How OpenAI’s rise is fuelling Microsoft and NVIDIA – and starting to threaten Google

The willingness of investors to back OpenAI (despite those massive losses) reflects both faith in the AI sector and recognition that the company is no longer a startup – it’s emerging as the next tech giant. But as UBS stresses in its report, the company will likely need to diversify beyond ChatGPT if it’s to justify such current or future higher valuations. The hunt for OpenAI’s next revenue streams could bring it into direct conflict with some of the very firms it currently partners with.

How OpenAI is fuelling/threatening the incumbents

The scale of OpenAI’s rise has created ripple effects across the global technology landscape, none more pronounced than with Microsoft. Since 2019, Microsoft has invested more than $13 billion in OpenAI and provided it with the Azure supercomputing infrastructure needed to train its models. UBS estimates that up to half of Microsoft’s Azure AI revenues are tied to OpenAI workloads, making the company a critical growth driver.

Yet this dependency brings risks. In early 2025, OpenAI ended its exclusivity with Microsoft and signed multi-billion-dollar agreements with Oracle (ORCL), CoreWeave (CRWV), and Google Cloud. This move both diversified its compute suppliers and introduced new competition for Microsoft, which is simultaneously promoting its own Copilot AI suite. UBS warns that OpenAI’s expanding enterprise features – such as spreadsheet editing and Gmail integration – increasingly overlap with Microsoft’s productivity offerings. The once symbiotic relationship now looks more complex, even competitive.

For Oracle, the story is very different. UBS highlights that Oracle expects $30 billion of annual revenues by FY28 from a single customer, widely believed to be OpenAI. That scale of spend could transform Oracle’s top line and underpins UBS’s bullish stance on the stock. The trade-off is margin pressure: GPU hosting is capital-intensive, and Oracle must balance growth against profitability. Still, OpenAI’s pivot to Oracle is one of the clearest equity tailwinds in the AI sector today.

NVIDIA, meanwhile, sits at the heart of the story. UBS describes OpenAI as likely the largest single consumer of NVIDIA GPUs worldwide, a dynamic that explains much of the chipmaker’s extraordinary rally. With AI inference costs expected to rise from $6 billion in 2025 to $30 billion by 2030, demand for NVIDIA's chips is set to remain structurally strong, suggests UBS. Simply put, the AI trade is also a GPU trade, and OpenAI is its biggest customer.

(FYI, “inference costs” are the ongoing expenses of running an AI model in production like computing, energy, network and data centres, etc. An “inference” is the term used for the model thinking through a query and producing an output).

Google faces the opposite dynamic. UBS points to evidence that ChatGPT is eroding Google’s search dominance, with OpenAI’s Chief Financial Officer claiming conversational AI may already account for 12% of search market share. Such claims are difficult to verify, and while Google’s Gemini models are gaining traction, the perception of disruption has become a material overhang on parent Alphabet’s (GOOG) stock. For investors, the competitive threat from OpenAI is no longer hypothetical – it is already reshaping stock valuations.

Risk vs reward

UBS’s central message is that OpenAI represents both a growth engine and a systemic risk for many tech giants. On the one hand, the company’s trajectory is lifting the revenues of Microsoft, Oracle, and NVIDIA, while catalysing investment across the entire data infrastructure ecosystem. On the other hand, the equity market’s dependence on OpenAI is growing increasingly concentrated.

“If OpenAI can scale toward its ambitious revenue targets, the AI trade holds,” UBS writes. “If not, the entire market could feel the impact.” In other words, the broker is implying that OpenAI has become a proxy for AI optimism. Any slowdown in ChatGPT adoption or shortfall in revenue growth, could puncture the broader investment thesis that's underpinning today’s AI-fuelled tech rally.

UBS also flags competitive risk. Rivals such as Anthropic*, xAI*, and Google remain well-funded, and enterprise customers may yet diversify their AI spending. Moreover, OpenAI’s compute costs are so high that a misstep in efficiency could widen its losses, forcing it to seek further funding at less attractive valuations. For investors, the potential reward from OpenAI's explosive growth is clear: it's helping drive one of the fastest-growing technological changes in history – but so is the risk: it's a model provider whose financial sustainability depends on relentless user and enterprise adoption.

Actionable AI investment ideas

Here, UBS’s research report provides a roadmap for investors seeking to navigate the AI trade:

Microsoft: Despite the risk of competition and customer concentration, Microsoft retains deep integration with OpenAI, rights to its IP until 2030, and a vast distribution network for enterprise adoption. UBS suggests investors should still view Microsoft as a long-term AI beneficiary, but temper expectations around Azure’s medium-term growth given OpenAI’s diversification.

Oracle: UBS is explicit that Oracle is a Buy. The $30 billion revenue commitment from OpenAI by FY28 is transformative, and while margins may be pressured, the top-line growth story is too powerful to ignore. Oracle is arguably the purest play on OpenAI’s compute expansion.

NVIDIA: The chipmaker remains the most direct beneficiary of AI’s scaling. UBS underscores that OpenAI is likely its single largest GPU consumer. For investors, NVIDIA continues to offer structural upside, though valuations may already price in perfection.

Google/Alphabet: The risk of search disruption is real, and UBS points to ChatGPT’s growing share as a market overhang. Investors may need to demand a higher risk premium for Alphabet’s core business while monitoring how effectively Gemini defends market share.

Conclusion: DON'T LOOK AWAY!

UBS’s report frames OpenAI as both a catalyst and a risk – the company most responsible for driving the AI trade, but also the one whose missteps could unravel it. For investors, the message is clear: Oracle and NVIDIA are the most direct beneficiaries, Microsoft is a partner navigating growing competition, and Google/Alphabet is the likely structural loser. More broadly, infrastructure data firms are second-order winners.

As AI adoption accelerates, OpenAI’s performance will ripple far beyond Silicon Valley. In the words of UBS, “continued ChatGPT growth is central to the AI trade across the market.” Investors would do well to keep one eye on ChatGPT’s user numbers, as well as tabs on its competition.

*Anthropic and xAI are still private companies.