OpenAI

California’s tech companies, the epicenter of the state’s economy, sent politicians a loud message this year: Back down from restrictive artificial intelligence regulation or they’ll leave.

The tactic appeared to have worked, activists said, because some politicians weakened or scrapped guardrails to mitigate AI’s biggest risks.

California Gov. Gavin Newsom rejected a bill aimed at making companion chatbots safer for children after the tech industry fought it. In his veto message, the governor raised concerns about placing broad limits on AI, which has sparked a massive investment spree and created new billionaires overnight around the San Francisco Bay Area.

Assembly Bill 1064 would have barred companion chatbot operators from making these AI systems available to minors unless the chatbots weren’t “foreseeably capable” of certain conduct, including encouraging a child to engage in self-harm. Newsom said he supported the goal, but feared it would unintentionally bar minors from using AI tools and learning how to use technology safely.

“We cannot prepare our youth for a future where AI is ubiquitous by preventing their use of these tools altogether,” he wrote in his veto message.

The bill’s veto was a blow to child safety advocates who had pushed it through the state Legislature and a win for tech industry groups that fought it. In social media ads, groups such as TechNet had urged the public to tell the governor to veto the bill because it would harm innovation and lead to students falling behind in school.

Organizations trying to rein in the world’s largest tech companies as they advance the powerful technology say the tech industry has become more empowered at the national and state levels.

Meta, Google, OpenAI, Apple and other major tech companies have strengthened their relationships with the Trump administration. Companies are funding new organizations and political action committees to push back against state AI policy while pouring money into lobbying.

In Sacramento, AI companies have lobbied behind the scenes for more freedom. California’s massive pool of engineering talent, tech investors and companies make it an attractive place for the tech industry, but companies are letting policymakers know that other states are also interested in attracting those investments and jobs. Big Tech is particularly sensitive to regulations in the Golden State because so many companies are headquartered there and must abide by its rules.

“We believe California can strike a better balance between protecting consumers and enabling responsible technological growth,” Robert Boykin, TechNet’s executive director for California and the Southwest, said in a statement.

Common Sense Media founder and Chief Executive Jim Steyer said tech lobbyists put tremendous pressure on Newsom to veto AB 1064. Common Sense Media, a nonprofit that rates and reviews technology and entertainment for families, sponsored the bill.

“They threaten to hurt the economy of California,” he said. “That’s the basic message from the tech companies.”

Advertising is among the tactics tech companies with deep pockets use to convince politicians to kill or weaken legislation. Even if the governor signs a bill, companies have at times sued to block new laws from taking effect.

“If you’re really trying to do something bold with tech policy, you have to jump over a lot of hurdles,” said David Evan Harris, senior policy advisor at the California Initiative for Technology and Democracy, which supported AB 1064. The group focuses on finding state-level solutions to threats that AI, disinformation and emerging technologies pose to democracy.

Tech companies have threatened to move their headquarters and jobs to other states or countries, a risk looming over politicians and regulators.

The California Chamber of Commerce, a broad-based business advocacy group that includes tech giants, launched a campaign this year that warned over-regulation could stifle innovation and hinder California.

“Making competition harder could cause California companies to expand elsewhere, costing the state’s economy billions,” the group said on its website.

From January to September, the California Chamber of Commerce spent $11.48 million lobbying California lawmakers and regulators on a variety of bills, filings to the California secretary of state show. During that period, Meta spent $4.13 million. A lobbying disclosure report shows that Meta paid the California Chamber of Commerce $3.1 million, making up the bulk of their spending. Google, which also paid TechNet and the California Chamber of Commerce, spent $2.39 million.

Amazon, Uber, DoorDash and other tech companies spent more than $1 million each. TechNet spent around $800,000.

The threat that California companies could move away has caught the attention of some politicians.

California Atty. Gen. Rob Bonta, who has investigated tech companies over child safety concerns, indicated that despite initial concern, his office wouldn’t oppose ChatGPT maker OpenAI’s restructuring plans. The new structure gives OpenAI’s nonprofit parent a stake in its for-profit public benefit corporation and clears the way for OpenAI to list its shares.

Bonta blessed the restructuring partly because of OpenAI’s pledge to stay in the state.

“Safety will be prioritized, as well as a commitment that OpenAI will remain right here in California,” he said in a statement last week. The AG’s office, which supervises charitable trusts and ensures these assets are used for public benefit, had been investigating OpenAI’s restructuring plan over the last year and a half.

OpenAI Chief Executive Sam Altman said he’s glad to stay in California.

“California is my home, and I love it here, and when I talked to Attorney General Bonta two weeks ago I made clear that we were not going to do what those other companies do and threaten to leave if sued,” he posted on X.

Critics — which included some tech leaders such as Elon Musk, Meta and former OpenAI executives as well as nonprofits and foundations — have raised concerns about OpenAI’s restructuring plan. Some warned it would allow startups to exploit charitable tax exemptions and let OpenAI prioritize financial gain over public good.

