OpenAI-linked shares plummet after it fails to hit growth targets
Companies with financial ties to the fate of OpenAI sold off sharply on Tuesday after it emerged the ChatGPT maker had fallen short of internal targets for revenue and user growth.
Shares in Japanese investment giant Softbank and data centre hyperscalers Coreweave and Oracle plunged by between four and eight per cent reigniting nerves over technology’s ability to generate financial returns that justify the vast levels of investment it sucks in.
The rout followed a report in the Wall Street Journal, which said OpenAI had missed its ambitious goal of reaching 1bn weekly active users by the end of last year, and also failed to hit its annual revenue target.
The tech darling was also said to ahve missed various monthly revenue targets earlier on in the year, and is facing higher than expected subscriber churn.
The misses come as OpenAI, which has raised over $120bn at a valuation of around $852bn, prepares for a potential mega IPO later this year.
The Sam Altman-led AI trailblazer has spun a complex web of pacts with counterparts in the technology sector – many of which involve it exchanging its equity for services like data centres and chips – to attract more investment.
Softbank – a Tokyo-based investment known for making gargantuan bets on technology firms – is one of the ChatGPT maker’s largest investors, ploughing over $34bn into the firm since September 2024.
Chipmakers Broadcom and Nvidia, the latter of which has provided the San Francisco-based start-up with chips in return for a $30bn worth of shares, also fell as investors cut back on exposure to the firm and its AI-liked rivals.
CFO flags risks over spending and IPO timing
Senior executives are reportedly concerns about whether the firm’s growth is keeping pace with mass spending.
Chief financial officer Sarah Friar warned colleagues that OpenAI may struggle to front future computing costs, if revenues don’t accelerate soon.
The firm has committed to huge investment in data centres and infrastructure, but the slumping user growth and monetisation has triggered scrutiny from board members.
Meanwhile, directors have looked into major data centre deals and questioned continued expansion plans as the business confronts softer growth.
OpenAI has also lost ground in parts of the coding markets to intensifying competition, as especially to rivals like Anthropic and Google’s Gemini, whose growth undoubtedly contributed to missed sale targets.
However, OpenAI said it remains committed to the expansion of its compute, with chief executive Sam Altman and Friar claiming they remain “aligned on buying as much compute as we can”.
OpenAI breaks up with Microsoft
Alongside the slowdown, OpenAI has also moved to reset its relationship with Microsoft, its biggest strategic partner.
Under newly renegotiated terms, Microsoft will no longer have exclusive access to OpenAI’s models and intellectual property.
Instead, it will hold a non-exclusive licence through 2032, while remaining the company’s “primary cloud partner” via Azure.
The change removes a key obstacle tied to OpenAI’s separate deal with Amazon, which had created potential legal tensions over cloud exclusivity.
Microsoft, which owns roughly a quarter of OpenAI’s for-profit arm, is expected to continue generating billions from the partnership, though it gives up some exclusivity in return.