TSX higher on employment data
Investing.com -- OpenAI’s rapid growth is creating both opportunities and risks for Microsoft, Oracle and the wider software sector, UBS said, calling the ChatGPT-maker one of the most consequential AI firms today.
OpenAI has scaled ChatGPT to more than 700 million users and could generate as much as $15 billion in revenue in 2025, UBS said, up sharply from about $3.7 billion in 2024. Media reports suggest the company recently secured $40 billion in funding at a $500 billion valuation.
For Microsoft, OpenAI is a double-edged sword. The bank said near-term questions center on how much of OpenAI’s compute spending remains with Microsoft Azure as rivals Oracle and CoreWeave expand capacity.
Ongoing talks over partnership terms including revenue sharing and intellectual property rights could also weigh on sentiment. Meanwhile, product overlaps are emerging between OpenAI’s tools and Microsoft’s Copilot suite.
Oracle has become a major beneficiary of OpenAI’s expansion. UBS highlighted Oracle’s disclosure of $30 billion in expected revenue from a single customer in fiscal 2028, widely assumed to be OpenAI, making the AI firm a central driver of Oracle’s growth but also a source of margin pressure.
OpenAI’s heavy GPU demand remains a tailwind for Nvidia, while Google faces growing competition in search and AI models.
For the broader software sector, UBS said OpenAI’s improvements are lifting infrastructure and data-focused firms but weighing on SaaS and application software providers that risk new competition.
UBS said OpenAI’s trajectory has become a market-wide factor. Its growth underpins massive capital spending across cloud, data center and chipmakers, but its projected multibillion-dollar annual losses mean the “AI trade” is heavily dependent on OpenAI sustaining momentum.