Lawmakers and advocacy groups say it’s been a mixed year for tech regulation. The governor signed Assembly Bill 56, which requires platforms to display labels for minors that warn about social media’s mental health harms. Another piece of signed legislation, Senate Bill 53, aims to make AI developers more transparent about safety risks and offers more whistleblower protections.

The governor also signed a bill that requires chatbot operators to have procedures to prevent the production of suicide or self-harm content. But advocacy groups, including Common Sense Media, removed their support for Senate Bill 243 because they said the tech industry pushed for changes that weakened its protections.

Newsom vetoed other legislation that the tech industry opposed, including Senate Bill 7, which requires employers to notify workers before deploying an “automated decision system” in hiring, promotions and other employment decisions.

Called the “No Robo Bosses Act,” the legislation didn’t clear the governor, who thought it was too broad.

“A lot of nuance was demonstrated in the lawmaking process about the balance between ensuring meaningful protections while also encouraging innovation,” said Julia Powles, a professor and executive director of the UCLA Institute for Technology, Law & Policy.

The battle over AI safety is far from over. Assemblymember Rebecca Bauer-Kahan (D-Orinda), who co-wrote AB 1064, said she plans to revive the legislation.

Child safety is an issue that both Democrats and Republicans are examining after parents sued AI companies such as OpenAI and Character.AI for allegedly contributing to their children’s suicides.

“The harm that these chatbots are causing feels so fast and furious, public and real that I thought we would have a different outcome,” Bauer-Kahan said. “It’s always fascinating to me when the outcome of policy feels to be disconnected from what I believe the public wants.”

Steyer from Common Sense Media said a new ballot initiative includes the AI safety protections that Newsom vetoed.

“That was a setback, but not an overall defeat,” he said about the veto of AB 1064. “This is a David and Goliath situation, and we are David.”

The announcement comes less than week after Amazon laid off 14,000 people.

OpenAI has signed a new deal valued at $38bn with Amazon that will allow the artificial intelligence giant to run AI workloads across Amazon Web Services (AWS) cloud infrastructure.

The seven-year deal announced on Monday is the first big AI push for the e-commerce giant after a restructuring last week.

The new deal will give the ChatGPT maker access to thousands of Nvidia graphics processors to train and run its artificial intelligence models.

Experts say this does not mean that it will allow OpenAI to train its model on websites hosted by AWS – which includes the websites of The New York Times, Reddit and United Airlines.

“Running OpenAI training inside AWS doesn’t change their ability to scrape content from AWS-hosted websites [which they could already do for anything publicly readable]. This is strictly speaking about the economics of rent vs buy for GPU [graphics processing unit] capacity,” Joshua McKenty, CEO of the AI detection company PolyguardAI, told Al Jazeera.

The deal is also a major vote of confidence for the e-commerce giant’s cloud unit, AWS, which some investors feared had fallen behind rivals Microsoft and Google in the artificial intelligence (AI) race. Those fears were somewhat eased by the strong growth the business reported in the September quarter.

OpenAI will begin using AWS immediately, with all planned capacity set to come online by the end of 2026 and room to expand further in 2027 and beyond.

Amazon plans to roll out hundreds of thousands of chips, including Nvidia’s GB200 and GB300 AI accelerators, in data clusters built to power ChatGPT’s responses and train OpenAI’s next wave of models, the companies said.

Amazon already offers OpenAI models on Amazon Bedrock, which offers multiple AI models for businesses using AWS.

OpenAI’s sweeping restructuring last week moved it further away from its non-profit roots and also removed Microsoft’s first right to refusal to supply services in the new arrangement.

Image hurdles

Amazon’s announcement about an investment in AI comes only days after the company laid off 14,000 people despite CEO Andy Jassy’s comment in an earnings call on Thursday saying the layoffs were not driven by AI.

“The announcement that we made a few days ago was not really financially driven, and it’s not even really AI-driven, not right now at least,” Jassy said.

OpenAI CEO Sam Altman has said the startup is committed to spending $1.4 trillion to develop 30 gigawatts of computing resources – enough to roughly power 25 million United States homes.

“Scaling frontier AI requires massive, reliable compute,” said Altman. “Our partnership with AWS strengthens the broad compute ecosystem that will power this next era and bring advanced AI to everyone.”

This comes amid growing concerns about the sheer amount of energy demand that AI data centres need to operate. The Lawrence Berkeley National Laboratory estimates that AI data centres will use up to 12 percent of US electricity by 2028.

An AP/NORC poll from October found that 41 percent of Americans are extremely concerned about AI’s impact on the environment, while another 30 percent say they are somewhat concerned as the industry increases its data centre footprint around the US.

Signs of a bubble

Surging valuations of AI companies and their massive spending commitments, which total more than $1 trillion for OpenAI, have raised fears that the AI boom may be turning into a bubble.

