Financial pressures at OpenAI have prompted a market reassessment, leading to a surge in software stocks and pressure on chip-related shares.
Reports on June 25th indicated OpenAI might postpone its initial public offering due to financial strain, causing investors to recalibrate their views on AI's impact on traditional software firms.
The software sector experienced broad gains on Friday. ServiceNow and Workday, previously seen as highly vulnerable to AI disruption, led the advance, while Oracle, which has deep ties to OpenAI, bucked the trend and declined.
RBC Capital Markets analyst Rishi Jaluria noted that while overall sentiment towards the software industry remains negative, "the peak of pessimism may be behind us." He also stated that the narrative of "enterprises fully replacing existing software solutions with AI" does not align with reality.
Software Sector Rallies, Formerly Pressured Names Lead Gains
The most significant gains on Friday came from software companies previously considered most susceptible to AI competition.
Shares of ServiceNow and Workday each rose more than 9%, ranking among the top performers in the S&P 500 index for the day.
Figma and Datadog closed up over 10% and 8%, respectively. Adobe and Salesforce each gained approximately 5%, while Atlassian rose more than 5%.
Raymond James analyst Adam Tindle pointed out that while attributing single-day moves is difficult, Friday's biggest gainers were precisely the companies the market had been most worried about regarding AI encroachment, with ServiceNow and Atlassian being prime examples.
Oracle Bucks the Trend, Cloud Infrastructure Business a Drag
In stark contrast to the broader software rally, Oracle shares closed down about 3% on Friday, a clear outlier.
Morningstar analyst Luke Yang identified the news of OpenAI's potential IPO delay as a key factor affecting Oracle's stock performance.
Yang explained that this news is a "positive" for the software application side but a "negative" for the cloud infrastructure side.
Oracle has a massive cloud computing cooperation agreement with OpenAI valued at up to $300 billion, making parts of Oracle's business prospects highly dependent on OpenAI's success.
From Oracle's own business structure, cloud computing has become increasingly important. In fiscal 2026, Oracle's cloud business revenue grew 39% year-over-year to $34 billion, while software revenue declined slightly by 1% to $24.5 billion.
Cloud Infrastructure Firms Under Pressure, Compute Providers Face Risk of Downgraded Expectations
Weighed down by news of OpenAI's financial challenges, emerging cloud infrastructure companies also faced pressure.
CoreWeave and Nebius Group both fell on Friday, with their shares closing down approximately 2% and 6%, respectively.
Luke Yang noted that both companies are highly reliant on AI infrastructure demand. If market expectations for OpenAI's growth prospects become more conservative, the negative impact on related cloud compute providers would be more direct.
Investment manager Eric Jhonsa stated on social media that the market is currently pricing significant long-term terminal value risk into many SaaS companies, while pricing almost no long-term risk into some AI infrastructure names.
He further pointed out that advancements in frontier large language models like GLM 5.2, export control policies, and the trend of enterprises shifting to smaller, cheaper models to compress token costs all indicate that AI compute capital expenditure faces uncertainty over longer time horizons as well.
Valuation Divergence Intensifies, AI Infrastructure Investment Thesis Faces Recalibration
This market activity also brought the valuation divergence within AI-related names into sharper focus.
Eric Jhonsa pointed out that Nvidia currently trades at about 20x forward P/E, Broadcom at around 23x, while Marvell trades at 58x and Astera at a high of 116x, with the latter two also having higher stock-based compensation as a percentage of earnings and free cash flow.
He views this divergence as "absurd," suggesting clear mean reversion pressure exists.
Meanwhile, some SaaS companies, while maintaining double-digit annual recurring revenue and free cash flow growth, have seen valuations compress to 10-15x forward free cash flow (excluding stock-based compensation), a level he believes offers a good margin of safety.
Regarding investment strategy, Eric Jhonsa stated he is constructive on AI infrastructure names whose valuations are supported by the need for capital expenditure to remain strong only through 2028, rather than extending to 2030 or beyond. For names requiring a longer capital expenditure cycle to justify valuations, he is cautious or bearish.
He added that buying AI infrastructure stocks at 15-20x estimated 2028 earnings per share feels far more comfortable than paying over 30x.
On a macro level, Eric Jhonsa noted that if inflation heats up again in the second half of the year, coupled with a potentially slow Federal Reserve response due to political pressure, long-term interest rates could rise sharply. This represents the biggest macro threat to current tech stock valuations.
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