(Bloomberg) — Wall Street's sentiment toward companies related to artificial intelligence is shifting, with two companies to watch: OpenAI (OPAI.PVT) falling and Alphabet Inc. (GOOG, GOOGL) rising.
The makers of ChatGPT are no longer considered to be at the cutting edge of AI technology and are facing questions about lack of profitability and the need to grow quickly to pay for the huge expenditures. Meanwhile, Google's parent company has emerged as a well-funded competitor with tentacles in every corner of the AI industry.
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“Earlier this year, OpenAI was the golden child, but Alphabet was looked at in a completely different light,” said Brett Ewing, chief market strategist at First Franklin Financial Services. “Sentiment towards OpenAI is much calmer now than it used to be.”
As a result, stocks of companies in the OpenAI orbit, primarily Oracle Corp. (ORCL), CoreWeave Inc. (CRWV), and Advanced Micro Devices Inc. (AMD), but also Microsoft Corp. (MSFT), Nvidia Corp. (NVDA), and SoftBank, which owns 11% of the company, are under heavy selling pressure. Meanwhile, Alphabet's momentum is not only boosting its stock price, but also related stocks such as Broadcom Inc., Lumentum Holdings Inc., Celestica Inc., and TTM Technologies Inc.
This change was dramatic in scale and speed. Just a few weeks ago, OpenAI was sparking a huge rally among all the companies associated with it. Now, these connections look like anchors. It's a change with far-reaching implications, given how central private companies have been to the AI mania that has driven the stock market's three-year rally.
“It shines a light on the complexities of financing, circular trading and debt issues,” Ewing said. “I'm sure this exists to some degree around the Alphabet ecosystem, but the exposure and recognition of it being pretty extreme for an OpenAI deal has changed sentiment quite a bit.”
The basket of companies associated with OpenAI is up 74% in 2025, which is impressive but nowhere near the 146% gain for Alphabet stocks. The tech-heavy Nasdaq 100 index rose 22%.
The skepticism surrounding OpenAI dates back to August when OpenAI announced GPT-5 to mixed reactions. This movement further accelerated last month when Alphabet released the latest version of its Gemini AI model to rave reviews. As a result, OpenAI CEO Sam Altman declared a “code red” effort to improve the quality of ChatGPT, delaying other projects until the company had its flagship product lined up.
“Every piece”
The perceived strength of the alphabet exceeds Gemini. The company has the third-highest market capitalization in the S&P 500 and has a lot of cash at its disposal. It also has a number of adjacent businesses, including Google Cloud and a growing semiconductor manufacturing business. And that's before you factor in the company's AI data, talent, distribution, or successful subsidiaries like YouTube and Waymo.
“There's a growing sense that Alphabet has all the ingredients to emerge as a dominant AI model builder,” said Brian Colello, senior technology equity strategist at Morningstar. “Just a few months ago, investors would have given that title to OpenAI. Now, with increased uncertainty and increased competition, there is a greater risk that OpenAI will not be the outright winner.”
Representatives for OpenAI and Alphabet did not respond to requests for comment.
The difference between first and second place isn't just bragging rights; it also has significant financial implications for companies and their partners. For example, if users drawn to Gemini slow ChatGPT's growth, it will be harder for OpenAI to pay for Oracle's cloud computing capacity or AMD's chips.
By contrast, the partners building Alphabet's AI efforts have been successful. Lumentum, which makes optical components for Alphabet's data centers, has more than tripled in value this year, making it a top-performing company on the Russell 3000 index. Celestica provides the hardware for Alphabet's AI builds, and its stock is up 252% in 2025. Meanwhile, shares of Broadcom, which makes the tensor processing unit (TPU) chips used by Alphabet, have soared 68% since the end of last year.
OpenAI has announced a number of ambitious deals in recent months. The flurry of activity “naturally led to scrutiny and concern about whether OpenAI could fund all of this and whether it was gobbling up more than it could afford,” Colello said. “The timing of revenue growth is uncertain, and each improvement made by a competitor increases the risk of not meeting that goal.”
To be fair, many of these deals looked like they were creating the next generation of AI winners, so investors greeted them with excitement. But as sentiment changed, they suddenly took a wait-and-see attitude.
“At a time when people thought they could generate revenue and make a profit, these big deal numbers seemed achievable,” said Brian Kersman, portfolio manager at GQG Partners, which has about $160 billion in assets. “We're at a stage now where people are stopping believing and starting to question.”
Kersmank sees the AI hype as “the dot-com era on steroids,” and said his company has gone from being a tech-heavy company to a deeply skeptical company.
“We try to avoid areas where there is too much hype, much of it fueled by OpenAI,” he said. “It's going to be a painful relief because a lot of places are affected by this. It's not just a few tech stocks that have to go down, despite being a big part of the stock index. All of these bets have parallel trades that are as highly correlated as utilities. That's our concern, not just that OpenAI has made this story up, but that so much has been lifted up on the hype.”
OpenAI's public relations efforts were to no avail. The company's chief financial officer, Sarah Friar, recently raised some eyebrows when she suggested that the U.S. government “backstop guarantees that would allow us to raise money.” However, she and Mr. Altman later clarified that the company had not requested such guarantees.
Altman then appeared on the “Bg2 Pod” and was asked how the company can commit to spending far more than it makes. “If you want to sell your shares, I'll find a buyer. I'm all you need,'' was the CEO's response.
Altman's firing was troubling because, according to HSBC estimates, there is a roughly $207 billion gap between OpenAI's revenue and its planned spending between now and 2033.
Sam Altman, co-founder and CEO of OpenAI, testifies during a Senate committee hearing at the Capitol in Washington on May 8, 2025. (AP Photo/Jose Luis Magana, File) ·Related news organizations
“Closing the gap will require one or a combination of factors, including higher revenues than our core case forecasts, better cost controls, incremental capital injections, and debt issuance,” analyst Nicholas Cote-Colison wrote in a Nov. 24 research note. Given that OpenAI is expected to generate more than $12 billion in revenue in 2025, its computing costs are “exacerbating investor nervousness about associated returns.” Not only to the company itself, but “to the interlaced AI chain,” he wrote.
To be sure, companies like Oracle and AMD don't rely solely on OpenAI. The company continues to operate in areas where there is a lot of demand, and its products can find customers even without OpenAI. Additionally, recent Wells Fargo analysis shows that companies related to ChatGPT and the chips that power it are trading at a discount to Gemini and the companies exposed to its chips for the first time since 2016, and the stock's weakness could represent a buying opportunity.
“We're seeing a lot of untapped demand and industry penetration that will ultimately support growth,” said Kieran Osborne, chief investment officer at Mission Wealth, which manages about $13 billion in assets. “For these companies, monetization is the end goal, and as long as they work toward that, that will be the rationale for investment.”