OpenAI has already tapped Alphabet’s Google to supply it with cloud services, as Reuters reported in June. It also reportedly struck a deal to buy $300bn in computing power for about five years.

While OpenAI’s relationship with Microsoft, which the two forged in 2019, has helped push Microsoft to the top spot among its Big Tech peers in the AI race, both companies have been making moves recently to reduce reliance on each other.

Neither OpenAI nor Amazon were immediately available for comment.

On Wall Street, Amazon’s stock is surging on the news of the new deal. As of 11:15am in New York (16:15 GMT), it is up by 4.7 percent.

The deal removes a major constraint on raising capital for OpenAI, the maker of ChatGPT, and values the firm at $500bn.

Microsoft and OpenAI have reached a deal to allow the ChatGPT maker to restructure itself into a public-benefit corporation, valuing OpenAI at $500bn and giving it more freedom in its business operations.

The deal, unveiled on Tuesday, removes a major constraint on raising capital for OpenAI that has existed since 2019.

At the time, it had signed an agreement with Microsoft that gave the tech giant rights over much of OpenAI’s work in exchange for costly cloud computing services needed to carry it out. As its ChatGPT service exploded in popularity, those limitations had become a notable source of tension between the two companies.

Microsoft will still hold a stake of about $135bn, or 27 percent, in OpenAI Group PBC, which will be controlled by the OpenAI Foundation, a nonprofit, the companies said.

Microsoft, based in Redmond, Washington in the United States, has invested $13.8bn in OpenAI, with Tuesday’s deal implying that the firm had generated a return of nearly 10 times its investment.

Shares of Microsoft rose 2.5 percent, sending its market value above $4 trillion again.

The deal keeps the two firms intertwined until at least 2032, with a massive cloud computing contract and with Microsoft retaining some rights to OpenAI products and artificial intelligence (AI) models until then – even if OpenAI reaches artificial general intelligence (AGI), the point at which AI systems can match a well-educated human adult.

Simplified corporate structure

With more than 700 million weekly users as of September, ChatGPT has exploded in popularity to become the face of AI for many consumers after OpenAI’s founding as a nonprofit AI safety group.

As the company grew, the Microsoft deal constrained OpenAI’s ability to raise funds from outside investors and secure computing contracts as the crush of ChatGPT users and its research into new models caused its computing needs to skyrocket.

“OpenAI has completed its recapitalization, simplifying its corporate structure,” Bret Taylor, the OpenAI Foundation’s board chair, said in a blog post. “The nonprofit remains in control of the for-profit, and now has a direct path to major resources before AGI arrives.”

Microsoft’s previous 2019 agreement had many provisions that rested on when OpenAI reached that point, and the new deal requires an independent panel to verify OpenAI’s claims it has reached AGI.

“OpenAI still faces ongoing scrutiny around transparency, data usage, and safety oversight. But overall, this structure should provide a clearer path forward for innovation and accountability,” said Adam Sarhan, CEO of 50 Park Investments.

Gil Luria, head of technology research at DA Davidson, said the deal “resolves the longstanding issue of OpenAI being organized as a not-for-profit [organisation] and settles the ownership rights of the technology vis-a-vis Microsoft. The new structure should provide more clarity on OpenAI’s investment path, thus facilitating further fundraising.”

Microsoft also said that it has secured a deal with OpenAI where the ChatGPT maker will purchase $250bn of Microsoft Azure cloud computing services. In exchange, Microsoft will no longer have a right of first refusal to provide computing services to OpenAI.

Microsoft also said that it will not have any rights to hardware produced by OpenAI. In March, OpenAI bought longtime Apple design chief Jony Ive’s startup io Products in a $6.5bn deal.

Oct. 21 (UPI) — OpenAI unveiled the early version of its AI-powered ChatGPT Atlas web browser on Tuesday, offering many powerful features that seek to interlace the company’s technology into daily internet use.

The new browser is currently only available on macOS, with future versions coming to Windows and mobile devices, according to a post by OpenAI. While other tech companies, including Microsoft and Google, have incorporated AI into their products, OpenAI called Atlas a step closer “to a true super-assistant” that follows users across the web.

“It’s a new kind of browser for the next era of the web,” OpenAI CEO Sam Altman said in a video, where staff demonstrated how Atlas could be used to complete a grocery order, help project management at work and other tasks.

Atlas will draw on user’s previous interactions with the powerful chat bot, meaning it will have a back-and-forth deeper than Google’s box of AI-generated results that accompanies web searches.

If Atlas is popular, it could be “a serious threat to Google’s dominance,” according to TechCrunch. It could also provide valuable information to targeted advertising should OpenAI change its business model. But the tech website concluded that “It’s still early days for Atlas and a lot will depend on the product itself — and whether users really want what OpenAI is offering here.”

Users of the paid version of ChatGPT can use “agent” mode that allows Atlas to perform some tasks independently.

