Shares of some of the biggest names in the artificial intelligence boom fell sharply this week after fresh details emerged about how much money OpenAI is bringing in. The reaction showed how closely investors are watching the business results of the companies at the center of the AI buildout.
What OpenAI told investors
CNBC confirmed that OpenAI told investors its annualized revenue reached roughly $50 billion at the end of September. Market reports then said that figure was about $20 billion below what had previously been shared. That gap was enough to unsettle traders who had priced in much faster growth.
Chip and cloud names take the hit
Nvidia, Oracle and CoreWeave were among the companies whose shares dropped on Thursday. All three are closely tied to the spending on data centers and computing power that supports the AI industry. The Nasdaq ended the session more than 1% lower as technology shares weakened broadly.
The slide also spread to deal-making. Firmus, an Australian operator of AI data centers backed by Nvidia, withdrew its planned large initial public offering. The company pointed to market volatility and difficult conditions as its reasons.
Concerns over funding the buildout
The selloff came amid a wider debate over whether the heavy spending on AI infrastructure will pay off. Reuters noted that investors are increasingly anxious about how much capital the leading AI companies need. Morgan Stanley has estimated that AI infrastructure will require about $1.5 trillion in external financing by 2028. That fundraising is taking place while interest rates around the world are rising, as central banks try to contain inflation driven by higher energy prices.
Worries about valuations and profitability have lingered over the market. At the same time, public unease about AI has grown in recent months. People have raised concerns about the small group of individuals who appear to hold influence over the technology, and some fear it could pose an existential threat to humanity.
A partial rebound
Sentiment improved somewhat by Friday. Several companies with exposure to the AI buildout were higher in premarket trading, and the Nasdaq Composite rose after the previous session’s losses. Whether the recovery lasts is unclear, since the market is still weighing what the revenue picture means for the industry’s growth.
Why it matters
OpenAI is one of the most closely followed AI developers, and its revenue is widely treated as a gauge of demand for the technology. A figure that is lower than earlier signals can ripple through suppliers and cloud partners that are betting heavily on continued expansion. The episode illustrates how sensitive the AI trade has become to any hint that revenue may not keep pace with the enormous sums being spent.
For now, analysts and investors are watching upcoming earnings from chipmakers and other infrastructure players for further clues. Their results should show whether demand for AI computing remains strong enough to justify the spending and the financing it requires.
Source: CNBC
