The Information : OpenAI Forecasts Revenue Topping $125 Billion in 2029 as Agent



From: Laurent Chekroun (MAKOR CAPITAL MARKET) At: 04/23/25 19:27:41 UTC+2:00
Subject: The Information : OpenAI Forecasts Revenue Topping $125 Billion in 2029 as Agent
OpenAI Forecasts Revenue Topping $125 Billion in 2029 as Agents, New Products Gain

The Takeaway
• OpenAI projects $174 billion in revenue in 2030
• Monetizing free users is a driver to higher revenue
• Gross margins expected to near 70% in 2029

For two years, ChatGPT has been OpenAI’s cash cow. But by the end of the decade, the company has told some potential and current investors it expects combined sales from agents and other new products to exceed its popular chatbot, lifting total sales to $125 billion in 2029 and $174 billion the next year, according to documents seen by The Information.

The projections, which would propel the 10-year-old startup’s sales toward the level of Nvidia or Meta Platforms today, reflect rapid revenue gains from agents, or AI software that can take actions on behalf of customers, as well as other new products. These include those tied to “free user monetization,” likely meaning money made from OpenAI’s nonpaying users.

OpenAI ended last year at $3.7 billion in revenue, nearly quadrupling sales the year prior. The San Francisco startup has been serving more than 500 million active users per week, up from 300 million in December.

What the new products are is unclear. CEO Sam Altman, in an interview with Stratechery newsletter writer Ben Thompson, recently discussed the possibility of charging affiliate fees—or a cut of a sale initiated from a user’s search through OpenAI software such as ChatGPT or its agents—though he said he is reluctant to sell traditional ads on the chatbot. OpenAI Chief Financial Officer Sarah Friar, meanwhile, has discussed the possibility of selling ads but told the Financial Times the company has “no active plans” to pursue advertising.

The forecasts provide insight into why investors, in a deal led by SoftBank, agreed to invest $40 billion in new capital at a $260 billion valuation, 73% higher than its valuation last fall. Spokespeople for SoftBank and OpenAI declined to comment.

The projections indicate executives expect the new sources of revenue could help offset rising costs. The company, which estimates it will burn $46 billion in cash over the next four years, thanks to the costs of training and running its models and other expenses such as salaries, expects to turn cash flow positive in 2029, generating close to $12 billion in cash that year.

The company also expects growth in inference costs—the costs of running AI products such as ChatGPT and underlying models—to moderate over the next half-decade. Those costs will triple this year, to about $6 billion and rise to nearly $47 billion in 2030. Still, the annual growth rate will fall to about 30% then.

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Costs for app developers using OpenAI models have been declining as models have become more efficient, as well as thanks to new techniques like prompt caching, which reuses parts of prior prompts to answer questions.

This slower growth in inference costs, combined with soaring revenue, is a boon to OpenAI’s margins. OpenAI anticipates gross profit as a percentage of revenue rising to nearly 70% in 2029, from 40% last year, which was far lower than the average gross margin of 74% for cloud software stocks tracked by Meritech Capital.

Beyond Chatbots

OpenAI has been releasing a slew of new products and model updates such as its computer-using Operator agent, reasoning models, and image-, audio- and video-focused AI. At the same time, OpenAI executives have discussed expanding into new types of products like humanoid robots and AI chips.

That said, OpenAI expects ChatGPT and API, its core products, to continue to comprise the bulk of its revenue. The company expects sales from ChatGPT subscriptions—the cost of which can range from $20 to $200 per month—to rise to $50 billion in 2029 from about $8 billion this year.

Revenue from selling access to its application programming interface, which gives businesses such as Salesforce and T-Mobile access to its models, will hit $22 billion in 2029, up from about $2 billion this year.

In 2029, the company has projected, it will generate $29 billion in revenue from agents, up from $3 billion this year. These agents could range from “high-income knowledge worker” agents that cost $2,000 a month to $20,000 per month for doctorate-level research agents.

It also has lined up some deep-pocketed customers. In February, SoftBank said it would spend $3 billion annually on OpenAI products, including AI agents, and also develop a joint venture to market OpenAI’s products, branded as Cristal Intelligence, to companies in Japan. Altogether, OpenAI forecasts agents will make up nearly a quarter of its revenue within the next five years.

OpenAI won’t start generating much revenue from free users and other products until next year. In 2029, however, it projects revenue from free users and other products will reach $25 billion, or one-fifth of all revenue.

The company is forecasting a sharp growth in users, telling investors it expects to hit 3 billion monthly active users, 2 billion weekly active users and 900 million daily active users by 2030. Fewer than 5% of ChatGPT’s weekly active users were paying subscribers at year-end.

