Oracle shares fell 4.1% in premarket trading on Tuesday after reports of OpenAI missing user and revenue targets, raising concerns about Oracle’s cloud growth.
Oracle has a contract to provide about $300 billion in computing power to OpenAI over five years, making up most of its cloud backlog. If OpenAI’s finances weaken or it cannot close this deal, Oracle could face lower revenues from this agreement, potential renegotiation, and the loss of contracted commitments, as well as heightened uncertainty about future cash flow. Investors need to consider these direct risks related to OpenAI’s ongoing stability. CoreWeave, a cloud provider that works with OpenAI, dropped 3.5% in premarket trading.
OpenAI did not immediately respond to requests for comment. Previously, it said it is buying as much computing capacity as possible, showing infrastructure remains a priority even as user and revenue growth lag forecasts.
This news raises concerns about the sustainability of aggressive, long-term spending by AI companies like OpenAI and the potential impact on suppliers such as Oracle.
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