00:00 Speaker A
We continue our look at OpenAI, the Yahoo Finance Company of 2025.
00:03 Speaker A
The startup has been part of almost every conversation about AI commerce since 2025. It hasn’t even gone public yet.
00:10 Speaker A
John Belton, portfolio manager of Gabelli Funds, joins us for what the coming year might look like for Open AI and the exchange-traded ecosystem around it and AI in general.
00:19 Speaker A
John, thanks for being here. So we named OpenAI the company of the year. Not surprisingly, it’s at the heart of all this AI talk, as I just mentioned.
00:29 Speaker A
Um, so will next year play out in a more positive or negative way, given that some questions have been raised about how dependent this transaction is on this company?
00:44 John Belton
Correct. Yes. No, thanks for having me, Julie. I mean, OpenAI is clearly one of the most, if not the biggest company in the AI space right now.
00:54 John Belton
What has become clear this year are a few things. First, the revenue trajectory for this company is astounding. It is unprecedented. I think going from, you know, single-digit billion dollars to coming out of the year, you know, approaching $20 billion in annual revenue rate, I think the most recent disclosures.
01:09 John Belton
with a user base now approaching 900 million weekly active users. So a lot of really exciting growth.
01:16 John Belton
I think what the market has become a little agitated around is the scale of the investment plans that this company has set.
01:26 John Belton
They are talking about a trillion dollar plus infrastructure being built over the next few years. So just a really ambitious company with really strong growth, yeah, it’s really important for the whole ecosystem.
01:36 Speaker A
Um, when you’re investing in the AI thesis at this point, John, how do you go about doing it at this stage of the game? I mean, as you know, there’s also a lot of discussion when people draw parallels to say the dotcom bubble, um, or other waves of technological innovation that we’ve seen in the past.
01:56 Speaker A
Often the winner you see at the beginning is not necessarily the winner at the end, even if the technology itself is viable and important, etc. So how do you think about this type of question?
02:10 John Belton
Well, yes, I still think it’s very early in the evolution of this technology. I think there have been a few use cases that have really proven themselves for AI to date. I think they would use artificial intelligence in digital media, digital advertising, e-commerce businesses, cloud computing, um, and then these LLM chatbots, which is kind of a brand new field that’s already a pretty massive industry.
02:39 John Belton
I think these are the use cases that are already pretty proven.
02:42 John Belton
I think there’s another collection of use cases that are interesting that are starting to commercialize things like autonomous driving, robotics, agent software, another one there.
02:54 John Belton
And then there’s another group of use cases that we can think about for the future that are still much earlier in their development.
03:06 John Belton
So the use of artificial intelligence in, you know, life sciences, medical diagnostics, drug discovery, things like that. So I think we’re still pretty early on in terms of how this technology, you know, is going to play out and what it’s going to be able to do.
03:24 John Belton
Um and so I think from that perspective, um, yeah, like I think companies that are involved in building infrastructure are still decent places to be.
03:36 John Belton
We’ll have to see some of these future use cases begin to commercialize to provide, you know, strong, consistent earnings growth, but very, very encouraged by what we’ve seen so far, for sure.
03:48 Speaker A
And as you know, there was a lot of competition between the biggest of the LLMs. OpenAI isn’t alone, is it? You have the Twins that have appeared. You have Anthropic more on the enterprise side. As an investor, do you feel like you have to pick a side, so to speak, or do you want to invest in everything again?
04:09 John Belton
Yeah, I think in terms of the foundation’s business model, it looks like at least four or five US companies are starting to break away from the group. You just alluded to Open AI and Gemini, I think XAI and and Anthropic as well, and maybe meta, depending on um, you know, what they come out with in early 2026.
04:35 John Belton
But, you know, I think there’s a lot of short-term market focus on, you know, the newest model releases and the kind of rankings, the model capability rankings. And I just think it’s going to be fluid for a while.
04:51 John Belton
I think certain models will end up specializing in certain areas and being the best in certain areas and other models will be better in other areas. So, um, yeah, I don’t think choosing a model foundation company today is a great way to do that.
05:10 John Belton
Um, but it looks like, you know, the top few companies are starting to really separate themselves from the pack, and given that this is such a capital-intensive business, it’s probably going to be harder and harder for everybody else to keep up with those companies.
05:24 Speaker A
John, thank you very much. Appreciate it.