“Advertisers have always followed eyeballs,” said Rich Greenfield, a co-founder and analyst at research firm LightShed Partners. “If there is a considerable time spent on OpenAI, advertisers will beg to be there.”

Other AI startups have started to test making money beyond subscriptions. Perplexity, a startup that sells access to an AI-powered search engine, in November said it was experimenting with selling ads on some queries, such as one sponsored by Indeed that asks, “How can I use Indeed to enhance my job search?” Perplexity has said its initial brand partners include Whole Foods Market and media agency Universal McCann.

Shopping is another potential avenue for OpenAI to make money off its hundreds of millions of users. Rival Google, for instance, has begun monetizing its AI Overview feature. It has been selling advertisers placement near the AI-based summaries shown to U.S. users on mobile devices.

OpenAI has already begun experimenting with launching software features for shopping. Starting in January, some users can access web-browsing agent Operator as part of their pro ChatGPT subscription tier to order groceries from Instacart and make restaurant reservations on OpenTable.

Launch partners such as Uber receive aggregated data on the most common uses of Operator and the traffic it is driving to their site. OpenAI said it would expand Operator to other users and even integrate these capabilities into ChatGPT.

WSJ : Xi Is Ratcheting Up China’s Pain Threshold for a Long Fight With Trump

Xi Is Ratcheting Up China’s Pain Threshold for a Long Fight With Trump
Censorship and surveillance have helped keep the Communist Party in control, and they are getting better.

Key Points
  • China is strengthening authoritarian tools to prepare for a confrontation with the U.S.
  • Xi Jinping has consolidated power to levels unseen since Mao, focusing on stability amid trade tensions.
  • China is using AI and surveillance to preempt dissent, showing resilience despite economic pressures.

As President Trump tries to play hardball in his trade war with Xi Jinping, he faces an adversary who has armed China to play a long and potentially painful game in its contest with the U.S.

In the weeks since the U.S. president first slapped sky-high tariffs on China, Beijing has responded with defiance. A spokeswoman for China’s Foreign Ministry posted on X footage from 1953 of Mao Zedong promising to fight to the end against U.S.-led forces in the Korean War. “We are Chinese,” she wrote. “We don’t back down.”

The Mao post and other messages from Beijing highlight what China sees as one of its core advantages against the U.S.: While Trump and his Republican backers are vulnerable to the whims of American voters, the party that Mao built is deeply entrenched, having maintained power through more than seven decades despite war, famine, political upheaval and financial crises.

Xi isn’t resting on those laurels. Since an earlier trade war during the first Trump administration, he has intensified his grip on the country’s leadership and spent lavishly reinforcing the authoritarian tools that underpin the party’s longevity, including enhancements of the world’s most sophisticated systems for censorship and surveillance. The Chinese leader wants to harden his country specifically for a confrontation with the U.S., urging officials to engage in what he calls “extreme scenario thinking.”

Trump has already struck a more conciliatory tone this week, saying he wants to enter into negotiations with Beijing and is willing to lower the 145% tariffs he has imposed on China in his second term.

The White House hasn’t said what it ultimately hopes to achieve in negotiations with China. Any push to significantly reduce the U.S.’s $295 billion trade deficit would require China to fundamentally change its economic model.

In Xi, Trump is facing off with an equally pugilistic figure. Before he even took power, Xi swiped at “foreigners with full bellies and nothing better to do” who had the temerity to criticize China. He has repeatedly stated his belief that the age of American dominance is nearing its end, due in large part to the capitalist excesses of the very consumer-driven economy the U.S. hopes to foist on China.

Where the Trump administration is riven with factions and embraces chaos, Xi has focused on stability. He eliminated term limits in 2018 and has used an endless crackdown on corruption to centralize power to a greater degree than any leader since Mao. He has also packed the party’s senior leadership with officials experienced in propaganda and security, who have made it a priority to inoculate China against the risk of mass dissent.

“Chinese society has an incredibly high capacity for pain,” said Yasheng Huang, a professor of global economics at the MIT Sloan School of Management and author of the forthcoming “Statism with Chinese Characteristics.”

“There is one scenario in which stability breaks down and this is the scenario in which there is a serious split among top leaders, as happened in 1989,” Huang said, referring to internal party divisions over that year’s pro-democracy protests in Tiananmen Square. China is now further away from such a rupture than at any other time since the start of the post-Mao reform era in 1978, according to Huang.

To be sure, the Trump administration can inflict real pain on China, which is heavily dependent on exports for growth. The country’s debt-laden economy grew by 5% in 2024, according to official figures, though that number has its skeptics. At the start of the earlier China-U.S. trade standoff during Trump’s first term, it was closer to 7%.