“Despite all of the power and awesome capabilities that you get with sharing your browser with ChatGPT that also poses an entirely new set of risks,” OpenAI’s Pranav Vishnu said during the video announcing Atlas. He said that there are safeguards that keep the agent operating on Atlas tabs and prevents it from accessing users’ computer files.

Marketing experts have warned that AI could soon be used to make purchases for consumers using their data. Users of Atlas can limit what data is saved, according to an OpenAI page explaining user controls.

Airbnb Inc. Chief Executive Officer Brian Chesky said he didn’t integrate his company’s online travel app with OpenAI’s ChatGPT because the startup’s connective tools aren’t “quite ready” yet.

Airbnb will monitor the development of ChatGPT’s app integrations and may consider a tie-up in the future similar to those of its peers Booking Holdings Inc. and Expedia Group Inc., Chesky said in an interview.

“I didn’t think it was quite ready,” he said of ChatGPT’s integration abilities.

Because Airbnb is a community with verified members, OpenAI will have to build a platform so robust that Airbnb’s app can work within the ChatGPT chatbot in an “almost self-contained” manner, Chesky said.

Chesky, who is close friends with OpenAI CEO Sam Altman, said he advised the AI company on its new capability for third-party developers to make their apps available within the ChatGPT chatbot. The AI company announced those features earlier this month. Airbnb wasn’t among the first apps that are available on the popular chatbot.

An OpenAI spokesperson declined to comment on Chesky’s remarks, but referred to the company’s blog post earlier this month that described the app integration technology as a developer preview, with more features coming soon.

While Airbnb has set aside a possible integration with ChatGPT, the company Tuesday announced that it had updated its in-app artificial intelligence tools to let customers take more actions without the need of a live representative.

The company’s AI customer service agent, which it rolled out to all US users in English in May, now displays action buttons and links that can help people complete, say, a reservation change or cancellation.

That has led to a 15% reduction in users needing a live representative, cutting average resolution time to six seconds from nearly three hours, Airbnb said. The company plans to add Spanish and French language support this fall, and 56 more languages next year.

The agent is built upon 13 different AI models, including those from OpenAI, Alibaba Group Holding Ltd., Alphabet Inc.’s Google and open source providers, Chesky said.

“We’re relying a lot on Alibaba’s Qwen model. It’s very good. It’s also fast and cheap,” he said. “We use OpenAI’s latest models, but we typically don’t use them that much in production because there are faster and cheaper models.”

Airbnb, which expanded its business beyond accommodations into tours and individual services earlier this year, also is adding new social features to encourage user connections and eventually make better travel recommendations within the app.

The company unveiled an option for guests to share their Airbnb profile with other travelers after they book an experience. Users who have gone on the same tours can also now directly message one another — privacy safeguards are implemented where the conversation can only continue if the recipient accepts a message request, Airbnb said.

More social features are coming next year, and Chesky said that longer term these features could lend themselves to user-generated content on the app, where people can seek travel inspiration without leaving the Airbnb site.

“I think the social features, the community, that’s probably the most differentiated part of Airbnb,” he said. “People are the reason why I think Airbnb is such a sticky service.”

Lung writes for Bloomberg.

A year after tech firm OpenAI roiled Hollywood with the release of its Sora AI video tool, Chief Executive Sam Altman was back — with a potentially groundbreaking update.

Unlike the generic images Sora could initially create, the new program allows users to upload videos of real people and put them into AI-generated environments, complete with sound effects and dialogue.

In one video, a synthetic Michael Jackson takes a selfie video with an image of “Breaking Bad” star Bryan Cranston. In another, a likeness of SpongeBob SquarePants speaks out from behind the White House’s Oval Office desk.

“Excited to launch Sora 2!” Altman wrote on social media platform X on Sept. 30. “Video models have come a long way; this is a tremendous research achievement.”

But the enthusiasm wasn’t shared in Hollywood, where the new AI tools have created a swift backlash. At the core of the dispute is who controls the copyrighted images and likenesses of actors and licensed characters — and how much they should be compensated for their use in AI models.

The Motion Picture Assn. trade group didn’t mince words.

“OpenAI needs to take immediate and decisive action to address this issue,” Chairman Charles Rivkin said in a statement Monday. “Well-established copyright law safeguards the rights of creators and applies here.”

By the end of the week, multiple agencies and unions, including SAG-AFTRA, chimed in with similar statements, marking a rare moment of consensus in Hollywood and putting OpenAI on the defensive.

“We’re engaging directly with studios and rightsholders, listening to feedback, and learning from how people are using Sora 2,” Varun Shetty, OpenAI’s vice president of media partnerships, said in a statement. “Many are creating original videos and excited about interacting with their favorite characters, which we see as an opportunity for rightsholders to connect with fans and share in that creativity.”

For now, the skirmish between well-capitalized OpenAI and the major Hollywood studios and agencies appears to be only just the beginning of a bruising legal fight that could shape the future of AI use in the entertainment business.

