Analysts are divided after a report that OpenAI missed growth targets triggered a sell-off in technology stocks.
Dan Ives at Wedbush pushed back on the market reaction, saying “we strongly disagree with the notion that growth is weakening” and calling the pullback a buying opportunity.
He added that concerns around OpenAI’s ability to fund future computing commitments had “turned hypothetical into a documented concern”, but said demand remained strong across consumer and enterprise markets.
"Overall, we believe OpenAI has been tracking very high demand on both the consumer and enterprise front and we strongly disagree with the notion that growth is weakening.
Ives said Oracle in particular had been hit too hard, arguing the move was a "way overreaction" and maintaining an Outperform rating with a $225 price target.
Others struck a more cautious tone.
Kathleen Brooks at XTB in London said that, with OpenAI "the poster child for AI" and hoping to raise close to a $1 trillion from a touted IPO, "if it is struggling with sales then it could limit its spending on data centres, which would be a blow to the speed of AI uptake.
"This news may threaten the AI investment theme that has driven US stock markets to record highs.
"The spending scrutiny could limit OpenAI’s ambitions, which may slow down the speed of AI uptake more generally, considering how central OpenAI has become to the AI revolution."
She said it was one reason why there had been some rotation out of US equities and into European markets on Tuesday morning.
Brooks added that the report will ramp up the scrutiny of capital spending plans from the likes of Microsoft Corp (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOG), Amazon.com Inc (NASDAQ:AMZN) and Meta Platforms Inc (NASDAQ:META) as they report earnings this week, as these groups have committed billions to AI infrastructure.
"If these companies are significantly stepping up their spend, this could lead to questions about how sensible this is and how quickly they can monetize AI investments, while if there are signs that the hyperscalers are slowing their spending on AI then it could hit the AI ecosystem hard," she said.