OpenAI To Delay IPO To 2027? Tech Stocks Fall After Report Emerges

Shares of multiple tech giants took a tumble on Friday after a report claimed that OpenAI was planning to delay its initial public offering (IPO) till 2027.

Shares of Tokyo-listed tech investor SoftBank closed 13% lower, as per Barron's. Oracle's shares dropped 1.6% while CoreWeave's stock fell 2.4% before the US markets opened.

The selloff happened after The New York Times claimed that OpenAI was inclined to delay its IPO until 2027. Three people involved in the matter told the outlet that recent developments, including SpaceX's blockbuster IPO debut and subsequent share slide, were behind the decision.

SpaceX reached a market valuation of $1.77 trillion on its debut. But after a few good trading sessions,  the stock of the Elon-Musk-led company has been on a downward slide. Shares fell $153 at the end of Thursday compared to their high of $202 last week.

Global markets have been volatile in recent weeks, with tech stocks dragging down indexes as investors question whether AI firms will live up to their promises.

Advisers employed by the company gave OpenAI executives the option of either waiting until 2027 for a $1 trillion valuation IPO, or lower the target for a quicker public issue, considering the state of the market. OpenAI chief Sam Altman said there would be no compromise in the valuation, a source told NYT.

A potential IPO delay comes as OpenAI has reportedly not yet turned a profit. It is also spending heavily on marketing and recruiting talent from firms like Google and looking for other lines of revenue like placing ads in ChatGPT.

The initiatives are still in the early phases, two employees told NYT. OpenAI earned roughly $13 billion in revenue last year. The AI startup said that it was generating $2 billion in revenue every month this year.

At the same time, the firm is also grappling with slowing downloads and rivalries with Anthropic and Google Gemini.

OpenAI's IPO is of significance to Oracle, CoreWeave and SoftBank particularly.

Oracle has a $300 billion deal with the ChatGPT makers to build out data centres till 2030. CoreWeave and OpenAI have a multi-year partnership with a total value of up to $22 billion.

SoftBank has put in about $65 billion in OpenAI, which represents almost 13% of the AI firm's total ownership as of February. SoftBank is also working with Oracle and OpenAI on the $500 billion Stargate AI infrastructure project.