OpenAI is in a much less dominant position than it was following the public release of ChatGPT a few years ago.
In 2022, the sudden popularity of ChatGPT sent Google into a panic. The company was so worried about the upstart chatbot disrupting its search business that executives issued a “code red” alert inside the company and called Sergey Brin and Larry Page out of retirement to help it formulate a response to OpenAI. It then fired Bard, announcing its first commercial chatbot on February 6, 2023. Google’s stock plummeted days later when the AI incorrectly answered a question about NASA’s James Webb Space Telescope during a public demonstration.
But it wasn’t just Google that wanted a piece of OpenAI, as the search giant sought to compete with it, others — including Microsoft and Apple — struck deals with the company to bring its technology to its products and services, all on the promise that AI would eventually revolutionize every facet of the economy.
Since then, OpenAI has seen its lead over Google and much of the AI industry evaporate, culminating in a series of back-and-forth strikes throughout 2025. On January 20, the same day Altman was busy rubbing elbows with other tech oligarchs at Donald Trump’s inauguration, China’s DeepSeek quietly launched its R1-th-th chain. A week later, the startup’s chatbot surpassed ChatGPT as the most downloaded free app in the US App Store. DeepSeek’s overnight success wiped out $1 trillion in market value and almost certainly left OpenAI out of sight.
In response, the company showed a new urgency. In one week, for example, OpenAI launched both o3-mini and Deep Research. He even went so far as to announce the latter on a Sunday evening. But for all its newfound urgency, OpenAI’s biggest and most important launch of the year was missed.
It’s safe to say that GPT-5 didn’t live up to anyone’s expectations, including OpenAI’s. The company touted the system as smarter, faster and better than all of its previous models, but after users got their hands on it, they complained about a chatbot that made surprisingly stupid mistakes and didn’t have much personality. For many, GPT-5 felt like a downgrade compared to the older and simpler GPT-4o. That’s a position no AI company wants to be in, let alone one that has taken on as much investment as OpenAI.
Anthropic was quick to take advantage of the slack, signing a deal with Microsoft to bring its Claude models to Copilot 365. Previously, Microsoft depended solely on OpenAI for partner models in Copilot. Before the company announced the integration, reporting from informationsaid that Microsoft made the decision based on Anthropic’s Sonnet 4.0 model, playing that it “performs[ed] better in subtle but important ways” relative to OpenAI’s offerings.
However, what will likely be the defining moment came just weeks after OpenAI announced the end of its restructuring. On November 18, Google released the Gemini 3 Pro, and immediately the new model surpassed the competition, including the GPT-5. As of this writing, Google’s new model is at the top of LMArena, the site where people compare results from different AI systems and vote for the best. GPT-5, on the other hand, is currently in sixth place overall, behind models from Anthropic and Elon Musk’s xAI.
According to a December 2 report from TheWall Street JournalSam Altman sent out a company-wide memo after the launch of the Gemini 3 Pro. Echoing the words Google used to describe the situation it found against OpenAI in 2023, he called for a “code red” effort to improve ChatGPT. Altman told employees that there would be temporary reassignments and that the company would delay some products, all in an effort to catch up with Google and Anthropic.
The few numbers these companies are willing to share do not paint a promising picture for OpenAI. Every month, about 800 million people use ChatGPT. On paper, that’s impressive, but Google is catching up, too. In October, the company said the Gemini app had 650 million users, up from 450 million just months earlier in July, thanks to the popularity of its Nano Banana Pro image generator.
More importantly, OpenAI has an inherent disadvantage to Google. For the search giant, AI can touch everything the company does now, but Gemini is just one product in an expansive portfolio that includes many other popular services. Google can fund its AI advances with money it earns elsewhere. OpenAI cannot say the same. The company is constantly raising money to stay afloat, and according to a financial roadmap obtained by Journalwill need its revenue to grow to about $200 billion annually to become profitable by 2030. In November, Altman told X that the company is on track to hit more than $20 billion in annual revenue this year.
In an effort to increase revenue, Altman and company adopted an incredibly risky strategy. In recent months, OpenAI has signed infrastructure deals worth more than $1.4 trillion in a bid to outpace the competition that is already beating it. Many of these deals can only be described as circular, and I think the fears of a financial bubble are real. In the first half of 2025, data center investment accounted for nearly all of US GDP growth. Even if there isn’t a repeat of the housing market crash of 2008 or the dot-com crash, the AI boom is at least poised to make everyday electronics (and utilities) more expensive for ordinary people in the short term.
Since late October, demand for server-level PC components, including memory and storage, has sent the price of consumer PC parts soaring as manufacturers dedicate more production capacity and wafers to high-margin customers like OpenAI and Google. Since late October, the cost of most RAM kits has doubled and tripled. In November, the price of some SSDs increased by up to 60 percent. Next year, the cost of LPDDR5X memory, which is used in both smartphones and NVIDIA servers are expected to grow as well.
“Whether it’s car, smartphone or consumer electronics manufacturers, everyone using memory is facing pressure from price increases and supply constraints in the coming year,” Zhao Haijun, co-CEO of memory maker SMIC, told analysts. Bloomberg.
Gita Gopinath, former chief economist of the International Monetary Fund, recently estimated that if the AI bubble were to burst, it would destroy $20 trillion in wealth held by American households. The Great Recession, considered the worst financial crisis since the Great Depression, reduced the net worth of American households by $11.5 trillion, and it took American families years to rebuild their wealth to pre-recession levels.
The modern AI bubble may have been started by ChatGPT, but given the crowded chatbot and LLM field, it won’t necessarily emerge if OpenAI fails. However, with novelty and technical prowess no longer on her side, Altman is now short on proving why her company still deserves such unprecedented levels of investment.