The Information : OpenAI Sees $8 ChatGPT Driving Consumer Subscribers to 122 Mil

OpenAI Sees $8 ChatGPT Driving Consumer Subscribers to 122 Million This Year

The Takeaway
  • OpenAI forecasts 112 million subscribers to cheaper ChatGPT Go tier this year.
  • Company expects advertising to drive revenue, reaching $102 billion by 2030.
  • ChatGPT Plus subscribers will fall 80% as total revenue doubles to $30 billion.

For three years, OpenAI has generated most of its revenue from people paying $20 a month for subscriptions to ChatGPT. This year, it is forecasting a massive shift, expecting a cheaper, ad-supported tier will both draw new users and cause tens of millions of its paying subscribers to downgrade, according to previously undisclosed projections.

The company’s hope is that it will make more money by selling ads shown to more users than relying on the existing flagship monthly subscription service, which is called ChatGPT Plus.

OpenAI at the start of this year forecast that consumer subscribers to ChatGPT Go, which costs $8 a month in the U.S. and around $5 monthly in other countries such as India, would surge about 36 times to 112 million this year. As a result, leaders have projected that the number of subscribers to ChatGPT Plus will fall 80% to about 9 million. Users of the most expensive Pro plan will double but will still make up less than 1% of the total, the forecasts said.

The company still sees total revenue more than doubling this year, to $30 billion, and hitting $284 billion in 2030. By 2030, OpenAI projects that ads will be the single biggest revenue driver of its business, generating about $102 billion, or about 36% of its total revenue that year.

The forecasts show just how much OpenAI is dependent on consumers, notwithstanding a public push it made this year to court large companies that have flocked to rival Anthropic.

Advertising growth is paramount after the company missed an internal revenue target in the first quarter. That miss, first reported by The Wall Street Journal, sent shares of OpenAI cloud partners CoreWeave and Oracle down 6% and 4%, respectively, on Tuesday.

OpenAI said Tuesday that its consumer and enterprise businesses “are firing on all cylinders.”


The company is looking to advertising to lift revenue as it faces increased competition for consumers from Alphabet-owned Google and its Gemini chatbot.

“With Alphabet in this game with Gemini, the majority of Gemini users are using it for free,” said analyst Michael Nathanson of research firm MoffettNathanson. Alphabet is willing to give away Gemini for free because it already has a large ad business, he said. “It’s going to be a challenge to compete with Alphabet.”

Currently, only about 5% of OpenAI’s more than 920 million weekly active users pay for a subscription. Now the company is hoping more will sign up for the low-priced subscription. ChatGPT Go, which launched in India last August and worldwide in January, offers more messages and more access to additional features, such as its flagship model, than the free offering, while also showing ads.

The company expects Go subscribers will make up 92% of all paying subscribers by the end of this year—up from just 7% last year. But much of that growth will come from users who migrate from more expensive subscriptions. Subscriptions to the Plus plan are expected to do the exact opposite—going from 92% to 7% of the total—showing how much of that growth will come from migration to the cheaper subscription. Altogether, it expects consumer subscribers to more than double this year, to 122 million—and to hit 306 million in 2030.

As more people flock to the cheaper subscription, OpenAI expects the average subscription revenue per user to drop from about $23 a month last year (or about $271 annually) to under $12 next year (or $141 annually). At the same time, annual advertising revenue per user will rise from nothing last year–since it hadn’t launched the ads business yet–to over $3 next year and about $59 per user in 2030, it projects.

Meta Platforms, which generates a majority of its revenue from ads, had an annual average revenue per user of $57 across its family of apps last year.

OpenAI is following a playbook similar to that of streaming companies such as Netflix, which introduced a cheaper, ad-supported tier in 2022. Netflix’s introduction of ads, along with a crackdown on password sharing, helped drive increased subscriber—and total revenue—growth.

The forecasts assume OpenAI will be able to quickly attract advertisers. It just began an advertising pilot in February and was generating $100 million in annualized revenue in late March. But it expects advertising to generate about $2.4 billion in revenue this year and to quadruple next year, to nearly $11 billion, The Information previously reported.

