Billion Dollar Financing Approaching, Wall Street Reassesses OpenAI Ecological Stocks.

Recently, artificial intelligence has once again stirred up a huge wave in the US stock market. Chatting companies like Alphabet (GOOGL.US), Anthropic, and Altruist, as well as Siasun Robot & Automation, are disrupting various industries from software to financial services. However, one name is conspicuously absent from this discussion: OpenAI. The once reigning champion of artificial intelligence has been surpassed by its competitors, at least according to public perception. However, Wall Street is not ready to give up on the developer of ChatGPT and its related companies. Brian Barbetta, Co-Head of Technology at Wellington Management and Co-Portfolio Manager of Global Innovation Strategy, said, "Even though it's not certain, OpenAI is highly likely to introduce a new model that can lead the trend again this year, thereby reversing the perception of falling behind the times, and stocks related to OpenAI will naturally benefit from it." In recent months, companies related to OpenAI have faced significant pressure on their stock prices. Year-to-date, the stock portfolio related to OpenAI has dropped by 13%, while the one related to Alphabet has risen by 21%. Therefore, this change in market sentiment is quite tight. However, investment professionals are becoming increasingly optimistic that OpenAI's current slump is only temporary. If market sentiment continues to improve, it could stimulate a rise in stock prices for its major partners, such as NVIDIA Corporation (NVDA.US), Oracle Corporation (ORCL.US), Microsoft Corporation (MSFT.US), CoreWeave (CRWV.US), and AMD (AMD.US) among others. Last fall, Alphabet's Gemini AI model received high praise, leading to a shift in people's views on OpenAI's leadership position in the technology field. This year, Anthropic's Claude model has become the focus, triggering a continuous decline in stock prices of companies perceived to be competing with it. Barbetta said, "Other AI companies are doing well too. But so far, we haven't seen any evidence that their success has caused any substantial harm to OpenAI in terms of growth or usage." The next change in market sentiment could open up new opportunities for OpenAI. According to a recent report, revenue trends for ChatGPT are improving. Additionally, the company released a new version of Codex AI coding agent earlier this month, which received praise from CEO Sam Altman. The upcoming key catalyst is OpenAI's next round of financing, which will reflect investors' willingness to support the company's loss-making business, especially with the ongoing headlines about the Anthropic incident. OpenAI plans to raise as much as $100 billion. Meanwhile, NVIDIA Corporation is reportedly close to a $20 billion investment agreement, and Microsoft Corporation and Amazon.com, Inc. are also said to be in talks for investment. Barbetta said, "If funds flow in at a higher valuation, it indicates that investors who have done their due diligence are satisfied with the company's progress. This is a vote of confidence, at least helping to reduce the risks faced by supply chain companies in the near term." In a report last Wednesday, the trading department of Mizuho Securities wrote that the momentum of OpenAI's financing "seems constructive," which helps improve people's confidence in its ecosystem. Daniel O'Regan, Managing Director of Stock Trading at Mizuho Securities, wrote: "This is in stark contrast to last week when Amazon.com, Inc. and Alphabet Inc. Class C both announced huge capital expenditure expectations. Many shorts interpreted this as intensifying competition for OpenAI, but this view seems to have quickly reversed." For OpenAI's competitors, the key question is whether they can continue to raise funds and grow their revenue at a fast pace. Estimates by HSBC Bank in November show a gap of about $207 billion between OpenAI's revenue and its spending plan for 2033. Closing this gap will be more difficult if users switch to products from OpenAI's competitors. Thomas DiFazio, Chief ETF Strategist at Roundhill Financial, said, "If they cannot address the question of how to bridge the gap between spending commitments and income to investors, we will see a reflection of this in the price trends of the supply chain." DiFazio added, "Anthropic's rise complicates the view of whether OpenAI can fulfill its obligations. If Anthropic becomes a leader, this will undoubtedly impact whether people believe competitor models can keep up with its growth rate or prove that the premium brought by its growth is reasonable confidence." Roundhill is adjusting its artificial intelligence portfolio to acknowledge Alphabet's leading position in the field of artificial intelligence, a shift that slightly reduces its allocation to OpenAI-related stocks. However, DiFazio emphasized that market sentiment could once again shift towards OpenAI, supporting stocks related to it. Oracle Corporation (ORCL.US) is one of the most prominent companies among those that have established a partnership with OpenAI. Its stock price has dropped by over half since reaching a high point in September, reflecting market concerns about its relationship with OpenAI. Investors are questioning the huge amount of funding Oracle Corporation has put into building cloud computing infrastructure (and the risks in its financing through debt markets), as well as whether OpenAI has the ability to fulfill its spending obligations to Oracle Corporation. But this sentiment is beginning to change, with DA Davidson recently upgrading its rating for Oracle Corporation stock, citing a more optimistic view of the company's relationship with OpenAI. DiFazio said, "Given Oracle Corporation's close relationship with OpenAI, Oracle Corporation is under pressure. If OpenAI can prove the effectiveness of its latest model, this could be crucial for Oracle Corporation."