Authors: Scott Galloway & Ed Elson
Compiled by: Deep Tide TechFlow
Deep Tide's Insight: Apple lawsuit, Oracle rating downgrade, price war kicks off—OpenAI is experiencing its worst week ever. Even more critically, if all these risks materialize, its 2030 revenue forecast could plummet by 70%, with cash flow losses reaching $165 billion. Could this AI giant with a valuation in the hundreds of billions become the biggest tech bubble in history?
Here's Why OpenAI May Miss 70% of Its 2030 Revenue Forecast
It was another terrible week for OpenAI. The company was exposed for selling advanced AI models to Chinese companies on the Pentagon's blacklist; its first AI device was leaked (reportedly a portable speaker); and according to Emarketer's latest forecast, OpenAI's advertising business is projected to be 95% lower than its own predictions.
And there's more. Apple sued OpenAI last week, alleging its consumer hardware plans are the product of stolen intellectual property. S&P Global Ratings also downgraded Oracle's debt to BBB-, just one notch above junk status, citing OpenAI as a "key credit risk." Furthermore, DeepSeek is reportedly preparing for an IPO, possibly filing as early as this year. A cheaper Chinese AI model provider successfully going public could make it harder for OpenAI and Anthropic to attract funding.
Taken together, these issues raise serious questions about OpenAI's ability to meet its revenue forecasts and fulfill its hundreds of billions of dollars in contractual obligations with computing suppliers and chip companies.
First, Apple's lawsuit could bring OpenAI's entire hardware business to a standstill. Apple alleges that OpenAI poached over 400 Apple employees, extracting confidential information from them, and then tricked Apple's suppliers into doing proprietary work for OpenAI without permission. Apple is asking the court for monetary damages and an order for OpenAI to return or destroy all misappropriated property.
Second, the AI price war has begun, with Chinese companies like DeepSeek posing the biggest threat. Open-source Chinese models now account for nearly 50% of enterprise token usage on OpenRouter (an AI model marketplace), up from just 4.5% in the first half of 2025.
In response, US companies are slashing prices. Last week, Meta announced its new model Muse Spark 1.1, priced 75% cheaper than OpenAI and Anthropic. Under industry pressure, OpenAI released a model that is 80% cheaper than its own.
In a worst-case scenario, if Apple's lawsuit shuts down OpenAI's hardware business, ChatGPT ad revenue underperforms as projected by EMarketer, and the price war forces OpenAI to cut model pricing by 80%, then OpenAI's 2026 revenue would fall by 40% and its 2030 revenue would drop by 70%.
For a company that, under ideal circumstances, would only be able to cover about 80% of its cash burn by 2030, this situation would be catastrophic.
This would also impact when OpenAI achieves positive cash flow. According to internal projections, OpenAI will reach positive cash flow in 2030. But under this downside scenario, it would instead lose $165 billion that year.
OpenAI CEO Sam Altman attempted to ease investor concerns with a tweet, but his statement ultimately just promised to "do the right thing." Whatever that means.
The best business model in history is stealing intellectual property. The second best is: delivering 80% of the value of a product at half the price. That's exactly what DeepSeek and other Chinese open-source weight models are now attempting to do.
The US has placed a massive bet on AI, and China just pulled out a product near the cutting edge at a fraction of the cost. Once Trump figures out what's going on, this will become the next geopolitical football.
The Market Hasn't Broadened—It's Just Getting Better at Hiding AI
Investors keep hearing that the stock market is broadening. But is it really? The deeper you look, the harder it is to argue that stocks, bonds, and even alternative assets aren't now one big bet on AI.
This pattern is most evident in the stock market. AI-related stocks now account for over 50% of the S&P 500 by weighting. If you removed AI and energy from the S&P 500 this year, the index would be negative.
AI is the hidden catalyst driving returns in seemingly unrelated sectors. For example, three of the four best-performing companies in the S&P 500 real estate sector are real estate investment trusts (REITs) focused on developing AI data centers.
Utility companies are benefiting from AI's soaring power demands. US electricity demand jumped to a record high last year, with data centers accounting for about 50% of the demand growth.
Industrial stocks are soaring on construction demand to build AI data centers. In fact, for the first time since 2021, the forward price-to-earnings ratio for S&P 500 industrials (26x) is higher than that for tech companies (24x).
