OpenAI-Driven AI Bubble Fears... All Eyes on Google and Meta Earnings on the 29th

All Three Major New York Indices Close Lower
Oracle, CoreWeave, and Other Related Stocks See Steep Declines
Concerns Over Massive CAPEX Emerge... Some Market Optimism Remains

Speculation about a slowdown in OpenAI’s performance has reignited concerns over an artificial intelligence (AI) investment bubble, weighing down the U.S. stock market on April 28 (local time). Investors are now closely watching the upcoming first-quarter earnings releases from major big tech companies scheduled for the following day.

OpenAI logo. Reuters Yonhap News

All three major indices on the New York Stock Exchange closed lower that day. Notably, the Nasdaq ended trading at 24,663.799, down 0.9% from the previous session. Shares related to OpenAI saw particularly steep declines, dampening investor sentiment. Oracle, SoftBank, CoreWeave, and other related stocks plunged over 4%. The sell-off was triggered by a report from The Wall Street Journal (WSJ) the previous day stating that OpenAI’s recent revenues have consistently fallen short of its own targets. However, as OpenAI publicly denied the report, some of the day’s losses were pared during trading.

Whether the AI bubble—rooted in skepticism over the sector’s ability to generate enough profit to offset massive investment costs—will persist will likely depend on the big tech earnings releases scheduled for this week. Alphabet (the parent company of Google), Amazon, Microsoft, Meta, and Apple are all set to announce their results starting the next day. WSJ pointed out that this will be “a test for the Nasdaq’s record-setting rally.” Dan Morgan, portfolio manager and analyst at Synovus Trust, commented, “The ice is very thin and the margin for error is extremely small. Any evidence that could add to doubts about OpenAI or Anthropic could trigger further selling pressure.”

However, some analysts argue that price corrections stemming from the AI bubble have already taken place. At the beginning of the year, the four major hyperscalers—Google, Amazon, Microsoft, and Meta—announced aggressive increases in capital expenditures, which sparked broader concerns and led to corrections across AI-related stocks. The combined capital expenditure (CAPEX) planned by these four companies for this year amounts to USD 645 billion, a 56% increase from the same period last year.

JP Morgan also stated in a recent report that the “AI boom is finding its footing” ahead of this year’s first-quarter earnings season. Analyst Dubravko Lakos-Bujas wrote in the report, “As AI model developers face shortages in computing resources, concerns over data center overinvestment have largely subsided.”

In particular, Anthropic’s new model, Mythos, is acting as a catalyst for a shift in market sentiment. He explained, “At the beginning of the year, a surge in capital spending without clear paths to monetization led to so-called ‘AI fatigue,’ but considering recent revenue trends from Mythos, market perceptions have shifted.”

This content was produced with the assistance of AI translation services.