OpenAI made these projections after it late last year declared a “code red” to focus on improving its flagship ChatGPT. Since then, the company has killed off some efforts—such as its stand-alone video app, Sora—and scaled back its shopping plans. Instead, it envisions ChatGPT as a superapp that will include coding and the Atlas browser.

It’s likely the company is expecting big growth in the lower-priced tier because much of its consumer growth happens overseas. About 90% of weekly active users are outside the U.S., with India, Brazil, Germany, Indonesia and France the five biggest markets outside of the U.S.


Additionally, 70% of ChatGPT Plus subscribers are outside the U.S., and Brazil, Germany, France, Japan and the U.K. are the biggest markets by subscribers outside of the U.S., according to the forecasts. As a result, it’s likely that most of the cheaper plan subscribers will be from these countries.

The company also has been boosting its marketing campaigns in the U.S. OpenAI this year spent millions on Super Bowl advertising, according to Adweek, using the catchphrase of “You can just build things,” a reference to its coding agent, Codex. The company also has plastered billboards across major cities, though these messages have not focused on the $8 tier.

More aggressive marketing of the $8 plan could pressure other companies to change their pricing. Since ChatGPT started charging for subscriptions in February 2023, OpenAI’s $20 a month price has become a benchmark for AI subscriptions such as Perplexity and Anthropic, which are both priced at $17 per month for their Pro plans.

The Information : OpenAI Sees $8 ChatGPT Driving Consumer Subscribers to 122 Mil

OpenAI Sees $8 ChatGPT Driving Consumer Subscribers to 122 Million This Year

For three years, OpenAI has generated most of its revenue from people paying $20 a month for subscriptions to ChatGPT. This year, it is forecasting a massive shift, expecting a cheaper, ad-supported tier will both draw new users and cause tens of millions of its paying subscribers to downgrade, according to previously undisclosed projections.

The company’s hope is that it will make more money by selling ads shown to more users than relying on the existing flagship monthly subscription service, which is called ChatGPT Plus.

OpenAI at the start of this year forecast that consumer subscribers to ChatGPT Go, which costs $8 a month in the U.S. and around $5 monthly in other countries such as India, would surge about 36 times to 112 million this year. As a result, leaders have projected that the number of subscribers to ChatGPT Plus will fall 80% to about 9 million. Users of the most expensive Pro plan will double but will still make up less than 1% of the total, the forecasts said.

The Takeaway
OpenAI forecasts 112 million subscribers to cheaper ChatGPT Go tier this year.
Company expects advertising to drive revenue, reaching $102 billion by 2030.
ChatGPT Plus subscribers will fall 80% as total revenue doubles to $30 billion.
Powered by Deep Research

The company still sees total revenue more than doubling this year, to $30 billion, and hitting $284 billion in 2030. By 2030, OpenAI projects that ads will be the single biggest revenue driver of its business, generating about $102 billion, or about 36% of its total revenue that year.

The forecasts show just how much OpenAI is dependent on consumers, notwithstanding a public push it made this year to court large companies that have flocked to rival Anthropic.

Advertising growth is paramount after the company missed an internal revenue target in the first quarter. That miss, first reported by The Wall Street Journal, sent shares of OpenAI cloud partners CoreWeave and Oracle down 6% and 4%, respectively, on Tuesday.

OpenAI said Tuesday that its consumer and enterprise businesses “are firing on all cylinders.”


The company is looking to advertising to lift revenue as it faces increased competition for consumers from Alphabet-owned Google and its Gemini chatbot.

“With Alphabet in this game with Gemini, the majority of Gemini users are using it for free,” said analyst Michael Nathanson of research firm MoffettNathanson. Alphabet is willing to give away Gemini for free because it already has a large ad business, he said. “It’s going to be a challenge to compete with Alphabet.”

Currently, only about 5% of OpenAI’s more than 920 million weekly active users pay for a subscription. Now the company is hoping more will sign up for the low-priced subscription. ChatGPT Go, which launched in India last August and worldwide in January, offers more messages and more access to additional features, such as its flagship model, than the free offering, while also showing ads.

