Tech giant Alphabet’s (GOOGL) Google Cloud scored a major victory in the AI infrastructure race, with OpenAI naming it as a key computing partner. OpenAI will use Google Cloud Platform to support ChatGPT and its API services in several countries. Back in June, reports had already hinted at OpenAI’s plans to expand its cloud capacity by teaming up with Google.
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In separate news, OpenAI is reportedly testing a new checkout feature within ChatGPT to tap into e-commerce and boost revenue. The move poses a growing threat to Google’s core business model of search and advertising.
Rivals to Partners
OpenAI is expanding its cloud partnerships to get more computing power as demand for its services grows. At first, it only used Microsoft (MSFT) for cloud support, but things have changed since then, especially after Microsoft called OpenAI a competitor last year. The move marks a significant expansion of OpenAI’s cloud strategy beyond Microsoft Azure.
Along with Google Cloud and Microsoft, OpenAI will also continue using computing power from CoreWeave (CRWV) and Oracle (ORCL) to meet its growing needs.
Meanwhile, the announcement marks a big win for Google, whose cloud business is still smaller and newer than those of Amazon (AMZN) and Microsoft.
And Back to Rivals
In another development, OpenAI plans to earn money by taking a small share of online sales made directly through ChatGPT. Right now, ChatGPT shows shopping links that send users to other websites. But OpenAI wants to go further by adding a full checkout system inside ChatGPT. According to the Financial Times, OpenAI now plans to add a checkout system to ChatGPT so users can complete purchases without leaving the app. Sellers who process orders this way will pay a fee to OpenAI.
This strategy also puts more pressure on Google’s core business, as more people turn to AI chatbots instead of search engines to find and buy products.
Is Google a Buy, Sell, or Hold?
Overall, on Wall Street, analysts have a Strong Buy consensus rating on GOOGL stock based on 28 Buys and nine Holds assigned in the past three months. The average GOOGL price target of $202.56 per share implies an 11% upside potential.
