Schlagwort-Archive: gemini

OpenAI Goes From Stock Market Savior to Burden as AI Risks Mount

 

Takeaways by Bloomberg AI

  • Wall Street’s sentiment toward companies associated with artificial intelligence is shifting, with OpenAI down and Alphabet Inc. up.
  • The maker of ChatGPT is facing questions about its lack of profitability and the need to grow rapidly to pay for its massive spending commitments.
  • Alphabet’s perceived strength goes beyond its Gemini AI model, with the company having a ton of cash at its disposal and a host of adjacent businesses, making it a deep-pocketed competitor in the AI trade.
 

Wall Street’s sentiment toward companies associated with artificial intelligence is shifting, and it’s all about two companies: OpenAI is down, and Alphabet Inc. 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 Corp., CoreWeave Inc., and Advanced Micro Devices Inc., but also Microsoft Corp., Nvidia Corp. and SoftBank, which has an 11% 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 Inc., Lumentum Holdings Inc., Celestica Inc., and TTM Technologies Inc.

Read More: Alphabet’s AI Strength Fuels Biggest Quarterly Jump Since 2005

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.

“A light has been shined on the complexity of the financing, the circular deals, the debt issues,” Ewing said. “I’m sure this exists around the Alphabet ecosystem to a certain degree, but it was exposed as pretty extreme for OpenAI’s deals, and appreciating that was a game-changer for sentiment.”

A basket of companies connected to OpenAI has gained 74% in 2025, which is impressive but far shy of the 146% jump by Alphabet-exposed stocks. The technology-heavy Nasdaq 100 Index is up 22%.

OpenAI vs Alphabet

Stocks in orbits of OpenAI and Alphabet have diverged

Source: Bloomberg, Morgan Stanley

Data is normalized with percentage appreciation as of January 2, 2025.

The skepticism surrounding OpenAI can be dated to August, when it unveiled GPT-5 to mixed reactions. It ramped up last month when Alphabet released the latest version of its Gemini AI model and got rave reviews. As a result, OpenAI Chief Executive Officer Sam Altman declared a “code red” effort to improve the quality of ChatGPT, delaying other projects until it gets its signature product in line.

‘All the Pieces’

Alphabet’s perceived strength goes beyond Gemini. The company has the third highest market capitalization in the S&P 500 and a ton of cash at its disposal. It also has a host of adjacent businesses, like Google Cloud and a semiconductor manufacturing operation that’s gaining traction. And that’s before you consider the company’s AI data, talent and distribution, or its successful subsidiaries like YouTube and Waymo.

 

“There’s a growing sense that Alphabet has all the pieces to emerge as the dominant AI model builder,” said Brian Colello, technology equity senior strategist at Morningstar. “Just a couple months ago, investors would’ve given that title to OpenAI. Now there’s more uncertainty, more competition, more risk that OpenAI isn’t the slam-dunk winner.”

Read More: Alphabet’s AI Chips Are a Potential $900 Billion ‘Secret Sauce’

Representatives for OpenAI and Alphabet didn’t respond to requests for comment.

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

By contrast, Alphabet’s partners in building out its AI effort are thriving. Shares of Lumentum, which makes optical components for Alphabet’s data centers, have more than tripled this year, putting them among the 30 best performers in the Russell 3000 Index. Celestica provides the hardware for Alphabet’s AI buildout, and its stock is up 252% in 2025. Meanwhile Broadcom — which is building the tensor processing unit, or TPU, chips Alphabet uses — has seen its stock price leap 68% since the end of last year.

OpenAI has announced a number of ambitious deals in recent months. The flurry of activity “rightfully brought scrutiny and concern over whether OpenAI can fund all 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 adds to the risk that it can’t reach its aspirations.”

In fairness, investors greeted many of these deals with excitement, because they appeared to mint the next generation of AI winners. But with the shift in sentiment, they’re suddenly taking a wait-and-see attitude.

