Stock Market Pulls Back as OpenAI Revenue Miss Triggers Tech Sector Selloff
U.S. stock markets dropped on April 28 after reports that OpenAI missed internal sales and user growth targets, reigniting concerns about massive AI spending across the tech sector and causing sharp declines in related companies.
Market Reaction to OpenAI Performance Report
The S&P 500 fell on Tuesday, weighed down by a report that pointed to weakness in OpenAI and a rise in oil prices, with the broad market index falling 0.49% to close at 7,138.80, while the tech-heavy Nasdaq Composite shed 0.9% and ended at 24,663.80, and the Dow Jones Industrial Average slid 0.05% to settle at 49,141.93.
OpenAI's Missed Targets
OpenAI recently saw revenue and new users growth that were below its own targets, according to a Wall Street Journal report, with CFO Sarah Friar telling leadership she was concerned OpenAI may not be able to pay computing contracts in the future.
Sector-Wide Impact
Investors sold off shares of companies tied to OpenAI after the Wall Street Journal reported the AI developer recently missed sales and user targets, renewing concerns about overspending in the sector. Oracle dropped more than 5% after the report, while a number of other chip stocks declined on the news, including Nvidia and Advanced Micro Devices that slid more than 1% and 3%, respectively.