US chip stocks slump on report OpenAI missed revenue targets

(Sharecast News) - US chip stocks were under the cosh on Tuesday following a report that OpenAI recently missed its own targets for new users and revenue. According to the Wall Street Journal, OpenAI's chief financial officer, Sarah Friar, has told other company leaders she is worried the group might not be able to pay for future computing contracts if revenue doesn't grow fast enough.

The WSJ, which cited people familiar with the matter, said the ChatGPT creator missed multiple monthly revenue targets earlier this year after ​losing ground to Anthropic in coding and enterprise ​markets.

The WSJ said ChatGPT's growth slowed towards the end of last year, with the company falling short of ​an ⁠internal target to reach 1 billion weekly active users for the artificial intelligence chatbot by year-end.

OpenAI dismissed the WSJ report. It told CNBC and Reuters: "This is ridiculous. We are totally aligned on buying as much compute as we can and working hard on it together every day."

But chip stocks fell nevertheless, and by 1525 BST, Oracle was down 7.7%, AMD was off 2.9%, Nvidia was 2% lower and Qualcomm was down 2.1%.

CoreWeave was 4.6% weaker, while shares of Japan's SoftBank - which owns a stake of around 11% in OpenAI - slumped 10% on the report.

Kathleen Brooks, research director at XTB, said: "OpenAI is the poster child for AI and its capabilities and ambitions. Its touted IPO is expected to raise close to a $1 trillion, but if it is struggling with sales then it could limit its spending on data centres, which would be a blow to the speed of AI uptake. This news may threaten the AI investment theme that has driven US stock markets to record highs.

"The spending scrutiny could limit OpenAI's ambitions, which may slow down the speed of AI uptake more generally, considering how central OpenAI has become to the AI revolution. This is one reason why we are seeing some rotation out of US equities and back into European markets this morning.

"The OpenAI news comes ahead of some key earnings releases this week with 5 of the Magnificent 7 reporting, four of whom have been massive hyperscalers committing hundreds of billions of dollars to AI investment per year. The latest news about OpenAI, who created ChatGPT, means that capex plans for Microsoft, Amazon, Meta and Google will be scrutinised even more this week.

"If these companies are significantly stepping up their spend, this could lead to questions about how sensible this is and how quickly they can monetize AI investments, while if there are signs that the hyperscalers are slowing their spending on AI then it could hit the AI ecosystem hard, including recent big winners like semiconductor stocks and Intel, which has risen more than 50% in the past month."