Oracle, CoreWeave shares drop after report of OpenAI missing growth targets

ShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountAI 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 ORCL-N dropped almost 7 per cent to US$161 before the bell. The AI cloud firm is reported to have signed one of the biggest cloud deals with OpenAI, amounting to US$300-billion in computing power over a period of five years.CoreWeave’s CRWV-Q shares slid 7.4 per cent to US$103.74. The Nvidia -backed AI startup signed a US$11.9-billion contract with OpenAI last month to provide AI infrastructure.“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 US$1-trillion, amid other blockbuster IPOs expected this year such as Elon Musk’s SpaceX.Elon Musk and Sam Altman head to court over OpenAI’s turn to for-profit companyOpenAI 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 US$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 US$5.8-billion stake in Nvidia NVDA-Q, offloading US$4.8-billion of its stake in T-Mobile and slashing staff.The dour sentiment extended to other semiconductor names. AMD AMD-Q, Broadcom AVGO-Q, 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 GOOGL-Q, Microsoft MSFT-Q, Meta META-Q and Amazon AMZN-Q 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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