Keeping up with OpenAI

OpenAI might as well be a hot new reality TV show, because the tech disruptor just can't seem to stay away from the drama.

Yesterday, the ChatGPT maker dominated headlines with some rapid-fire announcements. Today it’s back in the spotlight, but with news that’s not so great: According to The Wall Street Journal, the company missed internal revenue and user growth targets, and despite raising $122 billion in the largest funding round in Silicon Valley history, CFO Sarah Friar has warned leadership that future computing commitments could become difficult to fund without stronger revenue growth.

Now, the $850 billion startup is dragging down other tech stocks, after a roughly $600 billion dealmaking spree last year that locked the company into massive long-term spending commitments.

Here are a few names falling victim to the spillover:

• Chipmakers Nvidia, Broadcom, and AMD all fell—1.63%, 4.39%, and 3.37%, respectively
• Oracle, which has a $300-billion, five-year partnership with OpenAI, dropped 4.02%
• Qualcomm, which just yesterday announced a partnership with OpenAI to develop smartphone processing chips, lost just 0.17%
• CoreWeave, fresh off an $11.9-billion contract with OpenAI, sank 5.79%
• One of OpenAI’s largest investors, SoftBank, tumbled 11.77%

The plot thickens

The domino effect underscores just how much OpenAI’s performance matters in the complex web of tech, with deals spanning everything from chipmakers to cloud providers.

In its defense, the company is now signaling a more measured approach to spending: OpenAI has paused a UK project, Microsoft has taken over data center capacity in Norway that was originally earmarked for OpenAI, and Oracle and OpenAI dropped plans to expand a major Texas data center after financing talks stalled, according to Bloomberg.

But even with that shift, Friar has raised concerns about pushing ahead with a year-end IPO, warning that the company isn’t yet ready for public-market reporting standards. CEO Sam Altman, meanwhile, is said to favor a faster path to listing.

Either way, OpenAI might want to wrap up the season finale soon, because while Friar and Altman clash over the script, the rest of the tech sector is stuck watching the drama play out.—SY