Why OpenAI’s $1.2 Trillion Valuation Can Lift Oracle, CoreWeave From AI Gloom

The specter of a halt to artificial-intelligence progress is stalking companies such as Oracle and CoreWeave that have bet heavily on the AI boom. A report of OpenAI seeking further funding at a huge valuation should come as a relief.

OpenAI has had early talks about a funding round valuing the ChatGPT developer at more than $1.2 trillion, The Wall Street Journal reported late Tuesday, citing a person familiar with the matter. OpenAI didn’t immediately respond to a request for comment from Barron’s.

Such a move would be great news for Oracle and CoreWeave. Oracle has a $300 billion deal with OpenAI to build out AI data centers through 2030. CoreWeave has an OpenAI cloud-computing contract worth up to $22.4 billion.

A big funding round for OpenAI should act as reassurance that the AI company is good for its spending commitments even if it does delay its initial public offering. CEO Sam Altman said this week that he doesn’t expect OpenAI to launch its IPO this year, citing safety concerns. the company was valued at $852 billion in March.

The OpenAI funding report comes at a good time. Oracle and CoreWeave stocks were rocked along with the wider technology sector after AI bosses–including Altman–said over the weekend that they would support a slowdown of model development.

Oracle shares were up 3% in early trading Wednesday, having fallen for five straight trading sessions, losing 13% over that period. CoreWeave shares were up 4 after falling 15% in the past five trading days.

An AI pause might mean a slower pace of data-center construction and spending on AI infrastructure in future. But OpenAI’s funding talks suggest that is still a way off becoming reality.

“Recent comments from leading AI executives have elevated the discussion around pacing frontier development, independent evaluation and stronger governance. We do not see those comments as a near term demand signal for infrastructure,” wrote Brad Gastwirth, global head of research and market intelligence at Circular Technologies, in a research note. “No coordinated slowdown has been announced, no binding compute limit exists, and hyperscaler capacity expansion continues.”

A good rule of thumb for investors tends to be to watch what companies do rather than what they say. So long as OpenAI keeps raising funds, the prospect of an AI slowdown seems remote and that’s great for Oracle and CoreWeave.