By some estimates, the new Trump tariffs could wipe out half or more of Chinese exports to the U.S. Economists at Goldman Sachs estimate that as many as 20 million workers in China are exposed to U.S. exports.

“No political system, and no political leader, could emerge unscathed by tariffs of the dimension proposed by Trump, if they go ahead in a sustained fashion,” said Richard McGregor, a China expert at the Lowy Institute, an Australian think tank. “Factories will close and many thousands of people will lose their jobs, with little in the way of a welfare system to fall back on.”

Workers are the biggest drivers of dissent in China, accounting for more than 40% of in-person and online protests in the country in the first three quarters of 2024, according to tracking by China Dissent Monitor, a project of the U.S.-based nonprofit Freedom House.

Some of the messages aimed at rallying the country for the trade fight have met with skepticism on Chinese social-media sites, suggesting the party could face pushback if the economy was to suffer significantly. Xi has said he worries China’s young people are unwilling to suffer for the good of the country in the same ways as previous generations.

The Tiananmen Square pro-democracy protests loom large in the minds of Communist Party leaders, who view demonstrations and the bloody crackdown that ended them as an existential crisis fueled by economic mismanagement. While students led the protests, the crowds in and around the square were mostly made up of regular workers angry over consumer inflation that was hovering at 18% that year.

If similar discontent were to boil up as a result of the trade war, the party can turn to a mix of responses, including fiscal stimulus, targeted subsidies for affected industries and even direct handouts to laid-off workers.

It can also wield the vast “stability maintenance” machinery that the party built to raise the political system’s pain threshold after the Tiananmen crackdown, which has ballooned in size and sophistication under Xi. That system includes human- and AI-powered censorship and surveillance networks designed to pre-empt dissent, backed up by an army of police and domestic security agents.

China budgeted the equivalent of $209 billion on domestic security in 2023, the most recent year for which official data is available. That figure, which doesn’t capture spending on surveillance technology initiatives, amounts to 175% of what the U.S. spent on policing in 2023 when accounting for cost differences in the two countries.

And it recently earmarked roughly $110 billion to fund the implementation of major national strategies and “security capacity-building.”

The party’s control systems faced their biggest test during the Covid-19 epidemic. Government analysis of individuals’ location data initially enabled the government to get the virus under control. After the fast-spreading Omicron variant outran the system, the government used its tracking technologies to lock down several cities.

In Shanghai, face-recognizing surveillance cameras and drones helped police keep an anxious population of 25 million locked in their homes, even as some ran short of food. Censors zapped negative views of the city’s predicament before they could spread widely, paving the way for state media to paint a picture of normality for people in other parts of the country.

In late 2022, after public frustration boiled over into protests in several cities, authorities tracked the phones and faces of protest participants, some of whom they detained and interrogated for weeks. Censorship systems, initially overwhelmed, quickly learned how to neutralize symbols of the protests, including blank pieces of white paper held up by demonstrators as a sign of censorship.

Xi abruptly scrapped the country’s draconian zero-Covid controls a few weeks after the protests—evidence, according to some analysts, of the Communist Party’s vulnerability. But MIT’s Huang says the episode was the exception that proves the party’s resilience.

The protests erupted “only after months of economic devastation and an incredible level of personal suffering on the part of tens of millions, if not hundreds of millions, of people,” he said. “Once the lockdown ended, the protests fizzled out quickly and didn’t translate into any serious threat to the stability of the regime.”

Since then, Xi has pushed to bolster security systems further. He is encouraging the expansion of human surveillance through the adoption of the “Fengqiao model,” named after a town where residents were known in the Mao era for reporting on their fellow citizens’ errant behavior. The country’s network of intelligent surveillance cameras, already numbering in the hundreds of millions, continues to expand.

Chinese police and other domestic security agencies are actively exploring ways to apply the latest advances in AI to social control, according to government procurement documents and academic papers. That includes the use of AI models to attempt to predict discontent.

One police department in the coastal province of Zhejiang, for example, is experimenting with the use of large multimodal AI models to flag suspicious behaviors and analyze risks from large crowds in real-time surveillance footage.

“The reason they’ve spent all this time building these systems is precisely for the situation they are facing right now,” says Jessica Batke, a former U.S. State Department intelligence analyst now serving as a senior editor at ChinaFile, an online magazine run by the New York-based nonprofit Asia Society.

WSJ : U.S. Offers Iran Civilian Nuclear Program in Possible Compromise With Tehr

U.S. Offers Iran Civilian Nuclear Program in Possible Compromise With Tehran
Negotiators to meet Saturday in Oman for technical talks on nuclear deal

The Trump administration is prepared to allow Iran to have a civil nuclear program that relies exclusively on imported nuclear fuel, Secretary of State Marco Rubio said, outlining a possible compromise with Tehran aimed at preventing it from building a nuclear weapon.

