Before most people had finished their morning coffee, the selloff began. Within hours, AI-related tech stocks were plummeting after a Wall Street Journal report surfaced that suggested OpenAI had failed to meet some of its internal growth targets. The market value of billions was lost. As these things frequently do, some of it returned later in the day. However, the message persisted, weighing down traders’ screens like a persistent fog.
All of this is peculiar because OpenAI isn’t even a publicly traded business. Technically, you can’t purchase a share of it on any exchange. However, everyone else in the room seems to be affected by the weather. Chip designers, cloud middlemen, Nvidia, Microsoft, and smaller AI infrastructure companies were all affected. When covering the incident, LiveMint presented it as an instance of investors using a single private company as a kind of industry weather vane. When you think about it, it’s difficult to ignore how ridiculous that arrangement really is.
When OpenAI’s numbers are questioned in public, the company always reacts in the same way. In a statement, the company said it was still “firing on all cylinders.” No one outside the building truly knows if that is true or just what executives say on bad news days. However, it seems that the original report was more important than the statement. The calculations that markets desired had already been completed.
For months, analysts have cautioned about the dangers of this type of reflexivity. In general, the argument is that the fundamentals of the AI industry are not the same as OpenAI’s execution issues, whatever they may be. One is the quarterly disappointment of a single company. The other is a structural change in the rewiring of labor, computing, and software. The analysts claim that confusing them is more than just being imprecise. For actual people who just so happen to hold the wrong stock on the wrong morning, this is the kind of error that results in actual losses.
However, you can understand why investors do it. No other company has been able to take center stage in the public’s perception of AI like OpenAI. ChatGPT comes to mind when people think of artificial intelligence. The entire process of developing these systems comes to mind when they consider Sam Altman. Even when it should be, it is difficult to distinguish that kind of symbolic weight from share prices. When Elon Musk’s mood seemed to affect the auto industry, Tesla experienced something similar in its early years. The pattern is not brand-new. It was only recently used.
Additionally, there is the issue of the general mood, which has changed in ways that the industry hasn’t fully considered. A young man named Daniel Moreno-Gama used a Molotov cocktail to attack Altman’s San Francisco home in April. Though it only made it to the tech press, the story had a minor impact. These businesses have lost the affection of the general public, or at least a vocal segment of it.
Around the same time, Yahoo published an article claiming that the AI industry is realizing—possibly too late—that the general public has begun to dislike it. Accusations of grantwashing on safety research, lawsuits over adolescent suicides, and the constant barrage of reports about chatbots saying harmful things to susceptible users—none of it is helpful.
It remains to be seen if the markets will eventually learn to distinguish a sector’s trajectory from the mistakes of a single company. OpenAI sneezes for the time being, and everyone else grabs a tissue. It’s a risky method of pricing the future.
