Can an OpenAI IPO delay derail the AI chip rally? Here's why it matters

Global technology stocks resumed their selling streak in Friday's trade. Still, this time the weakness was driven not by valuation concerns or worries over hefty AI spending, but by media reports suggesting a potential delay in OpenAI's initial public offering (IPO), which triggered a brief trading halt on South Korea's Kospi index.

The impact was also felt on Wall Street, where major chipmakers and technology stocks traded lower as negative sentiment spread across global markets.

A New York Times report suggesting that OpenAI could delay its initial public offering (IPO) until 2027 also highlighted how quickly sentiment can shift across the AI sector.

The report triggered a 13% plunge in shares of OpenAI backer SoftBank Group Corp., marking the steepest one-day decline since August 2024, as investors worried that a delayed IPO could delay returns on their investment.

The sell-off reflected broader uncertainty over whether the AI investment boom can sustain its momentum if the sector's most anticipated public listing is pushed back. Expectations of a major OpenAI listing had helped push SoftBank shares to record highs and lifted its market value above Toyota Motor Corp.'s last month.

This has been another volatile week for the technology sector. While AI optimism has been enough to drive markets higher for much of the past year, investors are increasingly focused on whether the enormous capital required to build AI infrastructure will yield sufficient returns.

Although Micron Technology's strong earnings provided some reassurance, investors remain cautious amid elevated valuations and uncertainty over the pace of future AI spending. Investors also appear to be becoming more selective in picking AI-linked stocks rather than buying the sector broadly.

OpenAI weighs delaying blockbuster IPO

OpenAI is considering delaying its public debut until next year, The New York Times reported on Thursday, citing three people involved in the company's deliberations.

The maker of ChatGPT has recently submitted IPO paperwork to the US Securities and Exchange Commission and is working with Goldman Sachs and Morgan Stanley on a potential listing as soon as this fall, according to people familiar with the matter.

The New York Times reported that OpenAI had considered going public as early as the second half of 2026, with Chief Executive Officer Sam Altman reportedly pushing advisers toward a $1 trillion valuation target.

However, bankers advising OpenAI warned that heightened volatility in technology stocks could weaken investor appetite for the offering, according to the report.

The report also said that OpenAI is trying to catch up with its younger rivals in the race to win enterprise customers willing to pay large sums for AI tools that improve workplace productivity.

OpenAI IPO delay is a confidence signal, not a demand signal

According to domestic brokerage firm, Vested Finance, investors should distinguish between OpenAI's IPO timeline and the underlying demand for AI infrastructure.

"Let's separate two things because the market's conflating them," Vested Finance said.

"OpenAI possibly pushing its IPO to 2027 doesn't change how many chips it buys—it's a private company today, it'll be a private company next year, and its compute spending runs on the same trajectory either way. So, this isn't a demand signal for Nvidia or Broadcom or the memory names."

According to Vested Finance, the bigger implication is on investor confidence rather than chip demand.

"What it is, is a confidence signal. OpenAI's quietly become the load-bearing story for the whole AI infrastructure trade, and when the most-watched name in that trade blinks on going public at a trillion-dollar valuation, the market re-rates the multiple it's willing to pay for everything downstream—the chipmakers, the data-center plays, the next listing in the pipeline."

"For Indian investors, most of whom have got their US AI exposure concentrated in a handful of names, the takeaway isn't that the boom is ending." According to Vested Finance, the underlying capital expenditure cycle remains intact, with hyperscalers continuing to commit massive investments.

"The underlying capex is still there — the hyperscalers are committed to something like $750 billion this year. What's changed is that the market's stopped paying for the story alone and started asking about the returns on all that spending. That's a healthy question, even if it's an uncomfortable one."

Long-term investors may be less affected

Looking ahead, Vested Finance believes the market could interpret the recent weakness in different ways.

"Where this goes from here is honestly hard to call. You can build a case that it's a routine correction in an intact trend, and you can build a case that valuations got ahead of the fundamentals, and this is the air coming out. Both are live."

Vested Finance added that an OpenAI IPO delay is unlikely to matter much for long-term investors, although it could hurt those who entered the AI trade near its recent peak.

"What we would say to anyone holding the AI trade is that an IPO slipping a year barely registers if your horizon is long, and it really stings if you bought the momentum at the top. Which of those you are matters more right now than any view on OpenAI's timing."

(With inputs from agencies)

Disclaimer: We advise investors to check with certified experts before making any investment decisions.