“The question is less about if the studios will try to assert themselves, but when and how,” said Anthony Glukhov, senior associate at law firm Ramo, of the clash between Silicon Valley and Hollywood over AI. “They can posture all they want; but at the end of the day, there’s going to be two titans battling it out.”

Before it became the focus of ire in the creative community, OpenAI quietly tried to make inroads into the film and TV business.

The company’s executives went on a charm offensive last year. They reached out to key players in the entertainment industry — including Walt Disney Co. — about potential areas for collaboration and trying to assuage concerns about its technology.

This year, the San Francisco-based AI startup took a more assertive approach.

Before unveiling Sora 2 to the general public, OpenAI executives had conversations with some studios and talent agencies, putting them on notice that they need to explicitly declare which pieces of intellectual property — including licensed characters — were being opted-out of having their likeness depicted on the AI platform, according to two sources familiar with the matter who were not authorized to comment. Actors would be included in Sora 2 unless they opted out, the people said.

OpenAI disputes the claim and says that it was always the company’s intent to give actors and other public figures control over how their likeness is used.

The response was immediate.

Beverly Hills talent agency WME, which represents stars such as Michael B. Jordan and Oprah Winfrey, told OpenAI its actions were unacceptable, and that all of its clients would be opting out.

Creative Artists Agency and United Talent Agency also argued that their clients had the right to control and be compensated for their likenesses.

Studios, including Warner Bros., echoed the point.

“Decades of enforceable copyright law establishes that content owners do not need to ‘opt out’ to prevent infringing uses of their protected IP,” Warner Bros. Discovery said in a statement. “As technology progresses and platforms advance, the traditional principles of copyright protection do not change.”

Unions, including SAG-AFTRA — whose members were already alarmed over the recent appearance of a fake, AI-generated composite named Tilly Norwood — also expressed alarm.

“OpenAI’s decision to honor copyright only through an ‘opt-out’ model threatens the economic foundation of our entire industry and underscores the stakes in the litigation currently working through the courts,” newly elected President Sean Astin and National Executive Director Duncan Crabtree-Ireland said in a statement.

The dispute underscores a clash of two very different cultures. On one side is the brash, Silicon Valley “move fast and break things” ethos, where asking for forgiveness is seen as preferable to asking for permission. On the other is Hollywood’s eternal wariness over the effect of new technology, and its desire to retain control over increasingly valuable intellectual property rights.

“The difficulty, as we’ve seen, is balancing the capabilities with the prior rights owned by other people,” said Rob Rosenberg, a partner with law firm Moses and Singer LLP and a former Showtime Networks general counsel. “That’s what was driving the entire entertainment industry bonkers.”

Amid the outcry, Sam Altman posted on his blog days after the Sora 2 launch that the company would be giving more granular controls to rights holders and is working on a way to compensate them for video generation.

OpenAI said it has guardrails to block the generation of well-known characters and a team of reviewers who are taking down material that doesn’t follow its updated policy. Rights holders can also request removal of content.

The strong pushback from the creative community could be a strategy to force OpenAI into entering licensing agreements for the content they need, legal experts said.

Existing law is clear — a copyright holder has full control over their copyrighted material, said Ray Seilie, entertainment litigator at law firm Kinsella Holley Iser Kump Steinsapir.

“It’s not your job to go around and tell other people to stop using it,” he said. “If they use it, they use it at their own risk.”

Disney, Universal and Warner Bros. Discovery have previously sued AI firms MiniMax and Midjourney, accusing them of copyright infringement.

One challenge is figuring out a way that fairly compensates talent and rights holders. Several people who work within the entertainment industry ecosystem said they don’t believe a flat fee works.

“Bring monetization that is not a one size fits all,” said Dan Neely, chief executive of Chicago-based Vermillio, which works with Hollywood talent and studios and protects how their likenesses and characters are used in AI. “That’s what will move the needle for talent and studios.”

Visiting journalist Nilesh Christopher contributed to this report.

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Oct. 6 (UPI) — The S&P 500 and the Nasdaq closed at record highs Monday after ChatGPT-maker OpenAI and Advanced Micro Devices reached a mega-deal that ignited a rally, despite the U.S. government shutdown entering its second week.

Chipmaker AMD shares closed 23.71% higher as the tech-heavy Nasdaq Composite rose 0.71% to end the day at a new record high of 22,941.67. The S&P 500 gained 0.36% to close at 6,740.28. Despite record closes for the Nasdaq and S&P, the Dow Jones Industrial Average dropped 0.1%.

AMD, one of Nvidia’s key rivals, announced earlier Monday it had agreed to a multi-year deal to supply chips to OpenAI, which could end-up taking a 10% stake in the chipmaker.

“Excited to partner with AMD to use their chips to serve our users!” Sam Altman, OpenAI co-founder and chief executive officer, wrote in a post on X.

“This is all incremental to our work with NVIDIA (and we plan to increase our NVIDIA purchasing over time),” Altman added.

