Artificial intelligence once had an uncontested poster child—OpenAI, the company that ignited the modern AI revolution with ChatGPT. For nearly three years, markets rewarded anything even remotely connected to the organization, fueling an AI mania that pushed the Nasdaq to record-breaking heights. But in 2025, the story has shifted dramatically. OpenAI, once seen as the ultimate growth engine, is now increasingly viewed as a financial burden, a technological laggard, and a risk multiplier for companies in its ecosystem. Meanwhile, Alphabet—the “sleeping giant” of AI—has roared awake, reshaping investor sentiment with its massive balance sheet, infrastructure advantage, and rapid-fire product breakthroughs.
The result? A major shift in Wall Street’s AI playbook, with OpenAI–linked companies selling off sharply while Alphabet–exposed names surge. And this reversal reflects more than just hype cycles—it exposes the growing scrutiny over AI business models, the heavy costs of scaling frontier models, and the realization that the first-mover advantage may not guarantee long-term dominance.
A Narrative Flip: OpenAI Down, Alphabet Ascendant
For most of the AI boom, OpenAI appeared untouchable—the innovation engine at the center of the largest stock market run-up since the dot-com era. But now, the maker of ChatGPT is under pressure from every direction: slowing product momentum, a costly expansion plan, questions around transparency, concerns about long-term profitability, and fears that its financial structure may be too “circular” to sustain.
On the other side of the spectrum is Alphabet Inc., the parent of Google. Far from being sidelined, Google has surged to the top of the AI leaderboard thanks to its Gemini breakthroughs, unrivaled access to AI training data, and a deeply integrated ecosystem spanning Search, Cloud, YouTube, Android, and hardware.
“OpenAI was the golden child earlier this year, and Alphabet was looked at in a very different light,” says Brett Ewing of First Franklin Financial Services. “Now sentiment is much more tempered toward OpenAI.”
This reversal has fractured the AI trade—and sharply repositioned winners and losers.
The Market Fallout: OpenAI Partners Sink While Alphabet Allies Soar
Companies tied to OpenAI’s compute ecosystem—including Oracle, CoreWeave, AMD, and even Microsoft—are now facing steep selloffs. NVIDIA and SoftBank have also felt pressure, given their deep linkages to OpenAI’s growth.
By contrast, Alphabet-affiliated names have become the new darlings:
- Lumentum (optical components for Google’s data centers) → tripled in 2025
- Celestica (hardware manufacturer for Alphabet’s AI expansion) → up 252%
- Broadcom (builder of Alphabet’s TPU chips) → up 68% YTD
This shift underscores the reality that OpenAI is no longer viewed as the unavoidable center of AI innovation. Instead, investors are gravitating toward companies with:
✓ stronger balance sheets
✓ diversified AI revenue streams
✓ integrated ecosystems
✓ lower dependence on a single frontier model
And Alphabet has all of those in abundance.
How GPT-5 and Gemini Sparked a Sentiment Reversal
The turning point can be traced back to two major events:
1. GPT-5’s lukewarm reception
OpenAI’s release of GPT-5 in August did not produce the expected leap in capability. Instead, reviewers noted:
- inconsistent reasoning
- performance instability
- slower-than-expected model improvement
This was the first time OpenAI seemed vulnerable.
2. Alphabet’s Gemini surge
Alphabet then delivered a highly refined Gemini upgrade—one that was praised for:
- multimodal reasoning
- speed
- accuracy
- long-context capabilities
The response was so strong that Sam Altman declared an internal “code red,” diverting resources to improving ChatGPT quality.
Suddenly, OpenAI no longer appeared untouchable. Meanwhile, Google had momentum—and an expanding ecosystem ready to monetize it.
Alphabet Has ‘All the Pieces’ To Become the Dominant Model Builder
Brian Colello of Morningstar notes that Alphabet’s strength goes far beyond its latest model release.
Alphabet brings:
- the third-highest market cap in the S&P 500
- massive cash reserves
- Google Cloud’s infrastructure advantage
- its own semiconductor manufacturing (TPUs)
- the largest data distribution network on Earth
- powerhouse subsidiaries like YouTube and Waymo
“Alphabet has all the pieces to emerge as the dominant AI model builder,” Colello says.
For investors, this matters because dominance in AI isn’t just hype—it determines who controls:
- training pipelines
- inference revenue
- cloud compute demand
- enterprise adoption
- global data flows
It shapes the future of trillion-dollar markets.
OpenAI’s Problems Run Deeper Than Product Momentum
Beyond technical comparison, OpenAI is also battling internal and structural issues that worry investors.
1. Financing Complexity
OpenAI’s business structure—which blends nonprofit governance, a capped-profit arm, multiple financial partners, and enormous compute commitments—has become a source of concern.
2. A Massive Spending Gap
HSBC estimates that OpenAI’s spending obligations between now and 2033 exceed its revenue by:
→ $207 billion
That’s an unprecedented financial gap for a company still building its monetization model.
3. Public Relations Missteps
Statements from leadership—including CFO Sarah Friar and Sam Altman—have raised eyebrows due to:
- requests (later walked back) for government financial guarantees
- nonchalant comments about multi-billion-dollar commitments
- references to finding buyers for shareholder positions
For a company under intense scrutiny, the confidence sometimes seems mismatched with financial realities.
4. Dependence on partners
If ChatGPT growth slows:
- Oracle sells less compute
- AMD sells fewer chips
- Microsoft absorbs more cost than planned
- CoreWeave faces utilization risk
And investors now recognize these dependencies as fragile.
The AI Trade Is Entering Its ‘Dot-Com on Steroids’ Phase
Portfolio managers are calling this period a painful but necessary correction.
“We’re trying to avoid areas of over-hype, and a lot of those were fueled by OpenAI,” says Brian Kersmanc of GQG Partners. “This unwind won’t just hit a few tech names. Everything lifted by the hype will feel the impact.”
Unlike the dot-com crash, however, AI is not a passing fad. It is a technological foundation. But the winners are becoming clearer:
- Companies with real cash flow
- Companies with existing infrastructure
- Companies with distribution
- Companies with ecosystem lock-in
Alphabet checks all of these.
OpenAI checks far fewer.
A Buying Opportunity or a Warning?
Some analysts still believe the selloff in OpenAI-linked stocks could be an opportunity. Wells Fargo reports that for the first time since 2016, OpenAI-exposed stocks are trading at a discount to Gemini-exposed ones. But this discount exists because the market now questions OpenAI’s ability to scale profitably and sustainably.
Others argue that long-term demand for AI compute will buoy all major players, regardless of who dominates the model race.
“There’s a lot of untapped demand across industries,” says Kieran Osborne of Mission Wealth. “Monetization is the end goal, and as long as companies progress toward that, the case remains strong.”
OpenAI’s Shine Has Faded—but the AI Race Is Far From Over
OpenAI’s fall from market hero to perceived liability is not the end of its story. It remains one of the most innovative forces in modern technology. But the shift in sentiment reveals something deeper: investors now reward companies with durable ecosystems, stable infrastructure, diversified revenue streams, and enormous financial runway.
Alphabet checks those boxes—and Wall Street has noticed.
The AI boom is no longer about who built the first groundbreaking model. It’s about who can scale the fastest, monetize the widest, operate the cheapest, and withstand the pressure of trillion-dollar competition. In that arena, Google looks increasingly powerful, while OpenAI faces a critical crossroads.
The next phase of the AI supercycle will determine whether OpenAI can regain its former shine—or whether Alphabet and other giants will claim the future of machine intelligence.