“When people thought it could generate revenue and become profitable, those big deal numbers seemed possible,” said Brian Kersmanc, portfolio manager at GQG Partners, which has about $160 billion in assets. “Now we’re at a point where people have stopped believing and started questioning.”

Kersmanc sees the AI euphoria as the “dot-com era on steroids,” and said his firm has gone from being heavily overweight tech to highly skeptical.

Self-Inflicted Wounds

“We’re trying to avoid areas of over-hype and a lot of those were fueled by OpenAI,” he said. “Since a lot of places have been touched by this, it will be a painful unwind. It isn’t just a few tech names that need to come down, though they’re a huge part of the index. All these bets have parallel trades, like utilities, with high correlations. That’s the fear we have, not just that OpenAI spun up this narrative, but that so many things were lifted on the hype.”

OpenAI’s public-relations flaps haven’t helped. The startup’s Chief Financial Officer Sarah Friar recently suggested the US government “backstop the guarantee that allows the financing to happen,” which raised some eyebrows. But she and Altman later clarified that the company hasn’t requested such guarantees.

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

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 would need one or a combination of factors, including higher revenue than in our central case forecasts, better cost management, incremental capital injections, or debt issuance,” analyst Nicolas Cote-Colisson wrote in a research note on Nov. 24. Considering that OpenAI is expected to generate revenue of more than $12 billion in 2025, its compute cost “compounds investor nervousness about associated returns,” not only for the company itself, but also “for the interlaced AI chain,” he wrote.

To be sure, companies like Oracle and AMD aren’t solely reliant on OpenAI. They operate in areas that continue to see a lot of demand, and their products could find customers even without OpenAI. Furthermore, the weakness in the stocks could represent a buying opportunity, as companies tied to ChatGPT and the chips that power it are trading at a discount to those exposed to Gemini and its chips for the first time since 2016, according to a recent Wells Fargo analysis.

“I see a lot of untapped demand and penetration across industries, and that will ultimately underpin growth,” said Kieran Osborne, chief investment officer at Mission Wealth, which has about $13 billion in assets under management. “Monetization is the end goal for these companies, and so long as they work toward that, that will underpin the investment case.”

Source: https://www.bloomberg.com/news/articles/2025-12-07/openai-goes-from-stock-market-savior-to-anchor-as-ai-risks-mount

It’s the End of Google Search As We Know It

Source: https://www.wired.com/story/google-io-end-of-google-search/

Google is rethinking its most iconic and lucrative product by adding new AI features to search. One expert tells WIRED it’s “a change in the world order.”

Google Search is about to fundamentally change—for better or worse. To align with Alphabet-owned Google’s grand vision of artificial intelligence, and prompted by competition from AI upstarts like ChatGPT, the company’s core product is getting reorganized, more personalized, and much more summarized by AI.

At Google’s annual I/O developer conference in Mountain View, California, today, Liz Reid showed off these changes, setting her stamp early on in her tenure as the new head of all things Google search. (Reid has been at Google a mere 20 years, where she has worked on a variety of search products.) Her AI-soaked demo was part of a broader theme throughout Google’s keynote, led primarily by CEO Sundar Pichai: AI is now underpinning nearly every product at Google, and the company only plans to accelerate that shift.

“In the era of Gemini we think we can make a dramatic amount of improvements to search,” Reid said in an interview with WIRED ahead of the event, referring to the flagship generative AI model launched late last year. “People’s time is valuable, right? They deal with hard things. If you have an opportunity with technology to help people get answers to their questions, to take more of the work out of it, why wouldn’t we want to go after that?”

It’s as though Google took the index cards for the screenplay it’s been writing for the past 25 years and tossed them into the air to see where the cards might fall. Also: The screenplay was written by AI.

These changes to Google Search have been long in the making. Last year the company carved out a section of its Search Labs, which lets users try experimental new features, for something called Search Generative Experience. The big question since has been whether, or when, those features would become a permanent part of Google Search. The answer is, well, now.

