① Oracle, the US cloud service giant The earnings report triggered a sharp drop in the stock price after hours, and concerns spread to Asian markets, dragging down the stock price of Japan's SoftBank Group; ③ SoftBank and Oracle both have close working relationships with OpenAI and have pledged to invest huge sums of money in it, but if OpenAI faces operational risks, it may affect these two companies.
On Thursday, Beijing time, after Oracle 's earnings report in the morning triggered a sharp drop in its stock price in after-hours trading, people's attention turned to artificial intelligence. Concerns about over-investment in the sector have spread further to the Asian market.
In the Japanese stock market, SoftBank Group's share price was also dragged down, even contributing to the overall decline of the Japanese stock market.
AI-related anxieties spread to Japanese stocks.
SoftBank's stock price fell sharply after the Japanese stock market opened this morning and then fluctuated at low levels throughout the day. As of press time, SoftBank's stock price was down nearly 7.7% on the day, reaching a one-week low of 17,210.0 yen. SoftBank was also the biggest loser among the heavyweight stocks in the Nikkei 225 index, dragging the index down by more than 1%.
SoftBank's stock decline echoed Oracle's 11% drop in after-hours trading. Earlier that day, Oracle released its second-quarter earnings report, which, while exceeding market expectations, saw revenue slightly miss expectations. Furthermore, Oracle further raised its capital expenditure forecast for the current fiscal year from $35 billion to $50 billion, triggering market concerns.
For nearly two months prior, people were already wondering how Oracle would implement its massive artificial intelligence data center. Concerns remain about the company's spending plans. Oracle's earnings report and conference call this morning not only failed to alleviate these concerns, but its move to raise spending expectations further dampened investor confidence.
With Oracle having issued billions of dollars in bonds this year, coupled with its over-reliance on OpenAI, investors are increasingly concerned about the company's operational risks.
Bank of Montreal Analysts say that Oracle’s massive contract with OpenAI carries some long-term risks because the sheer size of OpenAI’s spending commitments raises questions about how it will fulfill those commitments.
The three companies are already "in the same boat".
The concerns sparked by Oracle's financial report have spread to SoftBank because both SoftBank and Oracle share a common characteristic: they have extremely close cooperative relationships with OpenAI.
SoftBank has already invested massive sums in OpenAI. SoftBank CFO Yoshimitsu Goto recently stated that SoftBank remains firmly focused on OpenAI and has no intention of funding its competitors. This implies that the fates of the two companies are now highly intertwined.
To date, SoftBank has committed up to $40 billion to OpenAI and recently revealed that it has sold its stake in Nvidia. The company sold all of its shares to fulfill this commitment.
Oracle, meanwhile, announced last quarter that it had signed a massive $300 billion contract with OpenAI and pledged to provide data center capacity for ChatGPT. Oracle has launched a large-scale fundraising campaign this year to build the necessary infrastructure.
The problem is that while OpenAI is indeed the leading company in the global AI industry, it is still burning through a lot of cash, has hardly found a truly effective way to make a profit, and is facing fierce competition from giants such as Google and Alphabet.
OpenAI has pledged to invest over $1 trillion in AI infrastructure over the next five years. However, if OpenAI's future prospects fluctuate, SoftBank and Oracle, which are closely tied to it, will likely be affected.
(Article source: CLS)
