OpenAI has plans to add Alphabet\u2019s Google cloud service to meet its growing needs for computing capacity. This is a surprising development considering the two companies are prominent competitors in the world of artificial intelligence.<\/p>\n
This deal has been under discussion for months, and was finalized in May. It shows how the massive computing demands for AI has reshaped competitive dynamics within the industry, and how OpenAI is trying to diversify its compute sources beyond its main supporter, Microsoft.<\/p>\n
Scotiabank analysts called the development \u201csomewhat surprising\u201d in a note on Tuesday, highlighting the growth opportunities for Google\u2019s Cloud unit, while expressing caution regarding competition from ChatGPT.<\/p>\n
READ: OpenAI in the talks to buy Windsurf for $3 billion<\/a><\/strong>\u00a0(April 17, 2025)<\/p>\n \u201cThe deal \u2026 underscores the fact that the two are willing to overlook heavy competition between them to meet the massive computing demands. Ultimately, we view this as a big win for Google\u2019s cloud unit, but \u2026 there are continued worries that ChatGPT is becoming an incrementally larger threat to Google\u2019s search dominance,\u201d the analysts wrote. It also comes as a win for Google\u2019s cloud unit, which will supply additional computing capacity to OpenAI\u2019s existing infrastructure for training and running its AI models.<\/p>\n Google\u2019s parent company, Alphabet, saw a 2.1% rise in stocks following the news<\/a>, while Microsoft shares went down by 0.6%.<\/p>\n According to a Reuters report, adding OpenAI as a customer shows how Google has used its in-house tensor processing units (TPUs) to grow its cloud business. These specialized chips\u2014somewhat similar to the GPUs produced by Nvidia to accelerate AI tasks\u2014have helped Google attract customers, including big tech companies like Apple and Anthropic, as well as startups like Anthropic and Safe Superintelligence<\/a>, two OpenAI competitors launched by former OpenAI leaders.<\/p>\n Google Cloud, which generated $43 billion in sales, comprising 12 percent of Alphabet\u2019s 2024 revenue, has positioned itself <\/a>as a neutral provider of computing resources. The strategy aims to challenge Amazon and Microsoft as the preferred cloud provider for AI startups with heavy AI compute needs, although selling computing power to OpenAI potentially strengthens a rival while reducing Google\u2019s own chip supply.<\/p>\n