Wall Street Millennial
July 3, 2026
OpenAI's IPO Delay: Financial Crisis and Customer Backlash
TL;DR
OpenAI delays its IPO from 2026 to 2027 after investment banks value it below $1 trillion, while the company faces a revenue sustainability crisis as customers revolt against massive price increases and pull back AI spending.
Key Takeaways
- 1OpenAI confidentially submitted an S-1 IPO filing in June 2026, but Sam Altman postponed the IPO to 2027 after investment banks valued the company below his desired $1 trillion threshold.
- 2OpenAI has signed $600 billion in legally binding data center spending commitments over 5 years but only generates $30 billion in annualized revenue, requiring a 4x revenue increase just to break even.
- 3Both OpenAI and Anthropic switched enterprise customers from subsidized subscription pricing to consumption-based billing in 2026, causing many customer costs to triple and triggering a customer revolt.
- 4Major consulting firms like KPMG and Deloitte are generating AI-generated reports full of hallucinations and false claims, damaging their credibility and revealing that enforced AI usage often produces low-quality work.
- 5Enterprise customers are rapidly pulling back AI spending after discovering the true costs; GPU rental prices dropped 30% in June 2026 as consumption-based billing came due.
- 6CFO Sarah Frier warned Altman about the IPO risks but is now isolated and excluded from key meetings after disagreeing with him, while Altman is considering desperate price cuts that would further erode revenue.
Notable Quotes
“Altman has boxed himself into a corner. He's reportedly signed up to $600 billion worth of data center spending commitments over the next 5 years. These are legally binding commitments.”
— Wall Street Millennial
“Our data shows regular AI users produce higher quality work, feel less stressed, and spend more time on strategic work. These benefits help people progress faster in their careers.”
— KPMG Spokesperson
“Tracking AI usage is almost as arbitrary as tracking days if we used Google search. Just because we've used AI 75% of days we worked didn't make us more productive or benefit the bottom line.”
— KPMG Employee
“People are really saying, you know, that's kind of become a meme now, but my company spent my entire 2026 budget in Q1. Can you make this more efficient?”
— Sam Altman
Chapters
1. OpenAI's IPO Confidential Submission and Strategic Delay
OpenAI filed a confidential S-1 IPO prospectus in June 2026 and publicly announced it to control the narrative. Sam Altman wanted an IPO by end of 2026, but after investment banks valued the company below $1 trillion, he delayed the IPO to 2027. CFO Sarah Frier opposed the IPO timeline due to massive data center commitments, and is now isolated by Altman for her disagreement.
2. OpenAI's Impossible Financial Situation
OpenAI has signed $600 billion in binding data center spending commitments over 5 years ($120 billion annually) but only generates $30 billion in annualized revenue. The company needs a 4x revenue increase just to cover computing costs. At a sub-$1 trillion valuation, they cannot raise enough capital to meet these commitments, risking bankruptcy.
3. The Great AI Pricing Bait-and-Switch
OpenAI and Anthropic transitioned enterprise customers from subsidized subscription pricing ($20-200/month) to consumption-based billing in 2026, causing customer costs to triple. This was necessary because both companies were losing massive amounts of money on the previous subscription model—the largest rugpool of all time.
4. Token Maxing and Work Slob Culture
Employees boast about wasting money on AI tokens in meaningless publicity stunts. Corporate executives believe AI narratives without evidence, forcing employees to use AI despite 40% of workers reporting no time savings. KPMG mandates AI usage 75% of working days with no proof of productivity gains.
5. Consulting Firms Drowning in AI Hallucinations
KPMG published a 'thought leadership' report full of AI-generated hallucinations about enterprise AI implementations that never actually happened. The Financial Times exposed that UBS, Transport for London, and other organizations denied using AI the way KPMG claimed. Deloitte similarly provided a $300k report to the Australian government full of fabricated quotes and non-existent research.
6. Enterprise Customers Revolt and Pull Back Spending
Customers are rapidly discovering that enterprise AI is not worth the cost. Sam Altman admitted in June 2026 that cost concerns went from non-existent to a major issue. GPU rental prices dropped 30% in June as consumption-based billing came due and enterprises slashed spending. Uber capped AI spending at $1,500 per employee per month after blowing its entire 2026 budget in Q1.
7. The Impossible Dilemma: Revenue vs. Customer Satisfaction
OpenAI is trapped: Altman needs revenue to quadruple to justify a $1 trillion valuation for the 2027 IPO, but customers are demanding lower prices. Wall Street Journal reports OpenAI is considering drastic price cuts, which would further erode revenue and make bankruptcy even more inevitable.
Key People & Entities
- Sam Altman
- CEO of OpenAI; pushed for $1 trillion IPO valuation and delayed IPO to 2027; formerly president of Y Combinator
- Sarah Frier
- CFO of OpenAI; opposed 2026 IPO timeline due to data center spending commitments; now isolated by Altman and excluded from key meetings
- Anthropic
- One of the two largest AI companies; grew annualized revenue from $10 billion (end 2025) to $45 billion (May 2026)
- KPMG
- Big Four accounting and consulting firm; enforced AI usage policies and published AI-generated report full of hallucinations
- Deloitte
- Major consulting firm; delivered $300k AI-generated report to Australian government containing fabricated quotes and non-existent research
- Accenture
- Large technology consulting firm; CEO Julie Sweet enforces AI usage requirements and laid off thousands of employees; stock declined 66% in 6 months
- Uber
- Ride-sharing company; spent entire 2026 AI budget in Q1 and now caps AI spending at $1,500 per employee per month
Glossary
- Form S-1
- An IPO prospectus document submitted to the SEC by a company seeking to go public; details the company's business, finances, and risk factors
- Confidential Submission
- An S-1 filing that is not initially released to the public; the SEC reviews it confidentially before approval and public release
- Down Round
- A funding round where a company raises capital at a lower valuation than its previous funding round; signals weakening investor confidence
- Tokens
- Units of text processed by AI models; consumption of tokens determines billing under consumption-based pricing models
- Agentic AI
- AI systems that autonomously perform multiple discrete tasks to accomplish complex goals; consumes far more tokens than single-query chatbot interactions
- Consumption-Based Billing
- Pricing model where customers pay based on actual usage (tokens consumed) rather than a fixed monthly subscription fee
- Token Maxing
- The phenomenon of companies and employees boasting about spending large amounts of money on AI tokens as a status symbol or marketing stunt
- Work Slob
- Corporate practice of forcing employees to use AI tools to produce large volumes of low-quality output with no measurable productivity benefit
- AI Hallucinations
- False or fabricated information generated by AI models, including fake quotes, non-existent research papers, and fictional case studies
- Rugpool
- A deceptive business practice of offering artificially low prices to attract customers, then dramatically raising prices once they are dependent on the service