Tech stocks slide following report on OpenAI missing key targets

Tech stocks slid Tuesday after The Wall Street Journal published a report warning that ChatGPT-maker OpenAI was falling short of revenue and user targets, fueling concerns about whether the tech industry’s multitrillion-dollar investment in AI will eventually pay off.

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Japanese tech conglomerate SoftBank led the declines, dropping 10% in Tokyo trading Tuesday. SoftBank has committed to investing $60 billion in OpenAI. Other names linked to OpenAI also saw significant sell-offs, including cloud computing providers CoreWeave, down 6%, and Oracle, down 4%.

Chipmaker Nvidia, which announced an agreement with OpenAI worth up to $100 billion last September, was down about 3%. That initial agreement has since been downsized to as much as $30 billion, the Financial Times reported in February.

The broader Nasdaq composite index, which is mostly made up of tech companies, declined 1%.

NBC News has not verified the Journal’s reporting, which said that some OpenAI leadership is worried about its business trajectory as it heads to an initial public offering, a move that will require it to publish earnings reports.

An OpenAI representative pushed back on the Journal’s article, calling it “clickbait” and said the business was “firing on all cylinders.”

“We are on an extremely steep growth curve across consumer, enterprise and developers,” said Steve Sharpe, OpenAI’s head of business and financial communications.

OpenAI is at the heart of a web of deals undergirding the artificial intelligence boom that has helped power the entire stock market higher. Some analysts have raised alarms about how weakness in a key node of the web, like OpenAI, could set off a chain reaction that could threaten the entire AI ecosystem.

“Last year I referred to OpenAI as too big to fail,” Peter Boockvar, chief investment officer of One Point BFG Wealth Partners, wrote in a note Tuesday. “Not from the perspective of a government backstop but because their tentacles have reached so wide in the data center ecosystem buildout.”

Several major tech companies are set to report quarterly earnings Wednesday. In commentary released Tuesday, Dennis Follmer, chief investment officer at Montis Financial, a registered investment adviser with $1.25 billion in assets under management, said that given major stock indexes are sitting near record levels, investors will be sensitive to any shortcomings.

“In a stock market where earnings expectations are rising even faster than stock prices, any misstep involving AI-related demand or capital budget expenditures from one of the four Mag 7 companies reporting Wednesday could easily give this market second thoughts about how far it has run in the past month,” he wrote

In a statement, CoreWeave highlighted other partnerships it has struck with other major tech players such as Google, Microsoft and OpenAI rival Anthropic.

“OpenAI is a terrific partner, but not our only one,” it said.

Representatives for Oracle and Nvidia did not immediately respond to requests for comment.