With the four tech hyperscalers â Amazon, Alphabet, Meta and Microsoft â set to report quarterly earnings after the close, hovering over their results is a single company that doesn't even release its financials to the public: OpenAI.
The ChatGPT creator, now valued at more than $850 billion by private investors, has become a major market mover over the past year as its revenue and hefty spending are increasingly viewed as a proxy for the artificial intelligence trade.
OpenAI would be all over the headlines this week anyway because of a high-profile legal battle between CEO Sam Altman and Tesla CEO Elon Musk. The two ex-friends were among a group of techies who created OpenAI as a nonprofit lab in 2015, and they're now facing off in court after Musk sued Altman and OpenAI in 2024, alleging they breached the founding agreement.
Before opening arguments could begin on Tuesday, shares of companies including Oracle, Nvidia, Advanced Micro Devices and Broadcom were sinking from a Wall Street Journal report that OpenAI missed revenue and user growth projections. The report, which OpenAI characterized as "ridiculous," also suggested that OpenAI leaders are worried about the company's ability to keep pace with its massive financial commitments tied to building out data centers.
All eyes then turned to the earnings reports scheduled for Wednesday. The four tech giants that are reporting are among the most valuable businesses in the world and all have clear ties to OpenAI, whether as an investor, customer, strategic partner, competitor, or some combination of those traits.
Following the Journal report on Tuesday, Amazon revealed that OpenAI's models would be available on its AWS cloud computing service. A day earlier, OpenAI and Microsoft announced a big shake-up to their established partnership that long predates the launch of ChatGPT.
Microsoft and Amazon are both major investors in OpenAI, with the former having pumped in a total of $13 billion and the latter recently committing to put in $50 billion.
To this point, Amazon has been a closer partner with Anthropic, backing the creator of Claude since 2023. With Tuesday's announcement, AWS users have expanded choice through its Bedrock service and can also pick OpenAI's flagship models.
"We view the launch as positive for AWS customers who can now access OpenAI and Anthropic frontier models within the AWS ecosystem and agentic solutions," wrote KeyBanc analysts, who recommend buying the stock, in a note to clients.
From the Microsoft side, analysts at Raymond James wrote Tuesday that investors are increasingly concerned "about the company's reliance on OpenAI along a few fronts," and that "OpenAI is diversifying its compute away from Microsoft." The analysts have the equivalent of a buy rating on the stock.
Manageable threat
Alphabet is directly taking on OpenAI through its Gemini models and suite of Gemini-powered services. When ChatGPT quickly went viral in late 2022 and early 2023, investors soured on Google because of concerns that search traffic would move to AI and that Google would get left behind.
But the narrative has changed dramatically. Alphabet shares have more than doubled in the past year, far outpacing the company's hyperscaler peers, as Gemini has caught up in a number of areas and Google's cloud business has boomed thanks to soaring demand for compute capacity. Meanwhile, Google's custom-built tensor processing units, or TPUs, are becoming a popular alternative to Nvidia's graphics processing units, or GPUs, for AI workflows in the cloud.
Analysts at Roth laid out their top debates around Google in a preview note last week. One was specific to OpenAI. "Is OpenAI a real competitive threat? Yes, but manageable," wrote the analysts, who recommend buying the stock.
At Meta, perhaps the biggest risk posed by OpenAI is in the war for talent.
Altman called attention to the issue in June, when he said on a podcast that Meta tried to poach OpenAI employees by offering signing bonuses as high as $100 million, with even larger annual compensation packages.
"I've heard that Meta thinks of us as their biggest competitor," Altman said on the "Uncapped" podcast, hosted by his brother. "Their current AI efforts have not worked as well as they have hoped and I respect being aggressive and continuing to try new things."
Andrew Bosworth, Meta's technology chief, responded by saying that OpenAI countered those offers. He described the hiring environment as "kind of unprecedented in my 20-year career as a technology executive."
Within AI, Meta was initially competing by building open-source models and trying to capture developers who didn't want to be tied down by proprietary offerings. But that approach failed, and Meta recently introduced Muse Spark, the first proprietary model spawned from Meta Superintelligence Labs, led by Alexandr Wang, the company's high-priced chief AI officer.
Early industry tests show positive results for Meta's technology, but the company has a lot of work to do to prove it can compete with the leading model developers.
"While the company integrated Meta AI into its core apps, we are awaiting a strategy to drive scaled consumer usage that is akin to other AI chatbots like ChatGPT and Claude," analysts at Citizens wrote in an earnings preview last week. "We believe this can unlock new data and ad budgets."
WATCH: OpenAI pushes back on report that company missed revenue targets.