Google’s search overhaul comes at a time when critics are becoming increasingly vocal about what feels to some like a degraded search experience, and for the first time in a long time, the company is feeling the heat of competition, from the massive mashup between Microsoft and OpenAI. Smaller startups like Perplexity, You.com, and Brave have also been riding the generative AI wave and getting attention, if not significant mindshare yet, for the way they’ve rejiggered the whole concept of search.
Automatic Answers

Google says it has made a customized version of its Gemini AI model for these new Search features, though it declined to share any information about the size of this model, its speeds, or the guardrails it has put in place around the technology.

This search-specific spin on Gemini will power at least a few different elements of the new Google Search. AI Overviews, which Google has already been experimenting with in its labs, is likely the most significant. AI-generated summaries will now appear at the top of search results.

One example from WIRED’s testing: In response to the query “Where is the best place for me to see the northern lights?” Google will, instead of listing web pages, tell you in authoritative text that the best places to see the northern lights, aka the aurora borealis, are in the Arctic Circle in places with minimal light pollution. It will also offer a link to NordicVisitor.com. But then the AI continues yapping on below that, saying “Other places to see the northern lights include Russia and Canada’s northwest territories.”

Reid says that AI Overviews like this won’t show up for every search result, even if the feature is now becoming more prevalent. It’s reserved for more complex questions. Every time a person searches, Google is attempting to make an algorithmic value judgment behind the scenes as to whether it should serve up AI-generated answers or a conventional blue link to click. “If you search for Walmart.com, you really just want to go to Walmart.com,” Reid says. “But if you have an extremely customized question, that’s where we’re going to bring this.”

AI Overviews are rolling out this week to all Google search users in the US. The feature will come to more countries by the end of the year, Reid said, which means more than a billion people will see AI Overviews in their search results. They will appear across all platforms—the web, mobile, and as part of the search engine experience in browsers, such as when people search through Google on Safari.

Another update coming to search is a function for planning ahead. You can, for example, ask Google to meal-plan for you, or to find a pilates studio nearby that’s offering a class with an introductory discount. In the Googley-eyed future of search, an AI agent can round up a few studios nearby, summarize reviews of them, and plot out the time it would take someone to walk there. This is one of Google’s most obvious advantages over upstart search engines, which don’t have anything close to the troves of reviews, mapping data, or other knowledge that Google has, and may not be able to tap into APIs for real-time or local information so easily.

The most jarring changes that Google has been exploring in its Search Labs is an “AI-organized” results page. This at first glance looks to eschew the blue-links search experience entirely.

One example provided by Reid: A search for where to go for an anniversary dinner in the greater Dallas area would return a page with a few “chips” or buttons at the top to refine the results. Those might include categories like Dine-In, Takeout, and Open Now. Below that might be a sponsored result—Google’s gonna ad—and then a grouping of what Google judges to be “anniversary-worthy restaurants” or “romantic steakhouses.” That might be followed by some suggested questions to tweak the search even more, like, “Is Dallas a romantic city?”

AI-organized search is still being rolled out, but it will start appearing in the US in English “in the coming weeks.” So will an enhanced video search option, like Google Lens on steroids, where you can point your phone’s camera at an object like a broken record player and ask how to fix it.

If all these new AI features sound confusing, you might have missed Google’s latest galaxy-brain ambitions for what was once a humble text box. Reid makes clear that she thinks most consumers assume Google Search is just one thing, where in fact it’s many things to different people, who all search in different ways.

“That’s one of the reasons why we’re excited about working on some of the AI-organized results pages,” she said. “Like, how do you make sense of space? The fact that you want lots of different content is great. But is it as easy as it can be yet in terms of browsing through and consuming the information?”

But by generating AI Overviews—and by determining when those overviews should appear—Google is essentially deciding what is a complex question and what is not, and then making a judgment on what kind of web content should inform its AI-generated summary. Sure, it’s a new era of search where search does the work for you; it’s also a search bot that has the potential to algorithmically favor one kind of result over others.