The company expects Go subscribers will make up 92% of all paying subscribers by the end of this year—up from just 7% last year. But much of that growth will come from users who migrate from more expensive subscriptions. Subscriptions to the Plus plan are expected to do the exact opposite—going from 92% to 7% of the total—showing how much of that growth will come from migration to the cheaper subscription. Altogether, it expects consumer subscribers to more than double this year, to 122 million—and to hit 306 million in 2030.

As more people flock to the cheaper subscription, OpenAI expects the average subscription revenue per user to drop from about $23 a month last year (or about $271 annually) to under $12 next year (or $141 annually). At the same time, annual advertising revenue per user will rise from nothing last year–since it hadn’t launched the ads business yet–to over $3 next year and about $59 per user in 2030, it projects.

Meta Platforms, which generates a majority of its revenue from ads, had an annual average revenue per user of $57 across its family of apps last year.

OpenAI is following a playbook similar to that of streaming companies such as Netflix, which introduced a cheaper, ad-supported tier in 2022. Netflix’s introduction of ads, along with a crackdown on password sharing, helped drive increased subscriber—and total revenue—growth.

The forecasts assume OpenAI will be able to quickly attract advertisers. It just began an advertising pilot in February and was generating $100 million in annualized revenue in late March. But it expects advertising to generate about $2.4 billion in revenue this year and to quadruple next year, to nearly $11 billion, The Information previously reported.

OpenAI made these projections after it late last year declared a “code red” to focus on improving its flagship ChatGPT. Since then, the company has killed off some efforts—such as its stand-alone video app, Sora—and scaled back its shopping plans. Instead, it envisions ChatGPT as a superapp that will include coding and the Atlas browser.

It’s likely the company is expecting big growth in the lower-priced tier because much of its consumer growth happens overseas. About 90% of weekly active users are outside the U.S., with India, Brazil, Germany, Indonesia and France the five biggest markets outside of the U.S.


Additionally, 70% of ChatGPT Plus subscribers are outside the U.S., and Brazil, Germany, France, Japan and the U.K. are the biggest markets by subscribers outside of the U.S., according to the forecasts. As a result, it’s likely that most of the cheaper plan subscribers will be from these countries.

The company also has been boosting its marketing campaigns in the U.S. OpenAI this year spent millions on Super Bowl advertising, according to Adweek, using the catchphrase of “You can just build things,” a reference to its coding agent, Codex. The company also has plastered billboards across major cities, though these messages have not focused on the $8 tier.

More aggressive marketing of the $8 plan could pressure other companies to change their pricing. Since ChatGPT started charging for subscriptions in February 2023, OpenAI’s $20 a month price has become a benchmark for AI subscriptions such as Perplexity and Anthropic, which are both priced at $17 per month for their Pro plans.

>>> Stoxx 600 Pre-Market Indications

  • Scout24 (G24 TH) +7.5%
    • Scout24 1Q Oper Ebitda Meets Estimates
  • Fuchs (FPE3 TH) +4.9%
    • Fuchs to Raise Prices to Offset Hormuz Impact
  • Adidas (ADS TH) +3.4%
    • Adidas Sees Robust Growth Underpinned by Apparel and Football
  • Nokia (NOA3 TH) +3.1%
  • Infineon (IFX TH) +2.5%
    • Infineon Goals Look on Target, 2H Margin Upside Key: 2Q Preview
  • Thyssenkrupp (TKA TH) +2.4%
  • Pernod Ricard (PER TH) +2.2%
  • Mercedes (MBG TH) +2%
    • Mercedes Sees New Models, Solid Orders Countering China Drag
  • Amadeus (AI3A TH) +1.7%
  • Deutsche Telekom (DTE TH) +1.7%
  • Novo (NOV TH) -1%
    • Canada Approves Its First Generic Version of Novo’s Ozempic (2)
  • Fraport (FRA TH) -1.4%
    • LIGA-Pax-Aktien-Union Adds ABB, Exits Fraport

