OpenAI, the artificial intelligence company supported by Microsoft (MSFT), is reportedly planning to use Google’s (GOOGL) tensor processing units (TPUs) to help run its AI models. According to Morgan Stanley, led by five-star analyst Brian Nowak, this move would be a major endorsement of Google’s hardware capabilities, especially since OpenAI has mainly relied on Nvidia (NVDA) chips in the past to train its models and power inference (where trained AI models are used to generate results). It also shows that OpenAI is trying to keep up with the fast-growing demand for its services while managing costs more effectively.
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However, OpenAI won’t have access to Google’s newest and most powerful TPUs, which Google is reserving for its own Gemini AI models. Still, analysts say that the move highlights Google’s strong position in the AI hardware market. In addition, OpenAI would become Google’s most well-known TPU customer and would be the first time that OpenAI uses chips other than Nvidia’s in a major way. This development also highlights the ongoing chip shortage and intense competition in the cloud AI sector. With Nvidia GPUs in short supply, OpenAI’s choice may partly be due to the limited options available.
Nevertheless, Morgan Stanley noted that the move doesn’t look good for Amazon Web Services (AMZN), especially because OpenAI chose Google’s older TPUs over Amazon’s newer Trainium chips. With this deal, OpenAI would now be running its AI models across nearly all major cloud platforms—including Google Cloud, Azure, Oracle (ORCL), and CoreWeave (CRWV)—with AWS being the only major provider not included.
Which AI Stock Is the Better Buy?
Turning to Wall Street, out of the stocks mentioned above, analysts think that GOOGL stock has the most room to run. In fact, GOOGL’s average price target of $200.06 per share implies more than 13% upside potential. On the other hand, analysts expect the least from CRWV stock, as its average price target of $78.53 equates to a loss of 53%.