“One of the biggest changes to happen in search with these AI models is that the AI actually creates a kind of informed opinion,” says Jim Yu, the executive chairman of BrightEdge, a search engine optimization firm that has been closely monitoring web traffic for more than 17 years. “The paradigm of search for the last 20 years has been that the search engine pulls a lot of information and gives you the links. Now the search engine does all the searches for you and summarizes the results and gives you a formative opinion.”

Doing that raises the stakes for Google’s search results. When algorithms are deciding that what a person needs is one coagulated answer, instead of coughing up several links for them to then click through and read, errors are more consequential. Gemini has not been immune to hallucinations—instances where the AI shares blatantly wrong or made-up information.

Last year a writer for The Atlantic asked Google to name an African country beginning with the letter “K,” and the search engine responded with a snippet of text—originally generated by ChatGPT—that none of the countries in Africa begin with the letter K, clearly overlooking Kenya. Google’s AI image-generation tool was very publicly criticized earlier this year when it depicted some historical figures, such as George Washington, as Black. Google temporarily paused that tool.
New World Order

Google’s reimagined version of AI search shoves the famous “10 blue links” it used to provide on results pages further into the rearview. First ads and info boxes began to take priority at the top of Google’s pages; now, AI-generated overviews and categories will take up a good chunk of search real estate. And web publishers and content creators are nervous about these changes—rightfully.

The research firm Gartner predicted earlier this year that by 2026, traditional search engine volume will drop by 25 percent, as a more “agent”-led search approach, in which AI models retrieve and generate more direct answers, takes hold.

“Generative AI solutions are becoming substitute answer engines, replacing user queries that previously may have been executed in traditional search engines,” Alan Antin, a vice president analyst at Gartner, said in a statement that accompanied the report. “This will force companies to rethink their marketing channels strategy.”

What does that mean for the web? “It’s a change in the world order,” says Yu, of BrightEdge. “We’re at this moment where everything in search is starting to change with AI.”

Eight months ago BrightEdge developed something it calls a generative parser, which monitors what happens when searchers interact with AI-generated results on the web. He says over the past month the parser has detected that Google is less frequently asking people if they want an AI-generated answer, which was part of the experimental phase of generative search, and more frequently assuming they do. “We think it shows they have a lot more confidence that you’re going to want to interact with AI in search, rather than prompting you to opt in to an AI-generated result.”

Changes to search also have major implications for Google’s advertising business, which makes up the vast majority of the company’s revenue. In a recent quarterly earnings call, Pichai declined to share revenue from its generative AI experiments broadly. But as WIRED’s Paresh Dave pointed out, by offering more direct answers to searchers, “Google could end up with fewer opportunities to show search ads if people spend less time doing additional, more refined searches.” And the kinds of ads shown may have to evolve along with Google’s generative AI tools.

Google has said it will prioritize traffic to websites, creators, and merchants even as these changes roll out, but it hasn’t pulled back the curtain to reveal exactly how it plans to do this.

When asked in a press briefing ahead of I/O whether Google believes users will still click on links beyond the AI-generated web summary, Reid said that so far Google sees people “actually digging deeper, so they start with the AI overview and then click on additional websites.”

In the past, Reid continued, a searcher would have to poke around to eventually land on a website that gave them the info they wanted, but now Google will assemble an answer culled from various websites of its choosing. In the hive mind at the Googleplex, that will still spark exploration. “[People] will just use search more often, and that provides an additional opportunity to send valuable traffic to the web,” Reid said.

It’s a rosy vision for the future of search, one where being served bite-size AI-generated answers somehow prompts people to spend more time digging deeper into ideas. Google Search still promises to put the world’s information at our fingertips, but it’s less clear now who is actually tapping the keys.

Source: https://www.wired.com/story/google-io-end-of-google-search/