>>> TradeGate Pre-Market Indications

DAX:
  • Adidas (ADS TH) +3%
    • Adidas Sees Robust Growth Underpinned by Apparel and Football
  • Infineon (IFX TH) +2.6%
  • Mercedes (MBG TH) +2.3%
    • Mercedes Sees New Models, Solid Orders Countering China Drag
  • Deutsche Telekom (DTE TH) +1.8%
  • Deutsche Bank (DBK TH) +1.7%
    • Deutsche Bank Beats on Profit in Quarter as Trading Holds Up
MDAX:
  • Fuchs (FPE3 TH) +5.4%
    • Fuchs to Raise Prices to Offset Hormuz Impact
  • Thyssenkrupp (TKA TH) +3.6%
  • DWS (DWS TH) +1.5%
    • Deutsche Bank’s DWS Sees Net Inflows Slow as War Rattles Markets
  • RTL (RRTL TH) +1.3%
  • TUI (TUI1 TH) +1.1%
SDAX:
  • Tonies SE (TNIE TH) +1.6%
  • Eckert & Ziegler (EUZ TH) +1.1%
  • Suedzucker (SZU TH) -1%
  • Siltronic (WAF TH) -3.3%
    • Siltronic 1Q Sales Miss Estimates

WSJ : Ex-Twitter CEO’s AI Startup Raises Funds at $2 Billion Valuation

Ex-Twitter CEO’s AI Startup Raises Funds at $2 Billion Valuation
Parallel Web Systems raised $100 million in Series B funding to continue building web search for AI agents

  • Parallel Web Systems, a startup founded by Parag Agrawal, raised $100 million in Series B funding, valuing it at $2 billion.
  • The company plans to use the new funding to expand its sales, marketing, and research and development functions.
  • Parallel’s platform enables AI agents to efficiently search the web to complete tasks like investment research and insurance claims processing.

Parallel Web Systems, a startup founded by Parag Agrawal, the former chief executive of Twitter, has raised $100 million in Series B funding—reflecting increased interest in deploying autonomous artificial-intelligence agents.

The round was led by Sequoia Capital, and boosts the Palo Alto, Calif., startup’s valuation to $2 billion. Existing investors including Kleiner Perkins, Index Ventures and Khosla Ventures also participated.

Parallel, which has developed a platform for AI agents to search the web, has about 50 employees. Its prior funding round was a $100 million Series A last November, which valued the company at $740 million. The startup has raised $230 million in total.

Agrawal, Parallel’s founder and CEO, said the startup plans to use its latest cash infusion to build out a sales and marketing team, as well as grow its research and development function. The roughly three-year-old company is also using the funding to continue targeting enterprise clients.

Parallel’s platform is dedicated to servicing AI agents—the autonomous bots that can take action on behalf of humans—and allowing them to most efficiently and accurately search the web to complete tasks. The bet Agrawal said he made in 2023 was that “agents will use the web a lot more than humans,” and therefore need their own infrastructure to access it.

AI agents might need to search the web for tasks including investment and risk underwriting research, insurance claims processing and digging through government contracts—many of which fall under the category of “deep research.” Those are also activities humans would typically open a web browser to do, but AI agents can accomplish them faster and at a much greater scale, Agrawal said.

Andrew Reed, a Sequoia partner who joins Parallel’s board as part of the deal, said the startup’s recent traction can be tied to the rapid development of “long-horizon” or “long-running” AI agents. Such agents can operate autonomously in the background and maintain context for longer periods, but churn out user requests much faster.

“One of the things that is a core shared function amongst all of these long-horizon agents is the ability to use the web,” Reed said.

And, these agents are starting to become the norm among large enterprises, Reed added.

AI legal startup Harvey is using Parallel’s platform to support its own AI agents, which automate many research-heavy legal tasks on behalf of customers, said Gabe Pereyra, Harvey’s president and co-founder.

While enabling AI agents to search the web seems like an easy fix, it isn’t a simple matter of “giving the models google search,” Pereyra said. Harvey requires more granular control over which websites its AI agents should be accessing, which Pereyra said Parallel allows it to do.

Parallel said it has over 100,000 developers using its infrastructure, including AI-native startups and enterprises.

