What happened: Oracle (ORCL) and CoreWeave (CRWV) came out in support of OpenAI on Tuesday after the Wall Street Journal reported that the AI developer recently missed sales and user targets, renewing concerns about overspending in the sector.
Stock market reaction: Shares of companies partnering with OpenAI sank after the report signaled that OpenAI’s business was slowing. Software giant Oracle and data center provider CoreWeave led the losses, down almost 4% and 5%, respectively.
Oracle defended the AI developer on X, writing, “We’re incredibly excited about our partnership with OpenAI and remain focused on building and delivering the capacity they need to support rapidly growing demand.”
CoreWeave struck a similar tone in a statement to Yahoo Finance, but noted it had other partners.
“OpenAI is a terrific partner, but not our only one,” a CoreWeave spokesperson said, adding that the company has an “expanding set of customers like Meta Platforms, Anthropic, Microsoft, Google, IBM, Perplexity AI, Jane Street, and many others.”
Shares of other companies that have partnerships with OpenAI also fell on Tuesday, including chip giants AMD (AMD) and Nvidia (NVDA).
Citing people familiar with the matter, the WSJ report said the startup fell short of its internal goal of 1 billion weekly active users for OpenAI’s ChatGPT by year-end. It also reportedly missed its annual revenue target for the product. Meanwhile, Google’s (GOOGL, GOOG) competing AI bot, Gemini, grew over the past year, eating into OpenAI’s market share.
What else you need to know: OpenAI has been on a spending spree as CEO Sam Altman has raced to secure computing power. The missed metrics have renewed concerns about the company’s mounting costs amid increasing competition. The report also comes at a crucial time as the company was reportedly preparing to go public this year.
Last month, OpenAI announced it closed its latest funding round, raising $122 billion in commitments at a valuation of $852 billion. That’s more than the $110 billion the company said it raised in February, when it was valued at $730 billion.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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