AI stocks slide after report sparks OpenAI growth concerns
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April 28 : AI firms fell in premarket trading on Tuesday after the Wall Street Journal reported that OpenAI has missed its goals for new users and revenue in recent months, raising concerns over the ChatGPT creator's growth prospects.
OpenAI CFO Sarah Friar expressed concerns to other leaders over the company's ability to pay for future computing contracts if its revenue did not grow fast enough, the report said, citing people familiar with the matter.
Shares of Oracle dropped almost 7 per cent to $161 before the bell. The AI cloud firm is reported to have signed one of the biggest cloud deals with OpenAI, amounting to $300 billion in computing power over a period of five years.
CoreWeave's shares slid 7.4 per cent to $103.74. The Nvidia-backed AI startup signed a $11.9 billion contract with OpenAI last month to provide AI infrastructure.
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"We see this from time to time when you have any type of an AI heritage company, when they sell off, then it causes a ripple effect across the board, regardless of whether it's warranted or not," said Todd Schoenberger, chief investment officer at CrossCheck Management.
The scrutiny surrounding OpenAI comes as the AI startup lays the groundwork for an initial public offering that could value it up to $1 trillion, amid other blockbuster IPOs expected this year such as Elon Musk's SpaceX.
OpenAI could file with securities regulators as soon as the second half of 2026, Reuters reported last year.
Japan's SoftBank Group, a major investor in OpenAI, closed down almost 10 per cent in Tokyo trading, while Arm Holdings was down 7.7 per cent.
SoftBank had pledged a $22.5 billion funding commitment to OpenAI by end of 2025 through cash-raising schemes, which included potentially tapping its undrawn margin loans borrowed against its ownership in Arm, sources told Reuters in December.
SoftBank CEO Masayoshi Son has gone all in on the ChatGPT maker, raising money through selling the Japanese conglomerate's entire $5.8 billion stake in Nvidia, offloading $4.8 billion of its stake in T-Mobile and slashing staff.
The dour sentiment extended to other semiconductor names. AMD, Broadcom, Nvidia were down between 3.2 per cent and 5.3 per cent, with all three having partnered with OpenAI for deals that involved providing equipment or investment.
In a crucial week for big tech, investors will gauge quarterly reports from Alphabet, Microsoft, Meta and Amazon to gauge if lofty expenditure plans will see justifiable payoffs.
Optimism surrounding AI in recent weeks has helped Wall Street indexes touch all-time highs despite some concerns over the U.S.-Iran war.
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