Markets
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Luke Kawa

It sucks to be close to OpenAI right now

There’s a common thread between what’s ailing some different parts of the AI trade right now:

A high-profile relationship with OpenAI is a millstone around your neck. The ChatGPT maker is seemingly getting bested by Google’s Gemini 3 (and knows it) while burning a lot of cash, with no end to the red ink in sight.

Such millstone-afflicted parties include:

  • Investing conglomerate SoftBank has tumbled 9.9% and 10.8% in its two most recent trading days in Japan. SoftBank is a useful way to express a view on how OpenAI is doing because the Masayoshi Son-led firm is poised to own about 11% of the company, and increases in its valuation have been a big driver of SoftBank’s growth in net income. SoftBank sold its entire $5.8 billion stake in Nvidia in October, likely to finance what it owes OpenAI to build its position in that privately held company.

  • Oracle has the dubious distinction of getting battered across two different asset classes thanks to OpenAI. Remember: traders loved Oracle’s massive cloud-revenue backlog in the abstract. When the specifics were revealed and much of that sales pipeline was down to a $300 billion deal with OpenAI, that was when the stock peaked. More recently, credit default swaps tied to Oracle’s debt have also widened significantly, as the company’s infrastructure build-out is launching to fulfill demand from OpenAI, a customer that’s considered to be significantly less creditworthy.

  • The AI chip business of Advanced Micro Devices had a major breakthrough in October, securing a deal to sell multiple generations of its flagship GPUs for “tens of billions” in revenue. But... OpenAI was once again the customer. This was quickly followed by a separate announcement that 50,000 of its AI chips would be deployed in data centers run by Oracle starting in the second half of next year, likely de facto representing a further enmeshing of its relationship with OpenAI.

  • Microsoft has a tighter partnership with and bigger equity position in OpenAI than SoftBank. On the other hand, it also has its own successful core business, which significantly dilutes any OpenAI “signal,” so to speak. It’s the second-worst publicly traded hyperscaler in November, down almost double digits and trailing only Oracle.

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Oil prices are tanking on Tuesday, with West Texas Intermediate crude futures down about 2.8% amid reports that Ukraine has agreed to the framework of a possible peace deal with Russia.

A Kyiv official told Reuters that Ukrainian President Zelenskyy could visit the US to finalize the agreement in the next few days.

When crude falls, airlines tend to take off, and Tuesday’s market movements are sticking to that trend. Shares of major US airlines surged on oil’s price action, with discount carriers JetBlue, Southwest Airlines, and Frontier seeing the largest gains. The remaining members of the big four also rose, with United Airlines, American Airlines, and Delta Air Lines all up as well.

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Retailers on the move as Q3 results roll in ahead of Black Friday

Mall retailers were making moves Tuesday as Q3 earnings poured in ahead of Black Friday, with several chains lifting their full-year guidance on stronger consumer demand into the holiday season. Black Friday traffic is projected to hit record levels this week as deal-hungry shoppers hunt for bargains. Macy’s also popped on the back of the strong results from peers.

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Luke Kawa

Lumentum soars 50% in November as Wall Street and retail traders gush over the Google supplier

The Google halo effect is the new Nvidia halo effect.

Shares of optical and photonics company Lumentum have been on a tear in November, up nearly 50%. Its components help information move around quickly in data centers using lasers and mirrors.

Unlike a lot of the more speculative, volatile AI-adjacent stocks that have come under pressure as of late, Lumentum has strong operating performance to help justify these gains.

The company reported Q1 2026 results near the start of the month that exceeded analysts’ expectations, with management also offering Q2 guidance well ahead of forecasts.

The company’s fiscal 2025 results (the year ended June 28, 2025) showed that Google was its second-biggest customer, accounting for 15.4% of net revenues. Networking equipment company Ciena Corp. came in slightly higher, at 16%.

Bloomberg currently estimates that as of its most recent quarter, 22% and 21% of Lumentum’s sales come from Ciena and Google, respectively.

Retail traders have stampeded into the stock this month, per JPMorgan analyst Arun Jain.

JPM Retail Lumentum

Wall Street has been singing the company’s praises as of late, too. Needham analyst Ryan Koontz boosted his price target to $290 from $235 on Monday, while Rosenblatt’s Mike Genovese recently called it “a must own AI stock.”

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