OpenAI-Linked Stocks Slump on Report It Missed Key Targets
(Bloomberg) — AI stocks tumbled after OpenAI reportedly failed to meet sales and user targets, reigniting doubts that the hundreds of billions of dollars big companies are pouring into the technology will generate sufficient profits any time soon.
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The report sent down shares of companies that cut investment and business deals with OpenAI, which helped unleash an AI boom in the stock market following the launch of ChatGPT more than three years ago.
Oracle Corp., which has cloud computing agreements with OpenAI. and CoreWeave Inc. decreased by 4% and 6% respectively. Chipmakers Advanced Micro Devices Inc., both of which have ties to the company. and Nvidia Corp. also experienced a decrease.
The flaw reported by OpenAI was discovered by Microsoft Corp., Meta Platforms Inc., Amazon.com Inc. and Alphabet Inc. It has revived the concerns that have periodically shadowed the stock market for months, as technology giants such as have invested heavily in artificial intelligence and stocks have recovered thanks to this.
These investments, which boosted revenues for semiconductor, energy and data center companies, raised fears that technology stocks could decline again if spending stops or unexpected profits do not emerge.
While those concerns were put aside after the Iran war led to a decline in stocks, the Nasdaq 100 Index rose to record levels again this month after its strongest rise in more than a decade. The index fell about 1.5% on Tuesday.
“What we’re seeing in this market is like a maximum reaction,” said Brian Mulberry, chief market strategist at Zacks Investment Management. “We automatically price according to the worst-case scenario or the best-case scenario.”
OpenAI’s Chief Financial Officer Sarah Friar told internal leaders that she was concerned the firm wouldn’t be able to pay for future computer contracts if revenue didn’t grow fast enough, the Wall Street Journal reported, citing people familiar with the matter. An OpenAI spokesman said the company was “firing on all cylinders” and was seeing strong growth in demand from enterprise customers and the nascent advertising business.
Tuesday’s stock price moves weren’t huge by recent standards. But the report comes ahead of earnings reports from major tech companies like Alphabet, Microsoft., Meta and Amazon.com, all of which will provide an update on the rollout of AI.
