Hundreds of billions of dollars in funding approaching, Wall Street re-evaluates OpenAI ecosystem stocks

Recently, artificial intelligence has once again caused a huge wave in the U.S. stock market, with chatbots from startups like Alphabet (GOOGL.US), Anthropic, and Altruist disrupting industries from software to financial services. However, one name has noticeably been absent from this discussion: OpenAI. The former AI “kingmaker” has been surpassed by competitors, at least in the public eye. However, Wall Street is not ready to give up on the developers of ChatGPT and related companies.

Wellington Management co-head of technology and global innovation strategy co-portfolio manager Brian Barbetta said, “Even if not inevitable, OpenAI is very likely to launch a new model this year that could lead a trend reversal, changing the perception that it is falling behind the times. Stocks related to OpenAI will naturally benefit from this.”

In recent months, stocks related to OpenAI have faced significant pressure. This year, the stock portfolio associated with OpenAI has fallen 13%, while the portfolio related to Alphabet has risen 21%. This market sentiment shift has been quite rapid.

However, industry professionals are increasingly optimistic that OpenAI’s current slump is only temporary. If market sentiment continues to improve, it could boost the stock prices of its main partners, such as NVIDIA (NVDA.US), Oracle (ORCL.US), Microsoft (MSFT.US), CoreWeave (CRWV.US), and AMD (AMD.US).

Last fall, Alphabet’s Gemini AI model received widespread praise, and perceptions of OpenAI’s leadership in technology also shifted. This year, Anthropic’s Claude model has become a focal point, causing continued declines in the stock prices of companies perceived to be in competition.

Barbetta said, “Other AI companies are also doing well. But so far, we haven’t seen any evidence that their success has caused any substantial damage to OpenAI in terms of growth or usage.”

The next market sentiment shift could reopen opportunities for OpenAI. A recent report indicates that ChatGPT’s revenue trend is improving. Additionally, earlier this month, the company released a new version of Codex AI coding agent, which was highly praised by CEO Sam Altman.

A key upcoming catalyst is OpenAI’s next round of funding, which will reflect investor acceptance of investing in the company’s unprofitable operations, especially amid frequent headlines about Anthropic. OpenAI plans to raise up to $100 billion. Meanwhile, reports suggest NVIDIA is close to a $20 billion investment deal, and Microsoft and Amazon are also said to be in negotiations.

Barbetta said, “If funding flows in at higher valuations, it indicates that investors who have completed due diligence are satisfied with the company’s progress. This is a vote of confidence and at least helps reduce the risks faced by supply chain companies recently.”

Mizuho Securities’ trading division wrote in a report on Wednesday that OpenAI’s fundraising momentum “seems constructive,” helping to boost confidence in its ecosystem. Daniel O’Regan, managing director of Mizuho Securities’ stock trading, said, “This contrasts sharply with last week’s massive capital expenditure forecasts from Amazon and Google. Many shorts interpret this as increased competition for OpenAI, but that view seems to be reversing quickly.”

For OpenAI’s competitors, the key issues are whether they can continue raising funds and how fast their revenue grows. HSBC’s November estimate shows a roughly $207 billion gap between OpenAI’s revenue and its planned expenditures through 2033. If users shift to competitors’ products, narrowing this gap will become even more difficult.

Roundhill Financial chief ETF strategist Thomas DiFazio said, “If they can’t meet investors’ concerns about bridging the gap between spending commitments and revenue, we will see this reflected in the price movements of supply chain stocks.”

DiFazio added, “The rise of Anthropic complicates perceptions of whether OpenAI can fulfill its obligations. If Anthropic becomes a leader, it will undoubtedly influence whether competitors’ models can keep up with its growth or whether the premium associated with its growth is justified.”

Roundhill is adjusting its AI investment portfolio to recognize Alphabet’s leading position in AI, which has slightly reduced its allocation to OpenAI-related stocks. However, DiFazio emphasized that market sentiment could shift back toward OpenAI, supporting its related stocks.

Oracle (ORCL.US) is among the most notable companies partnering with OpenAI. Since reaching a high in September, its stock has fallen more than half, largely reflecting market concerns about its relationship with OpenAI. Investors question the huge investments Oracle has made to build cloud infrastructure (and the risks associated with its debt financing), as well as whether OpenAI can fulfill its spending commitments to Oracle.

But this sentiment is beginning to change. DA Davidson recently upgraded Oracle’s stock rating, citing a more optimistic view of its relationship with OpenAI.

DiFazio said, “Given Oracle’s close ties with OpenAI, it faces some pressure. If OpenAI can demonstrate the effectiveness of its latest models, that could be crucial for Oracle.”