Google’s parent is emerging as a deep-pocketed competitor with tentacles in every part of the AI trade.New York: Wall Street’s sentiment toward companies associated with artificial intelligence is shifting, and it’s all about two companies: OpenAI is down, and Alphabet is up.
The maker of ChatGPT is no longer seen as being on the cutting edge of AI technology and is facing questions about its lack of profitability and the need to grow rapidly to pay for its massive spending commitments. Meanwhile, Google’s parent is emerging as a deep-pocketed competitor with tentacles in every part of the AI trade.
“OpenAI was the golden child earlier this year, and Alphabet was looked at in a very different light,” said Brett Ewing, chief market strategist at First Franklin Financial Services. “Now sentiment is much more tempered toward OpenAI.”
As a result, the shares of companies in OpenAI’s orbit – principally Oracle, CoreWeave, and Advanced Micro Devices, but also Microsoft, Nvidia and SoftBank, which has an 11 per cent stake in the company – are coming under heavy selling pressure. Meanwhile, Alphabet’s momentum is boosting not only its stock price, but also those it’s associated with like Broadcom, Lumentum Holdings, Celestica, and TTM Technologies.
The shift has been dramatic in magnitude and speed. Just a few weeks ago, OpenAI was sparking huge rallies in any company related to it. Now, those connections look more like an anchor. It’s a change that carries wide-ranging implications, given how central the closely held company has been to the AI mania that has driven the stock market’s three-year rally.
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