OpenAI goes from stock market savior to burden as AI risks mount

The maker of ChatGPT is no longer seen as being at the forefront of AI technology and faces questions about its lack of profitability and the need to grow quickly to pay for its massive spending commitments. Meanwhile, Google’s parent company is emerging as a deep-pocketed competitor with tentacles in every part of the AI ​​business.

“OpenAI was the golden child earlier this year, and Alphabet was viewed in a completely different light,” said Brett Ewing, chief market strategist at First Franklin Financial Services. “Now feelings are becoming more intense about OpenAI.”

As a result, stocks of companies in OpenAI’s orbit — primarily Oracle Corp. and CoreWeave Inc. and Advanced Micro Devices Inc., but also Microsoft Corp. And Nvidia Corp. And SoftBank, which has an 11% stake in the company – is under intense selling pressure. Meanwhile, Alphabet’s momentum is not only boosting its stock prices, but also those of related stocks such as Broadcom Inc. and Lumentum Holdings Inc. and Celestica Inc. and TTM Technologies Inc.

Read more: Alphabet’s AI power fuels biggest quarterly jump since 2005

The transformation was dramatic in scale and speed. Just a few weeks ago, OpenAI sparked massive protests at any company associated with it. Now, these links look like an anchor. It’s a change with wide-ranging implications, given how central the company has become to the artificial intelligence craze that has driven the stock market for three years.

“The complexity of financing, circular deals and debt issues has been highlighted,” Ewing said. “I’m sure this is around the Alphabet ecosystem to some extent, but it was exposed as being too extreme for OpenAI deals, and recognizing that was a game-changer for sentiment.”

A group of companies linked to OpenAI posted a 74% gain in 2025, which is impressive but far less than the 146% jump seen by shares exposed to Alphabet. The high-tech Nasdaq 100 rose 22%.

Skepticism surrounding OpenAI dates back to August, when it unveiled GPT-5 to mixed reactions. It escalated last month when Alphabet released the latest version of its Gemini AI model to rave reviews. As a result, OpenAI CEO Sam Altman announced a “code red” effort to improve the quality of ChatGPT, delaying other projects until they had their signature product.

“All the pieces”

The perceived power of the alphabet goes beyond Gemini. The company has the third-highest market cap in the S&P 500 and has a significant amount of cash at its disposal. It also has a host of neighboring companies, such as Google Cloud and a semiconductor manufacturing process that is gaining momentum. And that’s before you consider the company’s AI data, talent and distribution, or its successful subsidiaries like YouTube and Waymo.

“There is a growing sense that Alphabet has all the pieces to emerge as the dominant AI model-building company,” said Brian Colello, chief technology equity strategist at Morningstar. “Just a few months ago, investors would have given that title to OpenAI. Now there is more uncertainty, more competition, and more risk that OpenAI is not a knockout winner.”

Read more: Alphabet’s AI chips represent a $900 billion ‘secret sauce’

Representatives for OpenAI and Alphabet did not respond to requests for comment.

The difference between finishing first or second goes beyond bragging rights, it also has significant financial ramifications for companies and their partners. For example, if users’ attraction to Gemini slows ChatGPT’s growth, it will be difficult for OpenAI to pay for cloud computing capacity from Oracle or chips from AMD.

By contrast, Alphabet’s partners in building its AI efforts are thriving. Shares of Lumentum, which makes optical components for Alphabet’s data centers, have more than tripled this year, putting it among the 30 best-performing companies in the Russell 3000. Celestica provides the hardware needed to build Alphabet’s artificial intelligence, and its stock will rise 252% in 2025. Meanwhile, Broadcom — which builds the tensor processing unit, or TPU, chips that Alphabet uses — saw its stock price jump by 68% since the end of last year.

OpenAI has announced a number of ambitious deals in recent months. The flurry of activity “has rightly brought scrutiny and concern about whether OpenAI can fund all of this, whether it is biting off more than it can chew,” Colello said. “The timing of its revenue growth is uncertain, and every improvement a competitor makes increases the risk that it will not be able to achieve its aspirations.”

In fairness, many of these deals were greeted with excitement by investors, because they appeared to be shaping the next generation of AI winners. But with the shift in sentiment, they suddenly took a wait-and-see attitude.

“When people thought it could generate revenue and become profitable, these big deal numbers seemed possible,” said Brian Kerzmanek, a portfolio manager at GQG Partners, which has about $160 billion in assets. “We are now at a point where people have stopped believing and started questioning.”

Kerzmanek sees the AI ​​euphoria as “the dot-com era on steroids,” and said his company has gone from being a tech heavyweight to being highly skeptical.

Self-inflicted wounds

“We try to avoid areas of hype and a lot of it is fed by OpenAI,” he said. “Since this has hit a lot of places, it’s going to be a painful break. It’s not just a few tech names that need to come down, even though they’re a big part of the index. All of these bets have parallel trades, like utilities, with high correlations. That’s the fear we have, that it’s not just that OpenAI spun this narrative, but a lot of things have been lifted because of this hype.”

OpenAI’s PR flops weren’t helpful. The startup’s CFO, Sarah Friar, recently suggested that the US government “back the guarantee that allows the financing to happen,” which raised some eyebrows. But she and Altman later clarified that the company had not asked for such guarantees.

Then there was Altman’s appearance on “Bg2 Pod,” where he was asked how the company makes spending commitments that far exceed its revenues. “If you want to sell your shares, I will find you a buyer – that’s enough,” was the CEO’s response.

Read more: Sam Altman’s coworkers are shocked

Altman’s dismissal was problematic because the gap between OpenAI’s revenue and its spending plans between now and 2033 is about $207 billion, according to HSBC estimates.

“Closing the gap will need one or a combination of factors, including higher revenues than in our central forecast, better cost management, additional capital injection, or debt issuance,” analyst Nicola Cote Collison wrote in a Nov. 24 research note. Given that OpenAI is expected to generate revenues of more than $12 billion in 2025, its computational cost “exacerbates investor anxiety about the associated returns,” not only for the company itself, but also “for the company.” “The Nested AI Series,” he wrote.

Companies like Oracle and AMD certainly aren’t relying solely on OpenAI. They work in regions that still see a lot of demand, and their products can find customers even without OpenAI. Moreover, stock weakness could represent a buying opportunity, as companies linked to ChatGPT and the chips it operates are trading at a discount to those exposed to Gemini and its chips for the first time since 2016, according to a recent analysis by Wells Fargo.

“I see a lot of untapped demand and penetration across industries, and that will ultimately fuel growth,” said Kieran Osborne, chief investment officer at Mission Wealth, which manages about $13 billion in assets. “Monetization is the ultimate goal for these companies, and as long as they work towards that, it will strengthen the investment case.”