S&P 500 declined 0.5% to 7,139.24 on Tuesday, while the Nasdaq Composite fell 0.9% to 24,663.80, snapping a recent run of record highs as worries over OpenAI’s user and revenue targets sparked profit-taking across artificial intelligence-linked stocks.
The S&P 500 fell as much as 0.8% during the session before paring some losses, while the Nasdaq dropped as much as 1.5% intraday. The declines erased a portion of Monday’s gains that had pushed both indexes to all-time closing highs.
Market Snapshot
S&P 500 closed at 7,139.24, down 35.82 points on the session. The index traded in a range of 7,115.20 to 7,172.45. Nasdaq Composite settled at 24,663.80, shedding 224.21 points. Declining issues outnumbered advancers by more than 3-to-1 on both indexes, with technology and communication services leading the losses.
OpenAI Misses Targets
A Wall Street Journal report that artificial intelligence startup OpenAI missed internal targets for weekly active users and monthly revenue drove the session’s selling.
OpenAI missed a goal of reaching one billion weekly active users for its ChatGPT bot by the end of 2025, the report said, citing people familiar with the matter. The company also missed multiple monthly revenue targets earlier this year. Chief Financial Officer Sarah Friar expressed concern to other executives about the company’s ability to pay for future data center contracts if revenue does not accelerate.
The news triggered declines across AI-linked stocks that had powered both indexes’ recent rallies.
Trading Reaction
Oracle (ORCL), OpenAI’s largest cloud computing provider, fell 4.1%. CoreWeave (CRWV) dropped 5.8%. Nvidia (NVDA) closed lower after breaking an 18-session streak of daily gains. Pink sheet U.S.-listed shares of SoftBank Group, which has committed to massive investments in OpenAI, slid more than 7%.
“A WSJ report that OpenAI missed key targets is driving the day’s narrative. It has triggered profit-taking throughout the AI complex,” said Michael O’Rourke, chief market strategist at Jones Trading. “The Philadelphia Semiconductor Index broke a streak of 18 consecutive daily higher closes yesterday during which it rallied 47%. That leaves ample room for profit-taking.”
Microsoft (MSFT), a major OpenAI partner, reversed early losses to close marginally higher.
Outlook
Traders will watch three factors for the S&P 500 and Nasdaq’s next move.
- First, earnings from approximately 35% of S&P 500 companies reporting this week, including technology giants that will detail AI infrastructure spending plans.
- Second, the Federal Reserve’s policy decision Wednesday, expected to hold rates steady.
- Third, any further news on OpenAI’s financial trajectory that could extend or reverse the current selling pressure in AI-related names.