The startup is part of a cohort of other companies, including Tavily and Exa, which are targeting the same area—one that Reed calls an “obviously” big market for supporting AI agent technology.

Agrawal was CEO of Twitter until late 2022, when he was ousted by Twitter-acquirer Elon Musk. He served as Twitter’s chief technology officer before stepping in as CEO in 2021, following co-founder Jack Dorsey’s departure.

At Parallel, Agrawal said he has an ambitious growth plan to expand its products and customer base over the next year.

FT : Memory chipmakers hope AI frenzy signals end to boom and bust

Memory chipmakers hope AI frenzy signals end to boom and bust
SK Hynix and Samsung say customers now want long-term contracts to guarantee supplies amid acute shortages

Investors are betting on a prolonged boom for memory chipmakers amid voracious AI demand that has prompted customers to lock in multiyear contracts with SK Hynix and Samsung Electronics.

Hynix, the world’s second-largest memory chipmaker and a key supplier to Nvidia, said the “structural shift” differs from past booms because customers are prioritising security of supplies over price amid an acute shortage. That shift is reinforcing expectations that an industry long defined by boom-and-bust cycles may be shaking off its volatile past.

Analysts say the memory sector is facing a supply crunch as chipmakers, which also include Micron Technology, struggle to meet demand driven by a global data centre build-out, making memory a key bottleneck in the AI supply chain.

Many view the shortage as structural rather than temporary because demand has shifted from cyclical consumer electronics to deep-pocketed AI hyperscalers rapidly increasing capital spending.

Demand is also becoming more persistent as AI spreads into everyday applications, increasing the need for memory across devices and services.

Samsung’s co-chief executive Young Hyun Jun told shareholders in March that AI demand was driving an “unprecedented supercycle” in the semiconductor market and the company is planning a “substantial” increase in capital expenditure this year to meet surging memory demand.

SK Hynix and Samsung, which reports quarterly results on Thursday, say customers are now seeking contracts for three to five years rather than the usual quarterly agreements. This move shift enhances demand visibility and reduces the risk of oversupply, enabling producers to increase capital spending in a more controlled way.

“We are in a supercycle as AI requires more powerful memory for inference and agentic services,” said Kwon Seok-joon, a professor at Sungkyunkwan University. AI inference is the process whereby a trained AI model such as a chatbot generates responses. Agentic AI services are advanced systems that can handle complex problems and act on their own, with little human assistance.

“Hyperscalers are expanding capacity aggressively to avoid falling behind in the AI race, pushing up chip prices while production remains constrained.”

Samsung’s Young Hyun Jun told shareholders in March that the company was talking to major customers about moving on to contracts of between three and five years. The company also plans to increase spending this year, earmarking a record Won110tn for chip capacity expansion and research.

Analysts say the supply crunch is unlikely to ease before 2028, given the time required to build new plants. SK Hynix said it would “significantly” increase capital spending this year, but technological challenges are expected to limit how quickly supply can expand.

“We are in the third year of the upcycle with no end in sight,” said Daniel Kim, an analyst at Macquarie. “Chipmaking has reached a level of complexity where supply cannot easily be increased. Shortages are likely to intensify next year.”

As a result, the industry has become a seller’s market, with tight supply giving producers greater pricing power. Long-term contracts also allow companies to better manage output, unlike in the past when they were forced to react to volatile demand.

“The tables have turned,” said Kwon, noting that Samsung, SK Hynix and Micron jointly control about 90 per cent of the market for DRam, which serves as the main memory for computers and smartphones. “Producers now have the upper hand.”

Analysts believe this oligopoly, formed after decades of consolidation, will allow memory makers to sustain elevated margins as long as investment in AI infrastructure continues. SK Hynix reported a quarterly operating margin of 72 per cent, while Samsung’s memory margin is estimated to be well above 60 per cent, compared with Nvidia’s 65 per cent and TSMC’s 58 per cent.

Nomura analyst CW Chung said memory chip prices could rise by up to half in the second quarter compared with the first three months of the year, potentially lifting margins to above 80 per cent. He added that the growing share of long-term contracts would reduce sharp price swings.