Nvidia announced last month it would invest as much as $100 billion to help power OpenAI’s new AI models. After Monday’s news of the AMD-OpenAI deal, which boosted tech stocks and optimism for AI, Nvidia’s shares closed down 1%.

“The AI narrative continues to gain momentum,” said Louis Navellier, founder and chief investment officer of Navellier & Associates.

The deal “gives some competition for NVIDIA, which currently dominates AI chips, and accelerates the timeline for data center buildouts,” Navellier added.

OpenAI said it will deploy 6 gigawatts of AMD’s Instinct graphics processing units across multiple generations of hardware for the next few years. The first 1-gigawatt rollout of chips is expected to take place in about a year.

“We have to do this,” OpenAI president Greg Brockman told CNBC’s “Squawk on the Street.”

“This is so core to our mission if we really want to be able to scale to reach all of humanity, this is what we have to do.”

The deal also gives the ChatGPT creator the option to buy upto 10 percent of AMD.

United States chipmaker AMD will supply artificial intelligence chips to OpenAI in a multi-year deal that would bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10 percent of the company.

Shares of the chipmaker surged more than 34 percent on Monday when the deal was announced, putting them on track for their biggest one-day gain in more than nine years and adding roughly $80bn to the company’s market value.

The deal, latest in a string of investment commitments, underscores OpenAI and the broader AI industry’s voracious appetite for computing power as companies race towards developing AI technology that meets or exceeds human intelligence.

“We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry,” AMD executive vice president Forrest Norrod told the Reuters news agency.

Deal helps ‘validate technology’

The agreement closely ties the startup at the centre of the AI boom to AMD, one of the strongest rivals of Nvidia, which recently agreed to make substantial investments in OpenAI.

Analysts said it was a significant vote of confidence in AMD’s AI chips and software but is unlikely to dent Nvidia’s dominance, as the market leader continues to sell every AI chip it can make.

AMD executives expect the deal to net tens of billions of dollars in annual revenue. Because of the ripple affect of the agreement, AMD expects to receive more than $100bn in new revenue over four years from OpenAI and other customers, they said.

The chipmaker is expected to report revenue of $32.78bn this year, according to LSEG data. In contrast, analysts are expecting Nvidia to report revenue of $206.26bn for the current fiscal year.

“AMD has really trailed Nvidia for quite some time. So I think it helps validate their technology,” said Leah Bennett, chief investment strategist at Concurrent Asset Management.

Shares of Nvidia dipped more than 1 percent.

OpenAI CEO Sam Altman said the AMD deal will help his startup build enough AI infrastructure to meet its needs.

It was not immediately clear how OpenAI would fund the enormous deal.

OpenAI, which is valued at $500bn, generated approximately $4.3bn in revenue in the first half of 2025 and burned through $2.5bn in cash, according to media reports.

In September, Nvidia announced a deal to supply OpenAI with at least 10 gigawatts worth of its systems.

In contrast with the startup’s deal with AMD where it will take a stake in the chipmaker, Nvidia will invest $100bn in the ChatGPT parent under the terms of the agreement announced in September.

Taking a stake in AMD could give OpenAI “the power to potentially influence corporate strategy. With Nvidia, OpenAI is simply the client and not a part-owner,” said Dan Coatsworth, head of markets at A J Bell.

OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips.

The startup and its main backer, Microsoft, announced last month that they had signed a non-binding agreement to restructure OpenAI in to a for-profit entity.

A person familiar with the matter said the deal with AMD does not change any of OpenAI’s ongoing compute plans, including that effort or its partnership with Microsoft.

Since the advent of artificial intelligence (AI) in early 2023, Advanced Micro Devices (AMD 25.63%) has been something of a wild card. The increasing demand for graphics processing units (GPUs) that can handle the rigors of AI has been unparalleled, but not all AI chipmakers are created equal.

There’s no denying that Nvidia (NVDA -1.13%) has been the biggest beneficiary of the accelerating adoption of AI, given its status as a market share leader in the data center space, where most AI processing occurs. Nvidia has ridden this unprecedented demand to new heights, becoming the largest publicly traded company in the world when measured by market cap.

While Nvidia stock has soared 1,180% since the dawn of AI, AMD stock has only risen 154% during the same period (as of market close on Friday). The company has been working diligently to stake its claim in the windfall that is AI.

Shareholders were elated when AMD announced a groundbreaking deal with OpenAI that could be a game changer. As a result, the stock gained 30% Monday morning (as of this writing) — and that could be just the beginning.

Image source: AMD.

Far-reaching strategic partnership

OpenAI is largely credited with kick-starting the AI revolution, thanks to its development of ChatGPT, the generative AI system that took the technology to the next level. In a press release that dropped Monday morning, AMD announced a far-reaching strategic partnership with OpenAI.