Rubio’s comments, which came in a podcast earlier this week with The Free Press, provides a window into the details of the Trump administration’s stance since closed-door nuclear talks with Tehran started earlier this month.

Permitting Iran to have a program for power generation and other civilian purposes steps back from the initial demand last month by national security adviser Mike Waltz that Tehran agree to the “full dismantlement” of its nuclear program.

“If Iran wants a civil nuclear program, they can have one just like many other countries in the world,” Rubio said. But he added, Tehran would be required to “import enriched material.”

As outlined by Rubio, Iran could keep operating nuclear reactors, but its pathway to a bomb would be blocked, in part, because it wouldn’t be allowed to enrich its own uranium.

On Saturday, technical experts from the two sides will meet for the first time since the Trump administration and Iranians began high-level talks earlier this month.

The U.S. proposal, most experts say, is likely to be a hard sell. While it would provide Iran with what Tehran says it wants—a civilian nuclear program—accepting the proposal would make Iran dependent on foreign sources of fuel. Rejecting the proposal would deepen concerns in the West that Tehran is seeking to preserve the option to develop nuclear weapons.

Ali Shamkhani, a senior aide to Iranian Supreme Leader Ayatollah Ali Khamenei ruled out what he called the “U.A.E.” model as the talks got under way in Rome last week. That was a reference to the approach taken by the United Arab Emirates, which imports its nuclear fuel to operate several reactors, instead of enriching uranium itself. The oil-rich Persian Gulf state has also promised not to reprocess the spent fuel to extract plutonium, which can be used to make nuclear weapons.

The idea of providing Iran with fuel goes back to the early days of Iran’s nuclear program. Tehran offered to accept non-Iranian nuclear enrichment in the 1980s and early 1990s if the U.S. would allow European countries to provide the fuel but Washington refused, according to Seyed Hossein Mousavian, a former Iranian official now a nuclear policy expert at Princeton University.

Richard Nephew, who has served as a negotiator with Iran during the Obama and Biden administrations, said that the idea resurfaced during the talks leading to a 2015 nuclear deal restricting Iran’s nuclear program. Iran suggested that its uranium enrichment facilities could provide fissile material for neighboring countries but refused to depend on fuel from abroad, he said.

“People have been talking about joint ventures and multinational fuel supply for decades now. The problem always comes back to Iran’s distrust that they’ll get fuel and everyone else’s refusal to agree to Iran hosting such production sites,” Nephew said.

More recently, the idea of having Iran import fuel was hinted at by Steve Witkoff, the U.S. special envoy and real-estate executive who is leading the talks with Iran. In comments last week, Witkoff insisted that Iran eliminate its “nuclear enrichment and weaponization program,” leaving open the possibility some peaceful nuclear activities might continue.

Elaborating on Witkoff’s comments, Rubio said that Iran could have a peaceful civil nuclear program as long as the uranium was imported from outside the country and was enriched at the low level of 3.67%.

Witkoff is “talking about the level of enrichment that they would be allowed, the level of enriched material that they would be allowed to import from outside, like multiple countries around the world do for their peaceful civil nuclear programs,” Rubio said.

After President Trump during his first term exited the 2015 nuclear deal, Iran stepped up its nuclear program and is now producing 60% high-enriched uranium, the only country without nuclear weapons to do so. That material can be swiftly converted into the 90%-grade material needed for a bomb.

Iran already possesses enough nuclear material for at least six weapons, though U.S. intelligence says that Khamenei hasn’t given the go-ahead to build a nuclear device.

Rafael Grossi, the head of the International Atomic Energy Agency, which monitors Iran’s nuclear program, told reporters on Wednesday there are no indications that Tehran has slowed the pace of its nuclear operations since talks with the Trump administration began.

Grossi, who visited Iran last week, said that Tehran has agreed to let an IAEA technical team travel to the country in coming days to discuss replacing equipment that Iran had removed. Iran agreed to the visit after being criticized for not cooperating with the watchdog agency. While the meetings aren’t linked to the U.S. talks, Grossi said it was a sign that Iran might be open to a deal.

Gary Samore, the director of the Crown Center for Middle East Studies at Brandeis University and a former White House official during the Obama administration, said it was extremely unlikely that Iran would give up its enrichment program. Such a refusal, he said, would confront the Trump administration with a choice between accepting a limited Iranian enrichment program under strict verification or considering military action that Trump has threatened if Tehran balks at a deal.

