Even the biggest companies aren't immune to worries about the wider market. Nvidia stock was briefly shaken by concerns about OpenAI, in a reminder the chip maker is counting on some big initial public offerings to keep the artificial-intelligence boom going.
Nvidia shares were up 1.7% in premarket trading Friday. It looked set to recoup most of its 2.9% loss the previous day, driven by a Financial Times report that OpenAI's annualized recurring revenue was $20 billion lower than previously signaled.
OpenAI didn't immediately respond to a request for comment from Barron's early Friday. However, Wall Street analysts and other reports suggested the figures were being confused by discrepancies between how OpenAI and its rival Anthropic measure their revenue, and whether to include revenue generated through cloud-computing partners.
That has helped calm nerves about OpenAI's IPO, which is expected next year. But it goes to show that Nvidia is vulnerable to concerns about whether some of its biggest customers and partners can keep growing at the current pace.
One setback came Friday after cloud-computing company Firmus Grid scrapped its plans to raise $5 billion in an IPO in Australia after investors balked at its proposed $30 billion valuation. Nvidia has invested in Firmus, which rents its chips and computing capacity to customers including OpenAI and Meta Platforms.
The valuation would have been almost three times the $10.5 billion at which the company was valued two months ago. Firmus has two data centers operational and a further five in development.
"Firmus will now look to raise the money privately, which I am pretty sure that it will be able to do given how much demand currently exists," wrote independent analyst Richard Windsor, who publishes the Radio Free Mobile blog. "Firmus remains an attractive proposition, but given its early stage, the risk attached to it and how management has damaged its own reputation, $30bn was way too much to ask."
Firmus canceling its IPO isn't something that is going to really hit Nvidia or the whole AI trade. But Nvidia won't want to see a repeat when OpenAI does finally come to the public market.
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