Five Drivers Behind the Wall Street Selloff: OpenAI Revenue Questions, SpaceX Wireless Push and Apple’s 15% iPhone Parts Cut [Park Shin-young’s Before the Bell]

1. OpenAI’s annualized revenue may be under $50 billion, not $70 billion

AI-related technology shares slid after reports that OpenAI’s annualized revenue is coming in below earlier market estimates. The differing revenue calculations used by OpenAI and Anthropic also raised questions about the reliability of financial figures at private AI companies.

OpenAI recently told investors that its annualized revenue as of the end of September was just under $50 billion, Reuters and Bloomberg reported on Oct. 8. Earlier market estimates had put the figure near $70 billion.

The roughly $20 billion gap largely reflects differences in revenue accounting. OpenAI uses a net basis for revenue generated through cloud partners, while Anthropic uses a gross method that counts the full amount paid by customers as revenue.

For example, if a customer spends $100 through Amazon Web Services, Anthropic records the full $100 as revenue and books the payment to the partner as an expense. OpenAI, by contrast, does not include partner-channel sales in annualized revenue the same way.

That accounting distinction matters when investors assess business scale and profitability. A different presentation of revenue, however, does not by itself mean cash inflows or profit differ by the same amount.

The sharp market reaction reflected concern over AI infrastructure spending. OpenAI is seeking to raise more than $30 billion in fresh funding at a $1.4 trillion valuation. Its revenue growth outlook is also a key pillar supporting demand assumptions for Nvidia and Broadcom chips, as well as Oracle’s data-center investment.

If uncertainty over revenue size grows, doubts may also deepen over whether hundreds of billions of dollars in AI infrastructure investment can generate adequate returns.

Anthropic’s annualized revenue, meanwhile, topped $65 billion at the end of July and was projected to reach $100 billion by year-end.

2. SpaceX moves to enter the U.S. wireless market directly; telecom shares tumble

Elon Musk’s SpaceX has agreed to acquire wireless spectrum licenses that can be used nationwide in the United States. The move would expand Starlink beyond satellite internet and into the traditional mobile market. Shares of AT&T, Verizon and T-Mobile each fell about 6% in after-hours trading.

SpaceX signed a deal to buy nationwide 800-megahertz spectrum licenses from digital infrastructure investment firm Grain Management, CNBC reported. The Wall Street Journal said the transaction is worth about $8 billion.

The 800 MHz band is low-band spectrum that travels long distances and penetrates buildings well. The deal is significant because it gives SpaceX a foundation to offer mobile service directly rather than relying on partnerships with incumbent carriers.

Until now, satellite communications have largely followed a model in which operators such as Starlink provide network capacity to telecom companies, which then sell services to customers. T-Mobile’s T-Satellite is one example.

If SpaceX starts signing up subscribers directly, existing carriers would face a network supplier that is also becoming a competitor.

Still, SpaceX would struggle to replace the three major carriers anytime soon. Telecom industry expert Tim Farrar said the amount of spectrum acquired is limited and that reliable service in urban areas and inside buildings would still require terrestrial base stations.

That outlook lifted shares of tower operators such as American Tower, Crown Castle and SBA Communications. Investors see a chance that SpaceX could lease ground towers as it builds out a nationwide mobile network.

3. U.S. Treasury term premium hits a 12-year high, adding pressure on long-term yields

Long-dated U.S. Treasury yields are facing renewed upward pressure as the term premium surges, with benchmark yields already near their highest levels in 24 years.

A New York Fed model shows the term premium on the 10-year Treasury has risen about 40 basis points since mid-September to 0.98%. That is the highest level since 2014.

The term premium is the extra compensation investors demand to hold longer-dated debt instead of repeatedly buying short-term Treasuries. Even if expectations for the policy rate do not change, a higher term premium can still push long-term yields higher.

What stands out in the latest rise in yields is that inflation expectations and the outlook for Federal Reserve policy have changed little. The move suggests investors are demanding greater compensation for U.S. fiscal deficits, increased Treasury supply and geopolitical uncertainty.

The U.S. federal budget deficit stands at about $2 trillion, or roughly 6% of gross domestic product. At the same time, companies are issuing more corporate debt to fund investment in AI data centers, semiconductors and power infrastructure, adding to supply pressure in bond markets.

Temporary supply-and-demand factors may also have played a role. Stress in France’s government bond market may have prompted global investors to rebalance holdings, while mortgage-backed securities investors may have amplified Treasury selling through rate-hedging trades.

What concerns Wall Street is the possibility that the rise in the term premium is not temporary but structural.

If the term premium stays elevated, borrowing costs for companies and households could keep rising even without further Fed rate increases. In effect, the bond market would be tightening financial conditions on its own.

4. Citi quant team says it’s ‘the late 1970s’ and recommends selling U.S. stocks

Citigroup’s quantitative strategy team recommended cutting exposure to U.S. stocks and placing selective bearish bets, arguing that the current market backdrop resembles the late 1970s.

Citi’s macro model is signaling that the U.S. economy has moved beyond a Goldilocks phase and is entering the later stage of the business cycle.

The team cited two main reasons. One is tighter financial conditions driven by higher Treasury yields and increased corporate bond supply. The other is that economic data are beating market expectations by smaller margins.

Citi’s quant team therefore recommended shifting from a 4% overweight in equities to a 5% underweight. It also said investors should build a small short position in U.S. stocks and favor emerging-market equities on a relative basis.

In the late 1970s, the comparison period cited by Citi, stocks rose as inflation initially eased and economic activity remained resilient. Prices later accelerated again, however, and equities turned lower.

Views within Citigroup are not uniform. Citi’s U.S. equity strategy team is maintaining its year-end target of 8,100 for the S&P 500.

Given that the S&P 500 closed at 7,765 on Oct. 8, that implies additional upside of about 4%.

The equity strategy team is more constructive on corporate earnings and shifts in Fed policy. The quant team, by contrast, sees rising risks from interest rates, financial conditions and the business cycle.

U.S. stocks are still trading near record highs. Inside Wall Street, however, the divide over the market’s next direction is widening.

5. Apple reportedly cuts iPhone 18 parts orders 15% a month after launch

Apple has cut some component orders for the iPhone 18 Pro and Pro Max, which were launched last month, according to a report.

Nikkei Asia reported that Apple told several suppliers to reduce October component orders by about 15% from the original plan. Weaker-than-expected demand was cited as the reason.

The iPhone 18 lineup posted strong early sales in China. In the global market as a whole, however, demand has fallen short of expectations.

The order cut does not apply to all suppliers, and it is not yet clear whether November orders will also be revised. Apple did not immediately comment on the report.

Morgan Stanley said in a report earlier this month that it had not seen meaningful supply-chain adjustments following the launch of the iPhone 18 Pro series. That report, however, was written before the latest production-cut report emerged.

Morgan Stanley maintained a positive view on Apple’s upcoming product roadmap, saying the lineup of products set to be released is among the most compelling in more than a decade.

It did not raise its earnings outlook. Morgan Stanley kept its forecast for earnings per share at about $10 for fiscal 2027 and about $11 for fiscal 2028.

It lowered its price target to $355 from $360, citing uncertainty over the long-term profitability of Apple’s services business.

Apple shares fell about 2% in premarket trading on Oct. 9. Investors are watching whether the cut in component orders is a temporary inventory adjustment or a sign of weakening demand for premium smartphones.

Park Shin-young, New York correspondent, Hankyung.com nyusos@hankyung.com