Iran’s deputy foreign ministers, Majid Takht-Ravanchi and Kazem Gharibabadi, will head the Iranian delegation to the Saturday technical talks, which will be held in Oman. The U.S. hasn’t announced the members of its team. Another round of high-level negotiations between Iranian Foreign Minister Abbas Araghchi and Witkoff are expected to follow at some point.

WWD : Kering Reports 14% Sales Drop, Demna to Unveil First Gucci Designs in Sept

Kering Reports 14% Sales Drop, Demna to Unveil First Gucci Designs in September
The cash-cow Italian brand, down 24 percent in the three-month period, is awaiting Balenciaga fashion star Demna to rev up creativity.

Gucci’s new creative director Demna is expected to deliver the first “hint” of his vision for the ailing Italian megabrand this September, Kering executive Francesca Bellettini said Wednesday night.

Speaking to analysts after the French luxury group missed low expectations and reported a 14 percent drop in first-quarter revenues to 3.88 billion euros, she also made clear that the Georgian designer, who is moving over from sister brand Balenciaga in early July, will not pursue a scorched-earth policy on existing product lines, despite his past penchant for dystopian aesthetics.

“Demna is going to build on the vision of the brand. He’s going to bring desirability and fashionability, but it’s a build-up, not a cancelation,” said Bellettini, deputy chief executive officer in charge of brand development.

Bellettini and Armelle Poulou, Kering’s chief financial officer, were pummeled with questions about Gucci’s near-term prospects, given that its first-quarter sales dropped 25 percent on a comparable basis, slightly worse than the last three months of the year. (The brand accounted for 63 percent of Kering’s operating profit in 2024.)

While acknowledging that carryover styles were a heavy drag on Gucci’s performance in the quarter, Bellettini touted that its new Emblem, B Bag and Softbit handbag lines were performing in a low-traffic environment “giving us a lot of confidence in the appeal of novelties.”

She said Ophidia and Marmont lines would similarly be tweaked and improved in the near future, and “we are pushing even more on our supply chain to decrease the time to market for novelties. This is going to be the focus.”

In the future, “Demna for sure will be reinterpreting the icons,” Bellettini assured.

Since the designer was announced last month as the successor to Italian designer Sabato De Sarno, analysts had been fretting about the timing of Demna’s first Gucci collection, given that he is only finishing up his Balenciaga tenure in July with a couture collection.

De Sarno exited Gucci last February after a two-year collaboration that failed to ignite sales. His collections were met with mixed reviews and his timeless take on signature pieces did not gain enough traction at retail for a turnaround.

Bellettini skirted a direct question about who would succeed Demna as artistic director at Balenciaga, saying only that it would be announced “in due course,” and that she is searching for a “high caliber” candidate who “can build on what has already been done very well at the brand and continue the success and continue to develop.”

According to market sources, Balenciaga has held discussions with designers including Alaïa’s buzzy creative director Pieter Mulier, and Kim Jones, who recently wound up eventful stints designing Dior menswear and Fendi’s women’s collections.

It is understood Balenciaga’s business is evenly split between men’s and women’s, a rarity among Europe’s large luxury players.

Analysts expressed disappointment by the sales miss of 2 to 3 percentage points.

“We are likely to see further caution applied to Kering’s full-year 2025 earnings estimates given company-specific issues compounded by a challenging luxury sector backdrop,” RBC analyst Piral Dadhania said in a research note.

“This confirms our understanding that the Gucci revival has yet to appear and will likely face a more difficult context as luxury consumer demand softens,” opined Bernstein’s Luca Solca.

Citing an “environment harsher than anyone anticipated,” Poulou said Kering is anticipating another double-digit revenue decline in the second quarter, though the second half of the year should be better than the first.

The numbers trailed the performance of Kering’s larger luxury rivals LVMH Moët Hennessy Louis Vuitton, which reported a 3 percent dip in first-quarter revenues to 20.31 billion euros, and Hermès International, which bucked the trend and delivered a 7.2 percent improvement to 4.13 billion euros.

Kering reported double-digit declines across all regions in the first quarter of the year, with Asia-Pacific down 25 percent, in line with the last three months of 2024, the company noted.

However, Western Europe and North America fell 13 percent, and Japan 11 percent, representing a sequential deceleration.

First-quarter sales at Bottega Veneta improved 4 percent, reflecting gains “across all product categories,” and Kering Eyewear logged a 3 percent increase at comparable exchange rates. Meanwhile, Saint Laurent sank 9 percent and “other houses,” which includes Balenciaga, McQueen, Pomellato and Brioni, declined 11 percent.

While “the performance of Balenciaga’s leather goods was very solid,” sales were down at McQueen, still finding its footing under designer Seán McGirr, Kering said.