“Memory chips have become a core pillar of AI infrastructure,” Chung said, predicting that the upcycle could last three to five years.

Net profits at Samsung and SK Hynix this year are forecast at $151bn and $115bn respectively — far bigger than TSMC’s $81bn, according to Bloomberg.

Yet both Korean companies are valued at less than six times projected earnings, compared with roughly 19 times for TSMC and 22 times for Nvidia. The gaps reflect the industry’s historical cyclicality, although analysts expect them to narrow as earnings stability improves.

SK Hynix shares have surged more than 600 per cent over the past year, while Samsung shares have gained nearly 300 per cent.

Risks for the sector remain, however. Rapid capacity expansion could eventually lead to oversupply, particularly if hyperscalers slow their investment in AI infrastructure. Growing competition from Chinese players such as CXMT and YMTC also raises concerns about excess long-term supply in lower-end products.

“This is certainly a supercycle. But that doesn’t mean there won’t be ups and downs,” said Chris Miller, author of Chip War: The Fight for the World’s Most Critical Technology. “The data centre business will have its own cycles, even if longer-term contracts smooth some volatility.”

Kwon expects demand to remain strong, arguing that on-device AI could eventually surpass data centres as the main driver of memory consumption. But he warned that oversupply in legacy chips could emerge about 2035 as new plants come online and Chinese capacity expands.

Kwon estimates Samsung and SK Hynix could more than double their combined capacity by then: “There is strong optimism about the durability of this cycle — but it ultimately depends on how long the current pace of AI data centre expansion can be sustained.”

Miller also warned that Chinese producers are using the current boom as an opportunity to strengthen their position, as tight supply pushes some western manufacturers to consider broader use of Chinese chips in consumer electronics.

Citi analyst Peter Lee predicted that the upcycle could extend beyond seven years if AI momentum holds but cautioned against assuming a permanent break from the past.

“Many investors still don’t believe the industry’s cyclical nature has fundamentally changed,” he said. “This cycle may be stronger and longer-lasting, but cycles won’t disappear.”

FT : Chinese green technology poses national security problem for Europe, report

Chinese green technology poses national security problem for Europe, report warns
European countries want to accelerate the shift to solar, wind and other energy sources whose supply chains are dominated by China

Dependence on Chinese green technology is making European countries vulnerable to national security risks including cyber attacks, trade restrictions and espionage, new research warns.

A report co-authored by Michael Collins, a former deputy head of national security strategy in the UK Cabinet Office, said European governments were failing to fully account for such risks as they roll out Chinese green tech in a bid to secure energy supplies and address climate change.

After the Iran war triggered the second energy shock in just five years, many European politicians, including EU energy commissioner Dan Jørgensen, have argued that renewables are more secure than fossil fuels because they are not subject to the same price volatility and supply-chain disruptions.

But China dominates green tech, producing about 90 per cent of the world’s solar modules, more than 80 per cent of wind turbines and 80 per cent of battery cells, as well as controlling wider supply chains for rare earth and semiconductor materials. 

Collins said countries risked “sleepwalking into a scenario where you’re suddenly confronted with a big national security problem”. 

Countries should “get on with the transition” away from fossil fuels, but “be mindful of the risks” and diversify supply chains where possible, he said. “We don’t want to replace one set of dependencies on fossil fuel imports with a dependency on Chinese low-carbon technology.”

The report, co-authored by Michal Meidan, director of the China Energy Programme at the Oxford Institute for Energy Studies and based on interviews with energy and national security experts, identified eight separate risks linked to an over-reliance on Chinese green tech.  

Among the greatest was supply chain disruption, according to the authors, who argued that China was likely to restrict supply of low-carbon technology and components. Beijing has increasingly used export controls in recent years to leverage its control over global supply chains.

An under-appreciated risk was that the US could demand Europe remove Chinese technology from its energy systems — or face tariffs, sanctions or reduced security commitments, according to the report. It noted that the UK banned Chinese telecoms equipment maker Huawei from supplying kit for Britain’s 5G mobile phone networks following intense pressure from the US.

