Nvidia (NVDA) shares edged lower Tuesday morning, falling 1.8% to $212.78, as a Wall Street Journal report questioning OpenAI's user growth and future spending triggered a broader selloff in AI-related stocks. The decline erased part of Monday's rally, with the stock hitting a session low of $208.62 before recovering slightly. Despite the drop, Nvidia's market capitalization remained above $5.2 trillion.
The report highlighted that OpenAI missed internal targets for user growth and revenue, and that CFO Sarah Friar has flagged rising future computing costs. The company has committed to over $600 billion in cloud spending over time, raising concerns about the sustainability of AI infrastructure investments. OpenAI dismissed the report as 'clickbait,' asserting that business is 'firing on all cylinders,' with strong enterprise demand and usage of its Codex coding tool.
The selloff was not limited to Nvidia. Other AI-linked stocks also took a hit: AMD (AMD) dropped 2.5%, Broadcom (AVGO) fell 3.3%, and Oracle (ORCL) declined 3.4%. Oracle is said to have a $300 billion, five-year computing pact with OpenAI, while CoreWeave, which inked an $11.9 billion agreement with OpenAI last month, also saw its shares decline. The pressure extended to other names like Arm and SoftBank.
Analyst Reactions Mixed
Analysts were divided on the significance of the decline. Dan Ives of Wedbush Securities called the OpenAI worries 'overblown,' while Jefferies strategist Jeffrey Favuzza pointed to a lack of 'numerical datapoints' on revenue in the report. Todd Schoenberger, chief investment officer at CrossCheck Management, noted that pullbacks in AI stocks often create a 'ripple effect' across the sector, whether deserved or not. Allan Small of iA Private Wealth suggested the headlines reflect mounting competition rather than a sector-wide slowdown.
Nvidia's Financial Context
Nvidia reported revenue of $68.1 billion last quarter, up 73% year-over-year, driven by a 75% surge in data-center sales to $62.3 billion. The company's forecast for the first quarter of fiscal 2027 calls for revenue of around $78.0 billion, give or take 2%, excluding any data-center compute revenue from China. The company's next earnings report is scheduled for May 20, which will be a key checkpoint for investors.
If AI revenue does not ramp up quickly enough to cover data-center contracts, customers might delay capacity additions, renegotiate cloud deals, or diversify spending among providers. Such a scenario could test Nvidia's premium valuation, even if near-term demand remains strong.
Broader Market Implications
The OpenAI report has reignited debates about AI returns. Investors are now closely watching upcoming earnings from major tech companies like Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), and Meta (META) for signs that AI infrastructure spending remains robust. These results will be critical in shaping market sentiment toward Nvidia and the broader AI sector.