Bellettini noted that despite the low-traffic environment, all brands are improving on average ticket price. However, to fuel first-time purchases, brands are also revamping key leather goods lines for more “aspirational customers,” such as Saint Laurent’s Loulou range, she added.

The group closed a total of 25 stores in the quarter — including 10 at Gucci and a “substantial streamlining” at McQueen — leaving it with a network of 1,788 locations. Retail accounts for 73 percent of group revenues, and these were down 16 percent in the period. Wholesale decreased 9 percent.

“As we had anticipated, Kering faced a difficult start to the year,” François-Henri Pinault, Kering chairman and chief executive officer, said in a statement issued Wednesday after the close of trading on the Paris bourse.

“In this environment, we are fully focused on executing on our action plans to reach our strategic and financial objectives and strengthen the positioning of our houses on all our markets,” Pinault said. “We are increasing our vigilance to weather the macroeconomic headwinds our industry faces, and I am convinced that we will come out stronger from the present situation.”

Poulou told the call she saw no change in sales trends so far in the second quarter.

“The U.S. in [first quarter] was similar to [the fourth quarter]. We don’t see any change in trends, but of course we remain vigilant,” she said. “We remain extremely cautious.”

Asked if Kering would pursue price increases to mitigate the impact of Trump administration tariffs, she said “we need more clarity” before acting and “we must consider consumer confidence in geo-pricing.

“Top-line recovery is our absolute priority,” she stressed.

>>> US After Hours Summary: PI +15.2%, CYH +14%, NOW +10.8%, TXN +4.8%, WHR +4%,

After Hours Summary: PI +15.2%, CYH +14%, NOW +10.8%, TXN +4.8%, WHR +4%, LRCX +3.5% higher on earnings; FAST +2.3% on 2-for-1 stock split; RHI -15.3%, ALK -7.7%, IBM -6%, LUV -3.6%

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: PI +15.2%, CYH +14%, NOW +10.8% (also announces various collaborations), RMD +7.5%, HBNC +5.8%, OII +5.7%, PEN +5.7%, TXN +4.8%, MC +4.5%, TYL +4.3%, RS +4.2%, ESI +4.1%, URI +4.1% (also authorizes new $1.5 bln share repurchase program), WHR +4%, IMAX +3.9%, LRCX +3.5%, MTDR +3% (also authorizes new $400 mln share repurchase program), GGG +2.7%, CSL +2.5% (also increases share repurchase target to $1 bln for 2025), QS +2.4% (also enters collaboration with Murata), BANC +2% (also increases share repurchase authorization to $300 mln), MOH +1.9%, MTH +1.9%, DFS +1.5%, EW +1%, NEM +0.8%, CHE +0.6%, EGP +0.1%, EPRT +0.1%, FAF +0.1%, LVS +0.1% (also increases share repurchase authorization to $2 bln), RNR +0.1%, ROL +0.1%

Companies trading higher in after hours in reaction to news: CADL +14.1% (announces oral presentation of Phase 3 CAN-2409 results), CRDF +4% (granted a patent), FAST +2.3% (approves 2-for-1 stock split), MLYS +2.1% (NEJM publishes results from Phase 2 Advance-HTN trial), CRVS +2% (to present data from Phase 1 trial of Soquelitinib), RKLB +1.9% (selected by KTOS to launch first full-scale hypersonic test), INSM +1.9% (NEJM publishes results from Phase 3 ASPEN study), VSTM +1.5% (FDA clears Investigational NDA of VS-7375), MPX +0.9% (files $150 mln mixed shelf offering; also files for offering by selling shareholders), GPRK +0.4% (reports Q1 operational update), ET +0.3% (increases dividend), SUN +0.3% (increases dividend), PLX +0.3% (CFO to step down), HOMB +0.3% (increases dividend), ALSN +0.1% (selected by all three OEMs in India's FICV program), GM +0.1% (to increase production at Ohio plant, according to Reuters), NG +0.1% (files mixed shelf securities offering)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: RHI -15.3%, ALK -7.7%, IBM -6%, LOB -5.9%, VRE -5%, VIST -4.7%, GSHD -4.5% (also authorizes new $100 mln share repurchase program), CVBF -4.1%, CCS -3.9%, KNX -3.6%, LUV -3.6% (also proactively reducing capacity in 2H25 due to lower demand), CHDN -3.4% (also to pause projects to develop The Skye, Conservatory and Infield areas), KALU -3.3%, CLB -3%, NEU -2.8%, RJF -2.3%, ORLY -2.1%, TFII -2%, CMG -1.9%, CACI -1.8%, SIGI -1.8%, VKTX -1.1%, ASGN -0.7%, WU -0.5%, MXL -0.3%, RLI -0.2%

