OpenAI has reportedly missed its internal revenue and user growth targets, raising concerns about its financial sustainability and future computing contracts. The Wall Street Journal reported that OpenAI's CFO, Sarah Friar, expressed worries to company leaders about the firm's ability to fund future computing agreements if revenue growth does not accelerate. Shares of Oracle, CoreWeave, and other AI-linked companies dropped significantly in premarket trading on Tuesday following the report.
Immediate Impact on Markets
Oracle's shares fell nearly 7% to $161, while CoreWeave's shares slid 7.4% to $103.74. Both companies have significant contracts with OpenAI, with Oracle committing $300 billion in computing power over five years and CoreWeave signing an $11.9 billion deal last month. Japan's SoftBank Group, a major investor in OpenAI, also saw a nearly 10% drop in Tokyo trading, while Arm Holdings fell 7.7%. SoftBank had pledged $22.5 billion in funding to OpenAI by the end of 2025.
OpenAI's Response
In a joint statement to CNBC, OpenAI CEO Sam Altman and CFO Sarah Friar dismissed the concerns, stating, "This is ridiculous. We are totally aligned on buying as much compute as we can and working hard on it together every day." The company is reportedly preparing for an initial public offering (IPO) that could value it at up to $1 trillion, with potential filings expected as early as the second half of 2026.
Competitive Pressures
The report also highlighted that OpenAI has lost ground to competitors like Google's Gemini in coding and enterprise markets. ChatGPT's growth slowed toward the end of last year, and the company missed an internal target to reach 1 billion weekly active users by year-end. Additionally, OpenAI has faced subscriber defections, further complicating its growth prospects.
Broader Industry Implications
The news has sparked broader concerns about the sustainability of AI investments, particularly in data centers and computing infrastructure. Companies like Nvidia, AMD, and Broadcom, which have ties to OpenAI, also saw their shares decline. Analysts warn that if demand from key customers like OpenAI cools, companies selling into the AI buildout may struggle to sustain growth.
Investor Reactions
Todd Schoenberger, chief investment officer at CrossCheck Management, noted that such sell-offs are common when AI heritage companies face scrutiny. "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," he said.
Future Outlook
Despite the setbacks, OpenAI continues to secure major partnerships, including a recent strategic agreement with Amazon and an expanded $38 billion spending agreement. The company has also announced changes to its partnership with Microsoft, capping revenue share payments and ending Microsoft's exclusive license to its intellectual property.