OpenAI's Open Relationship

It's prom season in Silicon Valley, and everyone's scrambling to pair up.

No one wants to be left alone on the big night.

OpenAI, this decade's undisputed AI prom queen, was once exclusively on Microsoft Corporation (MSFT)’s arm.

But things have changed.

In recent weeks, Microsoft and OpenAI have struggled to agree on terms for their next deal.

The partnership that launched the AI revolution is showing cracks.

While Microsoft invested $13.75 billion in OpenAI and built the supercomputers that made ChatGPT possible, the relationship has gotten complicated.

The two companies are now competing for the same customers.

And OpenAI is looking for more dance partners.

The $30 Billion/yr AI Deal

Last month, Oracle (ORCL) disclosed a cloud deal that would generate a staggering $30 billion in annual revenue.

This week, we learned that customer is OpenAI.

Yes, that's $30 billion in a single year.

For perspective, Oracle's entire cloud revenue last year was just $24.5 billion.

This is a monster deal that sent Oracle's stock to an all-time high.

Oracle is an investment we added to the Altucher Investment Network portfolio last May, which is now up over 110%.

But Oracle isn't the only new friend in OpenAI's circle.

Slicing the Trillion-Dollar AI Pie

Google (GOOG) Cloud has also quietly been added to OpenAI's list of suppliers.

This is particularly interesting given that Google is OpenAI's biggest competitor in the AI race.

For Microsoft, this new "open relationship" status isn't necessarily bad news.

Yesterday's earnings proved just how well Microsoft is doing without exclusive access to OpenAI.

The company beat expectations across every metric, with revenue coming in $2.5 billion ahead of forecasts.

Azure, Microsoft's cloud platform, grew 39% - well above the expected 34-35% range.

More importantly, Microsoft's AI investments are already paying off.

The company now has over 100 million people using its Copilot AI tools each month.

After three years of deep integration with OpenAI's technology, Microsoft has built enough AI capabilities into its products that it could conceivably succeed without OpenAI.

The earnings call also revealed that Microsoft can now process 90% more AI requests using the same computer chips compared to a year ago.

This efficiency gain means they're getting much more value from every dollar spent on AI infrastructure.

Microsoft's Azure cloud platform remains the preferred choice for businesses, with 57% of IT leaders planning to increase their Azure spending in the next year.

Yesterday's results showed Azure revenue for the full year topped $75 billion - the first time Microsoft has shared this number publicly

Still, Microsoft and OpenAI are likely to remain close.

Bloomberg reports they're nearing an agreement that would give Microsoft ongoing access to OpenAI's technology.

However, no updates on those negotiations were mentioned during yesterday's earnings call.

The bigger story here isn't about who's dating whom.

It's about the unstoppable demand for AI infrastructure.

Insatiable Demand

Microsoft's latest results show that even with recent economic uncertainty, companies are rushing to adopt AI tools.

The company's commercial bookings grew 30% to over $100 billion for the first time.

The pie is growing so fast that everyone can get a bigger slice.

We're seeing unprecedented demand for AI computing resources.

Sam Altman, OpenAI's CEO, recently tweeted: "If anyone has GPU capacity in 100,000 chunks we can get ASAP, please call!"

That wasn't a joke.

OpenAI is desperately seeking more computing power wherever it can find it.

Microsoft faces the same challenge - CFO Amy Hood said the company still has more demand than supply for its AI services.

This is why OpenAI needs Oracle, Google, and yes, still Microsoft.

No single cloud provider can satisfy the growing hunger for AI computing power.

For investors, this means one thing: the companies providing the picks and shovels for the AI gold rush will continue to thrive.

Microsoft stock is up roughly 4.5% today, putting the company’s valuation at just under $4 trillion.

Whether it's Microsoft, Oracle, Google, or the chip makers powering it all, the infrastructure providers are positioned to generate extraordinary returns as AI transforms every industry.

This isn't just another tech cycle.

The wealth being created by AI will likely be generational, flowing primarily to those who own the fundamental building blocks enabling this revolution.

The prom may be getting crowded, but there's plenty of punch to go around.