OpenAI Partners with Google Cloud, Boosting Alphabet's AI Infrastructure Position

What's Going On With Alphabet Shares Today? - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)

Alphabet Inc. GOOG shares are trading higher Tuesday following reports that OpenAI has signed a cloud services deal with Google, marking a rare partnership between two direct competitors in the AI space. What's Going On: OpenAI is planning to add Google's cloud service after the companies finalized a deal in May in order to help OpenAI meet growing demand for computing power as it scales its AI operations, according to Reuters. Three sources reportedly told Reuters that the agreement will provide OpenAI access to Google Cloud's infrastructure, specifically its advanced computing capacity, to support the training and deployment of AI models like ChatGPT. The move allows OpenAI to further diversify beyond its reliance on Microsoft Azure, which had been its exclusive infrastructure provider until earlier this year. The partnership is seen as a win for Google's cloud business, which accounted for $43 billion of Alphabet's 2024 revenue and has been working to expand its share in the AI infrastructure space. Google has increasingly leaned on its in-house chip technology, known as TPUs, to attract enterprise clients including Apple and AI-focused startups like Anthropic. Adding OpenAI to that list reinforces Google's positioning as a serious competitor to Microsoft and Amazon in the cloud market. Despite the ongoing rivalry between Google and OpenAI in AI product development, especially with ChatGPT directly challenging Google Search, the deal highlights the complexity of the AI infrastructure market, where even rivals may rely on each other to meet operational demands. Google executives have acknowledged that the AI race may not be winner-take-all, and this collaboration reflects that evolving reality. Alphabet shares moved higher on Tuesday as investors reacted to the potential long-term value of the deal, which could support further monetization of Google's capital-intensive AI infrastructure investments, even as competition and regulatory pressure intensify. GOOG Price Action: Alphabet shares were up 1.53% at $180.33 at the time of publication Tuesday, according to Benzinga Pro. Read Next: Small Caps Test 200-Day Average, Nasdaq 100 Eyes Record Ahead Of US-China Progress: What's Driving Markets Tuesday? Image via Shutterstock. GOOGAlphabet Inc$180.461.59%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum48.04Growth88.50Quality85.90Value52.37Price TrendShortMediumLongOverviewGOOGLAlphabet Inc$178.881.58%Market News and Data brought to you by Benzinga APIs

Why Alphabet Stock Just Popped | The Motley Fool

Gigantic Alphabet's $2.2 trillion market cap just got a bit bigger, thanks to ChatGPT. Alphabet (GOOG 1.53%) (GOOGL 1.54%) stock jumped nearly 3% earlier in the day before retreating to about a 1.3% gain as of 2 p.m. ET Tuesday. It's not a huge increase -- but then again, you don't expect $2.2 trillion market cap companies to make huge increases in percentage terms all that often. What's interesting about the gain, though, is what caused it. According to a Reuters exclusive report this morning, artificial intelligence (AI) leader OpenAI is planning to utilize Alphabet's Google cloud service to help carry the load of its AI operations. Reuters calls this development "surprising" given that OpenAI's ChatGPT service famously competes with Google's own Gemini. And yet, it appears this deal got done regardless. The partnership was in fact finalized last month. So why is OpenAI teaming up with the competition? Firstly, to diversify the company away from reliance on Microsoft data farms. (OpenAI is also partnering with SoftBank and Oracle on Project Stargate for similar reasons). Second, to support OpenAI's rapid growth in artificial intelligence services. On the one hand, that sounds like good news for OpenAI, and conversely bad news for Google's Gemini, if ChatGPT is growing fast enough to make OpenAI overlook concerns about handing cash to a competitor. On the other hand, though, OpenAI is giving cash to a competitor here. This will fuel Gemini's own rise, and highlights OpenAI's dependence on other companies -- even competing companies -- to support its own growth. Commenting on the news, Scotiabank analysts agreed this is "a big win for Google's cloud unit," which did $43 billion in sales last year, and will now do even more in 2025, thanks to OpenAI. I agree.