OpenAI Debacle? Fresh Off the Oven Newsletter

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Markets at a Glance

United States, S&P 500 (+0.9%): Some semblance of optimism returned to the U.S. markets. Investors are cheering some of the strong results released by AI hyperscalers, but by and large, they are also wary of the developments within the Federal Reserve.

  • Earnings results from Alphabet, Amazon, Apple, Meta and Microsoft show mixed reactions from investors. Some are worried about them spending too much, while some worry that they are spending too little. Each has its own context. More on this later in the newsletter.
  • Federal Reserve (Fed) chairman, Jerome Powell said he will stay on the Fed’s board when he finishes his term as chairman. This has essentially dampened the markets as he has openly said that he is defending the Fed from attacks from the Trump administration.

China, Hang Seng China Enterprise Index (-1.1%): The Hong Kong/China stock market is down 1.1% amid declines in many banking and financial stocks. Meanwhile, some of the big technology companies also shed some weight. However, its softer non-manufacturing purchasing manager’s index probably dragged the market down.

  • Key banking stocks fell, such as Industrial Commercial Bank (-3.2%), Bank of Communications (-3.4%), China Merchants Bank (-6.6%) and Postal Savings Bank (-5.3%), while some tech stocks also followed, like Tencent (-5.2%), Xiaomi (-7.0%), Alibaba (-4.4%), and Baidu (-2.2%).
  • The non-manufacturing PMI fell from 49.9 points in March 2026 to 49.4 points in April 2026.

Malaysia, FBMKLCI (+0.1%): Markets were flat across Malaysia’s landscape. A decline in banking stocks was followed by strong buying in telecommunications and oil & gas stocks.

  • Gainers were Telekom Malaysia (+5.4%), Petronas Chemicals (+7.6%), Axiata (+4.9%), Inari (+8.2%), and Nestle (+9.2%).
  • Losers were Hong Leong (-2.5%), Public Bank (-2.7%), CIMB (-1.8%), and RHB (-1.3%).

News Slices to Digest

OpenAI Misses Revenue and User Targets

Something is amiss in OpenAI. According to the Wall Street Journal, OpenAI has missed revenue and user targets that it set internally.

  • Why is this important? It is planning for an IPO this year, which could value the company at US$852 billion. Investors are closely watching OpenAI’s financials now, to see whether its huge capital investments are yielding any returns.

Furthermore, OpenAI is buying a huge amount of computing power, which is worth US$600 billion, to expand its AI capabilities. In the past 4 months, investors have dumped AI-related stocks for fears of a big AI bubble forming.

  • Why are investors worried? Huge investments in AI are not yielding much return to many companies’ revenue and profits. That fear has now spread to the big AI companies. The latest news out of OpenAI supports this fear.

AI Hyperscalers’ Earnings Results for 1Q 2026

This week saw major quarterly earnings results for Amazon, Alphabet, Apple, Microsoft and Meta. Here are some highlights from them.

  • Amazon: Revenue is up by 17%, driven mostly by the Amazon Web Services (AWS) segment (+28%). It has also secured key contracts to supply computing power and AI chips to Anthropic and OpenAI.
  • Alphabet: Revenue increased by 22%, with Google Cloud revenue growing by a whopping 63%. Net profit is up by 81% as Google Cloud’s operating margin doubled.
  • Apple: Revenue is up by 17% as it announces iPhone 17e and M4-powered iPad Air. Importantly, its Greater China segment grew by 28%, after a prolonged period of weakness there.
  • Microsoft: Revenue grew by 18%, driven by its Microsoft Cloud segment (+29%) and Intelligent Cloud (+30%). However, investors are now selling down the stock due to its higher capital spending on AI.
  • Meta: Revenue is up by 33%, driven by higher advertising revenue. Meanwhile, its profits grew even more by 61%.

BYD’s 1Q 2026 Earnings Result Was Bad

It is a slide. A very slippery one. BYD’s fortunes in its own Chinese core market are turning sour. Revenue and profit are down by 11.8% and 55.3%, respectively.

  • What is driving the decline? The Chinese market has continued to be challenging. Price war is still eating into margins. Chinese consumer appetite is still weak, while government incentives for EVs are being taken away.

However, not all is bad. It has come to rely on overseas sales. Its contribution to total deliveries has increased from 23% in 2025 to 46% in 1Q 2026.

  • Why is it relying on overseas sales? The average net margin is higher for overseas sales at CNY20,000 compared to Chinese margins of CNY5,000.

Stock Focus

This week, I am taking a look at China Hongqiao Group, which is listed on the Hong Kong Exchange. It makes and sells aluminium products in China.

  • Why am I looking? Over the past week, the company’s share price declined by 10.2%. Its price-to-earnings ratio is now at 13 times.

Not really sure why the company’s share price declined by so much. At the current moment, the supply of aluminum is tight in the market, which makes it profitable for Hongqiao to sell. However, its previous earnings results have disappointed.

Hence, this may be a temporary sell-down.

Aluminium has become a sought-after commodity this year, similar to other commodities. And Hongqiao is a leading aluminium producer in China, with a wide market.

Analysts are targeting a price of HKD44.16 with a potential upside of +35.1%.

That’s all I have for this week.

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