Other risks include a large-scale disruptive attack that could use so-called kill switches to remotely disable solar panels, wind turbines and other technology, according to the authors.

While they said China’s “cyber actors . . . almost certainly have the capability to remotely access Chinese manufactured or operated smart hardware or software”, they said the risk of such an event was “very unlikely”. 

The report, which was commissioned by Loom, a non-profit focused on economic, environmental and national security issues, flagged inverters — which connect renewable energy projects with the grid — as an area that was vulnerable.

Chinese officials dismiss concerns about dependence on their country’s green technology, saying Beijing has no intention to use it for political advantage and that cheap turbines, solar panels and other renewable energy products reduce the much greater risk stemming from high carbon emissions.

In 2023, the FT reported that the National Cyber Security Centre, a branch of signals intelligence agency GCHQ, advised the UK’s National Grid to remove components supplied by a Chinese state-backed company from Britain’s electricity transmission network over cyber security fears.

British security services have also investigated China’s wider role in the country’s energy system.

Loom’s executive director, Joss Garman, said the recent fossil fuel price shocks “should accelerate Europe’s energy transition but new dangers arise because the cheapest route runs so overwhelmingly through China”. 

Last month, the UK rejected plans for a Chinese wind turbine factory in Scotland on national security grounds. An Italian auction last year required modules and inverters for new solar projects to be non-Chinese. 

However, Collins argued there was a “fundamental difference” between the risks posed by low-carbon electron-based technologies and fossil fuels. “If you fall out with China, once you’ve already installed all your low-carbon kit, your economy isn’t going to fall over within a matter of days, which is what we see with fossil fuels,” he said.

FT : Ken Griffin suggests wealthy individuals do not understand private credit r

Ken Griffin suggests wealthy individuals do not understand private credit risks
Founder of Citadel says some investors may not have realised they cannot quickly withdraw all their money from funds

Hedge fund billionaire Ken Griffin has questioned whether wealthy individuals truly understand the risks of investing in private credit and warned that they might struggle to access their money in the event of a downturn. 

Griffin, founder of $67bn hedge fund Citadel and trading firm Citadel Securities, is the latest high-profile financier to weigh in on the fate of the private credit industry, which has been hit by investor redemptions and fears over bad loans.

The sector — typically comprising investment funds that make direct loans to private equity-owned companies — has exploded in popularity over the past decade as many banks retrenched their commercial lending businesses due to stricter regulations. 

As a result, the private credit industry’s assets have surged to more than $3.5tn, according to the Alternative Investment Management Association, with funds targeting wealthy investors emerging as one of the fastest-growing areas of the asset management sector. 

“The real issue here is the liquidity mismatch between the retail investor and the duration of the investments,” Griffin said in an interview with the FT.

“We live in a world where retail investors have become accustomed to having immediate liquidity for their investments . . . investing in private credit is a different story.”

Some of the world’s largest alternative investment firms — including Blackstone, Apollo Global Management, KKR and Ares Management — have in recent years expanded beyond their traditional institutional client bases by launching funds aimed at wealthy investors.

The prospect of higher returns in exchange for limited liquidity has lured hundreds of billions of dollars from well-off individuals to “semi-liquid” private credit funds, which, unlike traditional mutual funds, only offer investors the ability to pull some of their money out periodically. 

“Retail was viewed as a phenomenal channel from which to raise assets,” said Griffin. “But did the retail investors really understand the nature of the investment they were making?”

Some cracks are beginning to emerge in the private credit industry. Blue Owl Capital, a private credit investment firm that aggressively tapped retail investors, has limited withdrawals from its two flagship funds amid billions of dollars of redemption requests and concerns over its exposure to software companies that are vulnerable to AI disruption. 

Wealthy investors sought to pull more than $20bn from private credit funds in the first quarter of 2025, according to Financial Times calculations, of which just over half was permitted by often strict withdrawal rules.  

JPMorgan Chase boss Jamie Dimon warned in his annual letter to shareholders earlier this month that losses for lenders to highly indebted companies will be higher than many expect because of weaker lending standards. 