The financial sector also relies on AI. Major banks are raking in record fees from AI company IPOs and M&A activity, and record trading revenue from market hype surrounding AI. Robert Armstrong of the Financial Times even wrote: "It’s not too much of a generalization to say that big banks are now direct AI plays."
Even the Russell 2000 small-cap index saw 52% of its first-half return come from AI-related companies.
Emerging markets are no exception. Korea and Taiwan account for 75% of emerging market returns, with most of those gains coming from three AI semiconductor chip suppliers: TSMC, Samsung, and SK Hynix.
In Europe, just nine AI winners account for roughly 47% of the Stoxx Europe 600 index's return this year.
Apollo chief economist Torsten Slok succinctly captured the implication of this dependence: "This AI thing better work."
Real estate investment trusts (REITs) are companies that own, operate, or finance real estate—apartment buildings, hotels, or increasingly, data centers. Many REITs trade publicly like stocks, so buying a share means buying into a professionally managed portfolio of real estate. REITs are required to distribute at least 90% of annual taxable income to shareholders as dividends.
The experts on CNBC own stocks, so they'll always find reasons why others should buy more. But don't be fooled: the market isn't broadening; it's just finding new ways to buy Nvidia.
Everything is becoming an AI stock. This isn't necessarily bearish, but investors are kidding themselves by calling it "broadening," as if it means diversification away from AI. It doesn't. Buying "AI-adjacent stocks" and calling it broadening is like ordering a Diet Coke with your Double-Double at In-N-Out. Let's be clear: you still bought a cheeseburger.
Among the big tech companies, who is least dependent on AI? Apple. Its stock is up 60% over the past year and just surpassed Nvidia to become the world's most valuable company again. Amazon, while still AI-related but more diversified than other hyperscale cloud providers, is up 11% over the past year. Microsoft, the core of the AI play, is down 23%.
If I could go long one basket of stocks, it would be GLP-1. If I could go short one, it would be AI. But to be clear: I'm not telling you to hold gold bars or cash. I am always in the market—you never know how far or how irrationally it will run. But you should understand how large the market's true exposure to one sector is.
I am a huge fan of index funds and passive investing: put the money in and let the market do the work. But now we have to ask what true diversification actually means. Putting money into the S&P 500 no longer does that job, which means you have to start doing some homework.
The question is: Can you find sectors that are truly away from AI?
I'll point out one sector: healthcare. It was one of my picks at the start of the year, and I stand by it. AI hasn't touched it yet—which means the real returns may still be ahead. But finding these sectors is the puzzle investors now face.
Netflix Engagement Slips, Competitive Pressure Mounts
Netflix reported disappointing second-quarter earnings. Revenue grew 13%, missing expectations, and the streaming giant posted weak engagement data, followed by announcing it would reduce the frequency of releasing engagement metrics, unsettling investors. The stock fell as much as 8% on Friday.
Netflix once boasted about its transparency; now, that claim seems ironic. In Q1 2025, Netflix stopped reporting quarterly subscriber numbers, telling investors to focus on engagement. Last week, the company decided to reduce its "What We Watched" engagement report from twice a year to once a year starting in 2027.
The last semi-annual engagement report looked weak. Total watch time grew just 2%, while the subscriber base is estimated to have grown 10%, implying per-subscriber daily engagement fell 8%.
Netflix has been facing increasing competition from short-form video suppliers, particularly YouTube. In response, it added "Clips," a TikTok-style scroll feature surfacing short content from its own library; struck video podcast deals with Spotify and Barstool; and signed new licensing agreements with external publishers (BuzzFeed, Condé Nast) to bring new short-form content to the platform.
Netflix has lost over $250 billion in market cap over the past year, while fellow streaming giant Disney has lost nearly $50 billion. Both are well-managed companies with growing revenue and subscribers, raising prices—yet are being punished for it. This raises an important question: Is streaming just a bad business? Or have Netflix and Disney's creative wells run dry? Tell us what you think in the comments.
In the next six months, OpenAI will acquire enterprise AI company Sierra and appoint Bret Taylor as CEO. Sam Altman will be elevated to Chairman. Altman is an innovator, not an operator, and Bret Taylor is arguably the best enterprise software operator of his generation.
