Closing Bell: OpenAI Revenue Concerns Hit Tech Stocks as Oil Rises

U.S. stocks were mostly lower on Thursday with higher oil prices and questions about OpenAI revenue that spooked investors and pressured artificial intelligence and tech trades.  

The S&P 500 (SPX) was down 0.47%, while the Nasdaq-100 (NDX) fell 1.39%, continuing a pullback from all-time highs earlier this week. The Dow Jones Industrial Average ($DJI) and the small-cap Russell 2000 (RUT) rose fractionally. 

The energy sector led gains as tensions in the Middle East escalated, with oil prices up about 3% to near $91 a barrel. Treasury yields moved lower for a second consecutive day following a strong 30-year Treasury auction. The 10-year yield is lower on the week at 5.233%, though it remains near levels not seen since 2007.

Four Things to Watch from Thursday’s Market 

Oil Rises on Elevated U.S.-Iran Conflict  

Oil moved higher with rising Middle East tensions. Among the news reports: Iran-backed Houthi forces claimed responsibility for attacks on Saudi Arabia airports and military sites this week. On Thursday, President Donald Trump said the U.S. would not attack Iran before the November U.S. midterm elections. On Wednesday, he said he did not want an Iran deal and was weighing pre-election strikes. 

In addition, hurricane Isaias near U.S. shores caused oil companies to shutter some production, according to reports. See Crude Oil Bounces Off Key Level with Attacks on Saudi Airports 

OpenAI Annualized Revenue Misses Prior Estimates by $20 Billion 

OpenAI recently told investors that its annualized revenue was approaching $50 billion at the end of September, according to financial documents reviewed by the Financial Times. The figure is roughly $20 billion below the approximately $70 billion figure widely reported late last month. Microsoft (MSFT), a key OpenAI investor and partner, slipped following the update. Names tied to AI infrastructure and demand like Oracle (ORCL), Nvidia (NVDA), CoreWeave (CRWV) and Cerebras (CBRS) also moved lower. See Dan Niles Tilts Bearish: How OpenAI Revenue Revision & Treasury Yields Tell Same Story  

PepsiCo Reports Mixed Results, Pledges Cost Cuts 

PepsiCo (PEP) beat expectations on both revenue and earnings in its third-quarter report, posting core EPS of $2.34 and revenue of $25.27 billion. Organic revenue growth accelerated, supported by volume gains in both its global beverage and convenient foods segments. However, the North America segment remains a concern for investors. Food volumes were flat, while beverage volumes declined 2% during the quarter despite February price cuts of up to 15%. 

CEO Ramon Laguarta said the company plans to implement additional structural cost reductions in the coming months to support growth initiatives and offset ongoing input-cost inflation. See PepsiCo’s (PEP) Next Challenge: Health, Wellness and GLP-1s | Trading 360 

Broadcom and Oracle Turn to Debt Markets for AI Chip Financing 

Broadcom (AVGO) has reportedly been working to arrange more than $50 billion in financing for OpenAI's custom AI chip initiative and has held discussions with lenders including Apollo (APO) and Blackstone (BX), according to The Wall Street Journal. Separately, Oracle (ORCL) is in talks with Apollo and Goldman Sachs regarding financing for a large chip purchase as well. The developments follow reports that SpaceX financed a portion of its Nvidia (NVDA) chip purchases through approximately $40 billion in debt financing. The trend highlights growing reliance on debt markets and private credit to fund AI infrastructure buildouts as demand for advanced semiconductors and computing capacity continues to accelerate. 

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