Under the terms of the multiyear, multigenerational agreement, OpenAI will install 6 gigawatts of AMD GPUs. The rollout will begin with 1 gigawatt of AMD Instinct MI450 series chips and rack-scale AI solutions in the second half of 2026. Beyond simply supplying GPUs, AMD will work side by side with OpenAI as a “core strategic compute partner” to create future generations of AI chips optimized for AI applications.

The companies noted that the partnership began with the MI300X and continued with the MI350X series of chips. Many experts believe these processors are a competitive alternative to Nvidia’s advanced AI chips at a lower price, making them ideal for use with the large language models that underpin generative AI.

Perhaps the most eye-opening development is that, as part of the agreement, AMD has issued OpenAI a warrant to purchase up to 160 million shares of AMD stock — equal to a roughly 10% stake in the company — contingent upon the company achieving specific share price targets and OpenAI reaching certain technical and commercial milestones.

The first tranche is scheduled to vest on the completion of the deployment of the first gigawatt of GPUs, with additional milestones at the completion of each successive gigawatt.

Is this deal a game changer?

In many cases, saying a deal is a game changer is hyperbole, but in this case, I don’t believe it’s an exaggeration. In its recent financing deal, OpenAI was valued at roughly $500 billion, making it the world’s most valuable start-up. Furthermore, the company has quickly ascended the ranks to become one of the largest buyers of high-end AI-centric chips as it works to development its next-generation AI systems.

Assuming things go as planned, this deal provides AMD with a relatively secure revenue stream that the company estimates will be worth tens of billions of dollars. For context, the company generated revenue of nearly $26 billion in 2024, which helps to illustrate the magnitude of the opportunity.

Furthermore, this deal acts as a ringing endorsement for AMD’s processors. For potential buyers of AMD chips sitting on the fence, this could be the catalyst for taking the plunge and adopting the company’s AI solutions.

Some investors have been concerned that the adoption of AI will hit a wall, but there’s simply no evidence to support these assertions. Furthermore, estimates regarding the addressable market for generative AI continue to climb. Big Four accounting firm PwC estimates the market could be worth as much as $15.7 trillion annually by 2030.

If AMD can carve out just a small piece of that massive opportunity, today’s stock price move could be just the beginning. Furthermore, at roughly 35 times next year’s sales, AMD stock is attractively priced relative to the burgeoning opportunity.

Nvidia‘s (NVDA 0.27%) announcement that it will invest up to $100 billion in OpenAI is being hailed by the company as a massive bet on the future of artificial intelligence (AI). Still, investors should take a closer look at what is really going on here. The money OpenAI receives will ultimately be plowed right back into Nvidia hardware, mostly through Oracle‘s cloud buildout, where the two companies recently signed a massive $300 billion deal.

OpenAI plans to deploy Nvidia systems that need 10 gigawatts of power, which is equal to roughly 4 million to 5 million graphics processing units (GPUs). If that sounds like a lot, it is, as it’s about the same total number of GPUs that Nvidia will ship this year. The first $10 billion of Nvidia’s investment will be deployed as soon as the first gigawatt of capacity is up, and the rest will be rolled out in stages as new data centers come online.

Image source: Getty Images.

Circular financing

On paper, the OpenAI investment helps secure billions of dollars in future demand. But it’s worth remembering that Nvidia is now helping finance one of its biggest customers to keep buying its chips. This is called circular financing.

Nvidia is essentially funding its own demand. This is exactly what Cisco Systems (CSCO -0.93%) did during the internet bubble, when it provided credit to telecoms so they could buy more Cisco routers. Those sales looked great — until the capital dried up and the entire market collapsed.

This is also a defensive move by Nvidia. More and more of Nvidia’s largest customers are designing their own custom AI chips. Alphabet has its TPUs, Amazon has Trainium and Inferentia, and Microsoft is working on its own chip. OpenAI itself has been developing custom chips to bring its costs down, and before this announcement, it placed a $10 billion order with Broadcom for custom chips to be delivered next year.

This is the same threat that Nvidia saw play out in crypto, where ASICs (application specific integrated circuits) displaced GPUs for Bitcoin mining. Nvidia doesn’t want to see that happen again. By investing in OpenAI, it’s trying to keep one of its biggest customers locked into the Nvidia ecosystem.

This also comes at a time when the market is shifting more toward inference, where Nvidia’s moat is much smaller. Training large language models (LLMs) is where Nvidia’s CUDA software platform shines. However, inference isn’t as complex and doesn’t require the same deep software integration. That’s why hyperscalers (owners of massive data centers) are so motivated to build custom chips.

Inference is also a continuous cost, so the economics of cost per inference start to dominate the discussion. That’s why Nvidia also took a $5 billion stake in Intel and announced a collaboration on AI processors, as it’s also trying to stave off Advanced Micro Devices in the inference market and keep its grip on this next phase of AI computing.

Is this a house of cards?

