Asian stocks dropped early Friday as tech jitters hit the markets. The MSCI Asia Pacific index fell 0.1% after Wall Street saw a slump in chipmakers. Investors worry about AI spending sustainability after OpenAI revenue reports. Chris Weston said, “The focus remains on whether the selling develops into broader risk.”
Asian stocks dropped, tracking declines on Wall Street, as speculation about OpenAI’s revenue revived concerns over the sustainability of the artificial-intelligence spending boom. Oil edged lower.
The MSCI Asia Pacific equities index edged 0.1% lower early Friday. Japan’s Nikkei fell over 1%, with Softbank Group Corp. declining more than 5%. The regional moves came after the Nasdaq 100 Index sank 1.4%, its worst day in seven weeks, while a US gauge of chipmakers slumped 3.4%. The S&P 500 Index dropped 0.5%. Markets are closed in South Korea and Taiwan.
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The declines in the US followed a Financial Times report that OpenAI’s annualized revenue was $20 billion below previously signaled levels. The ChatGPT maker is on track for roughly $50 billion, according to people familiar with the matter. Also, Firmus Grid Ltd., an Australian data center company backed by Nvidia Corp., is set to postpone its initial public offering, according to people familiar with the matter.
Elsewhere, American crude declined to around $91 a barrel after President Donald Trump said the US would not attack Iran ahead of November’s midterm elections. Global benchmark Brent fell 0.5% to around $103.80 a barrel. Treasuries held their gains from the US session, while a Bloomberg gauge of the dollar traded steady.
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“For now, the focus remains on whether the selling in AI and semiconductors develops into a broader risk reduction, or whether investors use the pullback to rebuild exposure ahead of earnings,” wrote Chris Weston, head of research at Pepperstone.
The OpenAI revenue questions added to concerns over AI spending as elevated borrowing costs make the vast sums flowing into data centers and computing infrastructure harder to justify. Investors are increasingly looking for evidence that revenue can keep pace with the investment required to develop and run AI models.
While OpenAI’s roughly $50 billion revenue is an uptick from the prior year, it’s still less than recently reported estimates.
OpenAI, Anthropic and other AI firms have often touted their annualized revenue — a projection of annual sales based on a shorter period — as a key growth metric. However, not all companies measure it the same way. Anthropic’s annualized revenue hit $65 billion by the end of July, Bloomberg News previously reported.
In stocks, the weakness remained concentrated in technology rather than spreading across the broader market. More than two-thirds of S&P 500 members advanced, while small-cap shares were little changed as investors rotated toward defensive sectors.
Meanwhile, Treasuries advanced on Thursday after solid demand at a 30-year debt auction pulled long-dated yields back from more than two-decade highs. The rally extended after Trump said he would hold off on attacking Iran again until after the US midterm elections on Nov. 3.
The gains provided some respite from a months-long selloff in longer-term debt, fueled by concerns that the Iran war will keep energy prices and inflation elevated, alongside mounting worries over government finances.
The outlook for rates remained under pressure, however, as Federal Reserve officials signaled more tightening ahead.
Governor Christopher Waller said further increases will probably be needed to bring inflation under control, while St. Louis Fed President Alberto Musalem said rates should rise over the next six to nine months without endorsing a move this month.
“To bring inflation back to target in a timely manner, more monetary policy firming will be required,” Musalem said Thursday at a Bloomberg event in New York.
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(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
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