AI Daily: OpenAI reported to miss internal targets

Catch up on the top artificial intelligence news and commentary by Wall Street analysts on publicly traded companies in the space with this daily recap compiled by The Fly.

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INTERNAL TARGETS: OpenAI missed internal targets for weekly users and revenue, raising concerns among leaders about funding massive new data center spending, and CFO Sarah Friar told other company leaders she is worried about future computing spending if revenue growth is insufficient, The Wall Street Journal’s Berber Jin reports, citing people familiar with the matter. Friar and other executives are now seeking to control costs and instill more discipline in the business, at times putting them at odds with CEO Sam Altman, according to the people. “We are totally aligned on buying as much compute as we can and working hard on it together every day,” Altman and Friar said in a joint statement. Any suggestion that the pair are divided or pulling back on securing new computing resources is “ridiculous,” they said.

Afterward, an OpenAI spokesperson told Bloomberg that the company is “firing on all cylinders” and seeing strong demand growth from enterprise customers and for its advertising business. OpenAI continues to see its push for more computing capacity as “the great enabler, allowing it to “deliver a better product experience to our customers, the company added, according to Bloomberg. Companies exposed to OpenAI like Oracle (ORCL) and CoreWeave (CRWV), as well as to the buildout of data centers, like GE Vernova (GEV) and Vertiv (VRT), are trading down after the Wall Street Journal report.

Meanwhile, a CoreWeave spokesperson said in an emailed statement to Bloomberg that “OpenAI is a terrific partner, but not our only one,” the news service reported. “As more companies build and deploy AI, demand for compute continues to grow. We continue to see demand exceed supply across the AI ecosystem, particularly as inference scales,” CoreWeave is quoted as having added while noting that its business is supported by a “diverse and expanding set of customers,” including Meta Platforms (META), Anthropic, Microsoft (MSFT), Google (GOOGL), IBM (IBM), Perplexity AI, Jane Street, and others.

WAY OVERREACTION: Wedbush analyst Daniel Ives views the selloff in shares of Oracle after the Wall Street Journal reported OpenAI recently missed its own targets for new users and revenue as a “way overreaction.” Wedbush believes OpenAI has been seeing “very high demand” on both the consumer and enterprise front. It “strongly” disagrees with the notion that its growth is weakening. Oracle’s backlog of $553B is largely made up of a $300B cloud contract with OpenAI over the next five years, a project that is set to contribute $30B to revenue, the analyst tells investors in a research note. The firm also has a high level of confidence in Oracle’s ability to complete its $50B capital raise. It believes recent concerns around OpenAI are overblown, saying the company has enough capital to fulfill its compute capacity needs over at least the next three years. Wedbush has an Outperform rating on Oracle with a $225 price target.

MANUS ACQUISITION: Meta (META) is preparing to undo its acquisition of AI startup Manus after China banned the transaction, Rafaele Huang and Meghan Bobrowsky of The Wall Street Journal report, citing people familiar with the matter. Meta bought Manus for $2.5B in December and quickly integrated the new tech into its systems. To further complicate matters, Manus’s investors have already received their returns, people with knowledge of the matter said.

AI-POWERED PIZZA ASSISTANT: Papa Johns (PZZA) unveils Lou AI – “a next-generation AI-powered pizza assistant available in the Papa Johns app designed to end group ordering chaos, help pizza lovers satisfy their cravings quickly and score great deals seamlessly,” the company said. Lou AI is the first AI-powered platform deployed through Google Cloud’s (GOOGL) Food Ordering agent that is equipping Papa Johns to “usher in a new era of pizza ordering that is more personalized, intuitive and seamless,” the company added.

AI COMPETITORS: The European Commission announced that it has sent its preliminary findings to Google as part of the specification proceedings it started on January 27 under the Digital Markets Act. These preliminary findings outline the draft measures Google should implement to ensure that third parties have effective access and interoperability with key capabilities of Android. “The proposed measures aim to ensure that competing AI services can effectively interact with applications on users’ Android devices and execute tasks accordingly, such as sending an email using the user’s preferred email app, ordering food or sharing a photo with friends. Currently, Google largely reserves these capabilities for use by its own AI offerings on Android phones and tablets. For example, the measures would allow competing AI services to be easily activated by users, using a custom ‘wake word’, a phrase that the user can speak to activate an AI service. The proposed measures will also enable competing providers of AI services to innovate and offer deeply integrated AI experiences to users on Android phones and tablets, along with Alphabet’s own AI services, such as Gemini. Opening up access to these capabilities will provide Android users across the EU with a wider choice of AI services.”