Concerns about AI are what’s behind Nasdaq’s steep declines every day this week, for a total drop of nearly 5% as of 11:25 a.m. Friday.
Late Thursday evening, The New York Times, citing three sources, reported that ChatGPT parent OpenAI is considering delaying its IPO until 2027, Investors Business Daily reports.
Traders are also jittery about SpaceX’s (SPCX) retreat after its initial post-IPO surge. SpaceX priced its record-setting $2.1 trillion IPO at $135 a share on June 11 and began trading on Nasdaq under the ticker SPCX on June 12.
As of this writing, the stock had fallen about 29% from its June 16 peak, giving back much of its early post-IPO gains amid a broader AI and technology selloff.
OpenAI, the Microsoft-backed artificial intelligence startup, announced on June 8 that it had confidentially filed its initial public offering with the Securities and Exchange Commission, with a $1 trillion valuation target.
A week earlier, Anthropic did the same; Elon Musk’s SpaceX’s IPO was priced on June 11.
Other notable losers in this week's AI, Big Tech and semiconductor selloff included Alphabet (GOOGL), down roughly 7%; Microsoft (MSFT), off about 6%; Meta Platforms (META), lower by about 5%; and Amazon (AMZN), down approximately 6% from last Friday's close.
Investor concerns have centered on the enormous cost of AI infrastructure, questions about when those investments will generate meaningful returns, and yesterday’s suggestions that OpenAI CEO Sam Altman may delay its IPO, for a variety of reasons.
Investors are wondering if the billions in AI capital expenditures will pay off.
Nevertheless, Google recently raised $85 billion, in stock, for its bold AI buildout.
John Chambers, former CEO and executive chairman of Cisco Systems and founder of venture capital firm JC2 Ventures, said on Bloomberg Radio Friday that a shakedown in the nascent AI marketplace is imminent.
In other words, Chambers said, stronger companies will acquire weaker rivals, leading to industry consolidation and, ultimately, a healthier market.