Companies trading lower in after hours in reaction to news: JACK -7.5% (provides Q2 guidance and long-term plan update; launching strategic alternatives process for Del Taco; discontinuing dividend), TATT -4.1% (files $70 mln mixed shelf offering; also files for offering by selling shareholders), COLB -2.2% (COLB to acquire PPBI, also reports earnings), HOG -1.5% (activist issues letter), MCB -0.2% (eyes Q3 for potential dividend)

FT : Donald Trump to exempt carmakers from some US tariffs

Donald Trump to exempt carmakers from some US tariffs
President’s latest retreat follows intense lobbying by industry executives

US President Donald Trump is planning to spare carmakers from some of his most onerous tariffs, in another trade war climbdown following intense lobbying by industry executives over recent weeks. 

The move would exempt car parts from the tariffs that Trump is imposing on imports from China to counter fentanyl production, as well from those levied on steel and aluminium — a “destacking” of the duties, according to two people with knowledge of the matter.

The exemptions would leave in place a 25 per cent tariff Trump imposed on all imports of foreign-made cars. A separate 25 per cent levy on parts would also remain and is due to take effect from May 3. 

Although Washington has already shielded autos from the “reciprocal” tariffs announced on major trading partners, US auto companies have in recent weeks pushed for further exemptions.

The concessions would mark an initial win for the auto sector and another retreat by Trump on his most aggressive tariffs amid concerns that they would push up US car prices, disrupt supply chains and cause job losses.

Car executives have stepped up their criticism of the tariffs over the past week, with Stellantis chair John Elkann warning that “American and European car industries are being put at risk” by Trump’s trade policy.

Another senior automotive executive said: “We’ve urged the administration — don’t hit us over and over with all of these other tariffs . . . because that really jeopardises the health of our sector.”

The reprieve is also the latest sign Trump is open to offering carve-outs to favoured industries after his tariff plans triggered a deep sell-off in global markets this month and warnings they could lead to a US recession.

Trump announced bespoke “reciprocal” tariffs of up to 50 per cent on almost every US trading partner on “liberation day” on April 2, before later lowering the levies to a 10 per cent baseline for 90 days.

Last week, the administration said it would exempt consumer electronics such as laptops and smartphones from the reciprocal tariffs but would instead potentially hit those imports with other levies later this year.

The president had also signalled last week that there would be “help” for the auto industry. He also earlier offered better terms for imports of cars made in Mexico and Canada as long as companies complied with the rules of the 2020 USMCA trade agreement.

Complete vehicles and parts that comply with the terms of the USMCA will have the 25 per cent tariff applied only to their non-US content.

The people with knowledge of the discussions said current negotiations are mainly focused on making it easier to implement the levies — for example, by simplifying rules over where the car components are sourced.

The White House declined to comment.

The Information : OpenAI Forecasts Revenue Topping $125 Billion in 2029 as Agent

OpenAI Forecasts Revenue Topping $125 Billion in 2029 as Agents, New Products Gain

The Takeaway
• OpenAI projects $174 billion in revenue in 2030
• Monetizing free users is a driver to higher revenue
• Gross margins expected to near 70% in 2029

For two years, ChatGPT has been OpenAI’s cash cow. But by the end of the decade, the company has told some potential and current investors it expects combined sales from agents and other new products to exceed its popular chatbot, lifting total sales to $125 billion in 2029 and $174 billion the next year, according to documents seen by The Information.

The projections, which would propel the 10-year-old startup’s sales toward the level of Nvidia or Meta Platforms today, reflect rapid revenue gains from agents, or AI software that can take actions on behalf of customers, as well as other new products. These include those tied to “free user monetization,” likely meaning money made from OpenAI’s nonpaying users.

OpenAI ended last year at $3.7 billion in revenue, nearly quadrupling sales the year prior. The San Francisco startup has been serving more than 500 million active users per week, up from 300 million in December.

What the new products are is unclear. CEO Sam Altman, in an interview with Stratechery newsletter writer Ben Thompson, recently discussed the possibility of charging affiliate fees—or a cut of a sale initiated from a user’s search through OpenAI software such as ChatGPT or its agents—though he said he is reluctant to sell traditional ads on the chatbot. OpenAI Chief Financial Officer Sarah Friar, meanwhile, has discussed the possibility of selling ads but told the Financial Times the company has “no active plans” to pursue advertising.

The forecasts provide insight into why investors, in a deal led by SoftBank, agreed to invest $40 billion in new capital at a $260 billion valuation, 73% higher than its valuation last fall. Spokespeople for SoftBank and OpenAI declined to comment.

