conditions (Read More)
• Italian factory output fell 1.3% in August from July, when analysts polled by Reuters had expected no change (Read More)
• Fast Retailing, the Japanese owner of Uniqlo, reported a record annual profit, helped by a return to growth on the Chinese mainland (Read More)

A Report Put OpenAI's Revenue At $50 Billion, Not $70 Billion, And Chip Stocks Fell 3.4%

On Thursday the Financial Times reported that OpenAI told investors its annualized revenue was approaching $50 billion at the end of September. Annualized revenue means one month's sales multiplied by 12, a way of showing how big a fast-growing company is right now. About a week earlier, the figure in circulation had been close to $70 billion. The FT said that higher number came from OpenAI's own investors trying to line the company up against Anthropic, a rival artificial intelligence developer that counts sales made through its cloud partners. OpenAI does not.

The Nasdaq composite, an index weighted toward technology companies, fell 1.25% to 27,193.34, the steepest loss of the three major indexes, two days after a record close. The S&P 500, a broader measure of 500 large companies, slipped 0.47% to 7,765.36, while the 30-stock Dow edged up 0.10% to 51,231.64. Chipmakers fell 3.4% as a group after rising more than 80% this year. Micron lost 4.8% and Broadcom 4.4%, while Oracle, which buys those chips rather than making them, fell 5.5%.

Why would a private company's sales figure move public stocks? Because it is one of the few public yardsticks for whether spending on chips and data centers is being earned back. Chipmakers sell that hardware, cloud companies rent it out, and lenders are now funding it. Our Thursday briefing covered three of those borrowers, as the Wall Street Journal reported them: Broadcom seeking more than $50 billion to finance the custom chips it builds with OpenAI, Oracle arranging to lease chips from a separate investor-funded company so the debt stays off its own books, and SpaceX approaching lenders about $40 billion of debt for Nvidia processors. OpenAI's revenue is part of what those loans are ultimately repaid from. Reuters tied part of Thursday's drop to worry that this much tech borrowing could leave companies competing for the same pool of investor money.

One caveat: the $70 billion was never a company forecast. Overnight, Bloomberg reported that OpenAI expects its annualized revenue to reach or exceed $70 billion by year-end. Separately, Nasdaq 100 futures, which let traders bet on where that index will be, were up 0.8% at 3:04 a.m. ET Friday, hours before the opening bell.

Sources: TechCrunch · Reuters via Yahoo Finance · AP via Yahoo Finance · WSJ on the chip-debt deals · Investing.com, early Friday · Rapunzl on the AI chip debt deals

Oil Jumped 4% On Two Supply Scares, And Treasury Yields Fell Anyway

Governments spent Wednesday reaching for more ways to get diesel to market, as our Thursday briefing covered, and on Thursday oil climbed anyway. Brent crude, the global price benchmark, ended the day 4.1% higher, and West Texas Intermediate, the main U.S. benchmark, rose 3.6%, Reuters reported. Two supply threats hit at once. Tanker attacks pushed deeper into the Persian Gulf, including a strike near Qatar, far from the usual flashpoint at the Strait of Hormuz. And Hurricane Isaias led producers to shut in, meaning stop pumping, about 63% of U.S. Gulf of Mexico oil output as of Thursday, per the federal offshore regulator; those waters normally produce about 2 million barrels a day. Prices came off their highs after President Trump said the U.S. would not attack Iran before the November 3 midterms.

Traders price those shocks differently. A hurricane shut-in is lost supply that comes back once the storm passes; a threat to a shipping lane lasts as long as the conflict does. Oil also feeds inflation, since it is built into the cost of fuel and freight, and inflation feeds rate expectations: CME FedWatch, which reads traders' bets, put the chance of a Federal Reserve increase in December at 69.2%. That is an expectation, not a decision. The odd part was bonds. A Treasury yield is the annual return the government pays to borrow, and inflation worries usually push it up, because lenders want more when rising prices shrink what they are repaid. Instead the 10-year Treasury yield closed Thursday at 5.22%, down six hundredths of a percentage point (six basis points), and the 30-year at 5.60%, down seven. A Yahoo Finance live blog said yields stabilized as oil eased after Trump's remarks.

The bigger number is the year: U.S. crude is up more than 60% in 2026, Reuters reported. That climb keeps rate fears alive, and rates reach households through what car loans, credit cards and mortgages cost. The storm itself is forecast to make landfall near the Mississippi-Alabama-Florida border Friday night.

Sources: Reuters via Yahoo Finance · Reuters via BOE Report · WSJ on tanker attacks · Axios · Yahoo Finance live blog · U.S. Treasury · Rapunzl on the diesel measures

PepsiCo Lowered Its Profit Forecast, And Its Stock Rose 3.7%

PepsiCo reported its third quarter on Thursday. Net revenue came to $25.27 billion, up 5.6%, and core earnings per share (profit divided across each share of stock, leaving out one-time items) was $2.34; analysts' average estimate, known as the consensus, had been $2.29. In its full-year forecast, called guidance, PepsiCo now expects core earnings per share, with currency swings stripped out, to grow 1% to 2% in 2026, down from the low end of its earlier 4% to 6% range. Revenue guidance went up, to about 6% growth from 4% to 6%. CEO Ramon Laguarta said the company is "acting with urgency to sustainably improve our performance in North America," and added that further structural cost cuts will follow in the coming months. The stock rose 3.7% on the day.

A lower forecast and a higher stock price look backward until you remember what a share price is: a running estimate already built from what investors expected before the news arrived. So a stock moves on how the news compares with those expectations. Here, quarterly earnings came in above the $2.29 consensus. Revenue guidance rose while profit guidance fell. And Reuters paired the stock's gain with PepsiCo's plan for more cost cuts. The useful question with any earnings report is not "good or bad?" It is "compared with what?"

Sources: PepsiCo via SEC EDGAR · Reuters via Yahoo Finance · Yahoo Finance live blog

What To Watch

Delta Air Lines is expected to report third-quarter results before the opening bell today, with analysts' average estimate at $1.80 in earnings per share. The airline has said it expects to spend about $4 billion more on fuel this year than last, which ties today's report to Thursday's oil move. The University of Michigan's early read on October consumer sentiment is also due this morning, expected to slip to 47.5 from 48.1 in September. In Miami, envoys Steve Witkoff and Jared Kushner are scheduled to meet Ukrainian negotiators and European officials to present new ideas for ending the war in Ukraine.

Third-quarter earnings season starts in earnest next Tuesday, October 13, when JPMorgan Chase is expected to report before the open at an average estimate of $5.94 a share against $5.07 a year earlier, Goldman Sachs at $12.90 against $12.25, Wells Fargo at $1.85 against $1.73 and Citigroup at $2.66 against $2.24. Johnson & Johnson ($2.53 against $2.80) and UnitedHealth Group ($4.12 against $2.92) report the same morning. Every earnings figure here is an analyst expectation, not a result.

On the Fed calendar, Governor Christopher Waller is scheduled to speak about artificial intelligence on October 13, the Beige Book of regional business conditions is due October 14, and Chair Kevin Warsh is scheduled for a conversation with IMF Managing Director Kristalina Georgieva on October 15. The next Federal Open Market Committee meeting is October 27 and 28.

The Classroom Takeaway

Thursday's selloff started with one number, counted two different ways, and it moved a whole corner of the market even though neither count was wrong. Learning where a figure comes from before reacting to it is a habit worth building, and following the live market data day to day is a good place to start.