Speaking on Tuesday at Norges Bank Investment Management’s conference in Oslo, Dimon pointed to the more than 1,000 private credit firms and said that they may experience mixed fortunes when the cycle turns.

Some firms “may be brilliant, but I guarantee you not all 1,000 of them are”, he said. “So in my view, because of that and the underwriting standards, we haven’t had a credit recession in so long, so when we have one it will be worse than people think.”

While views on the outlook for defaults in private credit vary, a number of financiers have suggested that some private capital firms had veered close to mis-selling in the hunt for money from retail investors.

“Not everybody has marketed their product as clearly as, certainly we would like to see, with the clarity that this is really not a liquid product,” Goldman Sachs president John Waldron said at a Semafor event in Washington earlier this month.

“Those retail investors, I think, have the perception of more liquidity than is the reality.”

>>> US After Hours Summary: SIMO +18.6%, STX +16%, NXPI +15.8%, VRNS +12%, FICO

After Hours Summary: SIMO +18.6%, STX +16%, NXPI +15.8%, VRNS +12%, FICO +11.8% higher on earnings; OI -18.8%, ENPH -9.6%, HOOD -8.9%, TER -8.2%, BKNG -4.5% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: SIMO +18.6%, STX +16%, NXPI +15.8%, RSI +14.6%, BE +12.9%, VRNS +12%, FICO +11.8%, PRCH +9.9%, WERN +9%, EXLS +7.7%, VLTO +7.6%, ORN +6.4%, ESI +5.7%, V +5.5% (also authorizes new $20 bln share repurchase program), SBUX +5%, SLDE +4.7% (also authorizes new $100 mln share repurchase program), FFIV +3.9%, LSTR +3.6%, UCTT +2.4% (also CFO to retire), MDLZ +1.8%, CZR +1.5%, TMUS +1.4%, PPG +1.2%, ROG +1.2%, ST +1.1%, STAG +1.1%, UMBF +0.9% (also authorizes new 2 mln share repurchase program), EIX +0.7%, WELL +0.6%, WPC +0.5%, EXE +0.3%, HTO +0.3%, OHI +0.2%

Companies trading higher in after hours in reaction to news: TWO +3.5% (amends merger agreement with CrossCountry Mortgage), PTCT +2.8% (topline results from PIVOT-HD study of Votoplam), VNO +2% (to purchase a 49% interest in Park Avenue Plaza), RDY +1.6% (Health Canada announces compliance for RDY's generic version of NVO's Ozempic), LW +1.6% (CFO bought 4556 shares worth ~$200K), HII +1.5% (awarded a $282.8 mln Navy contract), MET +0.8% (increases dividend), CHTR +0.8% (CEO and one Director bought 7,936 shares combined worth approx $1.4 mln), DOCN +0.4% (unveils AI-native cloud built for the inference era), NVO +0.2% (Health Canada announces compliance for RDY's generic version of NVO's Ozempic), RTX +0.1% (awarded a $206.2 mln Navy contract)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: OI -18.8%, RCKY -15.1%, MX -13.1%, ENPH -9.6% (also announces development of IQ Solid-State Transformer for AI data centers), HOOD -8.9%, CDNA -8.8% (also to acquire Naveris), TER -8.2%, NBR -5.8%, ACGL -4.7%, BKNG -4.5%, BXP -4.1%, ATEN -4%, LRN -3.7%, RBBN -3.5% (also names new CFO), CSGP -3.4%, OPK -3.3%, MIR -2.8%, EXR -2.4%, FE -2.2%, MKL -1.9%, ASH -1.8%, IR -1.1%, NOG -1.1%, UNM -1.1%, ARI -1.1%, EQR -1%, RNR -0.5%, WM -0.3%, DBRG -0.3%, NEO -0.2%

Companies trading lower in after hours in reaction to news: CDNA -8.8% (files mixed securities shelf offering), BF.A -2.9% (terminates merger discussions with Pernod Ricard), TRI -1% (shareholders approved capital plan), FSK -0.2% (reschedules Q1 earnings release), DIS -0.2% (not planning to spin off ESPN, according to Business Insider)