The projections indicate executives expect the new sources of revenue could help offset rising costs. The company, which estimates it will burn $46 billion in cash over the next four years, thanks to the costs of training and running its models and other expenses such as salaries, expects to turn cash flow positive in 2029, generating close to $12 billion in cash that year.

The company also expects growth in inference costs—the costs of running AI products such as ChatGPT and underlying models—to moderate over the next half-decade. Those costs will triple this year, to about $6 billion and rise to nearly $47 billion in 2030. Still, the annual growth rate will fall to about 30% then.

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Costs for app developers using OpenAI models have been declining as models have become more efficient, as well as thanks to new techniques like prompt caching, which reuses parts of prior prompts to answer questions.

This slower growth in inference costs, combined with soaring revenue, is a boon to OpenAI’s margins. OpenAI anticipates gross profit as a percentage of revenue rising to nearly 70% in 2029, from 40% last year, which was far lower than the average gross margin of 74% for cloud software stocks tracked by Meritech Capital.

Beyond Chatbots

OpenAI has been releasing a slew of new products and model updates such as its computer-using Operator agent, reasoning models, and image-, audio- and video-focused AI. At the same time, OpenAI executives have discussed expanding into new types of products like humanoid robots and AI chips.

That said, OpenAI expects ChatGPT and API, its core products, to continue to comprise the bulk of its revenue. The company expects sales from ChatGPT subscriptions—the cost of which can range from $20 to $200 per month—to rise to $50 billion in 2029 from about $8 billion this year.

Revenue from selling access to its application programming interface, which gives businesses such as Salesforce and T-Mobile access to its models, will hit $22 billion in 2029, up from about $2 billion this year.

In 2029, the company has projected, it will generate $29 billion in revenue from agents, up from $3 billion this year. These agents could range from “high-income knowledge worker” agents that cost $2,000 a month to $20,000 per month for doctorate-level research agents.

It also has lined up some deep-pocketed customers. In February, SoftBank said it would spend $3 billion annually on OpenAI products, including AI agents, and also develop a joint venture to market OpenAI’s products, branded as Cristal Intelligence, to companies in Japan. Altogether, OpenAI forecasts agents will make up nearly a quarter of its revenue within the next five years.

OpenAI won’t start generating much revenue from free users and other products until next year. In 2029, however, it projects revenue from free users and other products will reach $25 billion, or one-fifth of all revenue.

The company is forecasting a sharp growth in users, telling investors it expects to hit 3 billion monthly active users, 2 billion weekly active users and 900 million daily active users by 2030. Fewer than 5% of ChatGPT’s weekly active users were paying subscribers at year-end.

“Advertisers have always followed eyeballs,” said Rich Greenfield, a co-founder and analyst at research firm LightShed Partners. “If there is a considerable time spent on OpenAI, advertisers will beg to be there.”

Other AI startups have started to test making money beyond subscriptions. Perplexity, a startup that sells access to an AI-powered search engine, in November said it was experimenting with selling ads on some queries, such as one sponsored by Indeed that asks, “How can I use Indeed to enhance my job search?” Perplexity has said its initial brand partners include Whole Foods Market and media agency Universal McCann.

Shopping is another potential avenue for OpenAI to make money off its hundreds of millions of users. Rival Google, for instance, has begun monetizing its AI Overview feature. It has been selling advertisers placement near the AI-based summaries shown to U.S. users on mobile devices.

OpenAI has already begun experimenting with launching software features for shopping. Starting in January, some users can access web-browsing agent Operator as part of their pro ChatGPT subscription tier to order groceries from Instacart and make restaurant reservations on OpenTable.

Launch partners such as Uber receive aggregated data on the most common uses of Operator and the traffic it is driving to their site. OpenAI said it would expand Operator to other users and even integrate these capabilities into ChatGPT.

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:
  • ENPH -11.6%, PKG -6.1%, LII -4.8%, OTIS -3%, AVY -2.8%, TNL -2.1%, MAS -1.8%, PFSI -1.5%, RNST -1.5%, TDY -1.3%, SF -1.3%, NBHC -1.1%, EDU -1.1%, .
Other news:
  • BMY -4.4% (topline results from Phase 3 ARISE Trial)
  • SRAD -3.6% (announces launch of 23 mln share offering by selling shareholders and concurrent share repurchase; also guides Q1 revs above consensus)
  • PROP -1.9% (files $500 mln mixed shelf securities offering)
  • WNC -1.8% (strategic partnership with UP.Labs)
Analyst comments:
  • SEDG -5.4% (downgraded to Underweight from Equal Weight at Morgan Stanley)
  • VOD -2.2% (downgraded to Underweight from Neutral at JPMorgan)