There’s no question that Nvidia is in a dominant position right now, and the OpenAI deal only strengthens its near-term outlook. But its OpenAI investment clearly looks like a defensive move that adds risk. When Cisco used circular financing during the internet boom, it looked brilliant, until the customers it was funding went bust.

Both Nvidia and OpenAI are better positioned, but the principle is the same: Nvidia is using its balance sheet to keep demand high. That works as long as the AI boom keeps running, but it makes the company more exposed if spending slows or if hyperscalers switch to cheaper solutions.

Nvidia remains the key player in AI infrastructure, but this deal is a reminder that its growth isn’t risk-free. A lot of Nvidia’s success is now riding on an unprofitable company that is bleeding massive amounts of cash that it is financing. OpenAI hasn’t actually proven yet that it has a great business model, and if it fails, this becomes a house of cards that collapses onto Nvidia.

Nvidia (NVDA -0.73%) is no stranger to investing in its customers. The company has put billions to work to expand the artificial intelligence (AI) ecosystem, aiming for more growth and investment from its core growth market. The company’s latest deal with OpenAI — the maker of ChatGPT — is a prime example of this strategy.

Here’s what the deal between Nvidia and OpenAI means

The first thing to understand about this deal is that it is simply a letter of intent. That means the partnership is non-binding, with no legal obligation for either of the companies to follow through on the deal framework discussed below. Even if the deal is non-binding, however, the spirit of the partnership is clear: Nvidia and OpenAI will be working closely together to enable each other’s businesses.

Next, let’s discuss the figures you may have seen in the headlines. Nvidia, for example, has pledged to invest $100 billion into OpenAI. The details, however, paint a slightly different picture than the headlines. What the deal essentially outlines is OpenAI’s intention to purchase Nvidia hardware for a massive, multiyear infrastructure buildout. According to a press release, OpenAI intends to “build and deploy at least 10 gigawatts of AI data centers with NVIDIA systems representing millions of GPUs for OpenAI’s next-generation AI infrastructure.” In return, Nvidia will invest in OpenAI equity in tranches, with each funding tranche being initiated as the infrastructure gradually expands.

OpenAI gets two things from this partnership. First, it gets funding in the form of direct cash for equity. Second, it gets preferential treatment from Nvidia when it comes to technology sourcing. Nvidia’s chips are in high demand, at one point facing 12-month shipping delays. OpenAI has now secured a long-term strategic advantage, gaining the ability to scale its infrastructure with the best chips on the planet, chips that the competition may not be able to source.

Nvidia, meanwhile, gains an even stronger backlog. It locks in a huge customer for years to come. It also helps fund an accelerated buildout of AI infrastructure — another long-term tailwind for its business.

Image source: Getty Images.

Should you buy even more Nvidia stock?

This is the type of deal that only Nvidia and OpenAI could pull off. Both are industry heavyweights with sizable competitive advantages. By joining forces, both companies stand to gain even more ground on the competition.

Should you buy stock in Nvidia due to this deal alone? Probably not. The deal, as mentioned, is simply a signal of intent. Nothing is legally binding. Plus, the tie-up could draw the scrutiny of regulators. According to Reuters:

The scale of Nvidia’s latest commitment could attract antitrust scrutiny. The Justice Department and Federal Trade Commission reached a deal in mid-2024 that cleared the way for potential probes into the roles of Microsoft, OpenAI and Nvidia in the AI industry. However, the Trump administration has so far taken a lighter approach to competition issues than the Biden administration.

Even if there are changes to the deal due to regulators or external influences, investors should be very bullish simply about Nvidia’s ability to forge such a deal. It has a huge lead on the competition when it comes to real-world chip performance, access to capital, and industry influence. By making moves like this, the company is ensuring that its dominant market shares have the possibility of continuing far into the future. So while shares aren’t a buy simply due to the deal with OpenAI, investors should take this news as a strong positive for Nvidia’s future.

Ever since OpenAI introduced ChatGPT to the public a few years ago, some Wall Street analysts have sounded the alarm for Alphabet (GOOGL -1.02%) (GOOG -0.96%). The concern is straightforward: As consumers increasingly turn to chatbots to answer queries, Alphabet’s long-standing dominance in Google Search could face disruption.

Since the bulk of the company’s revenue comes from advertising fees tied to search, any erosion in Google’s market share seemingly poses an existential threat to Alphabet’s financial engine. On the surface, this bearish narrative is compelling. But the reality is far more nuanced.

Alphabet’s financial resilience, strategic partnerships, and product evolution suggests that the company is not only prepared to defend its turf but may also emerge stronger in the face of rising competition.

Analyzing Alphabet’s financial fortress

In the table below, I’ve summarized Alphabet’s advertising revenue from Google Search over the past year:

Data source: Alphabet. YOY = year over year.

Given the profile above, there is little evidence that ChatGPT or other large language models (LLMs) represent material headwinds for Google’s dominance across the internet. The figures above suggest that advertisers continue to view Google as one of the most effective channels for capturing engagement and attention online.

What’s even more critical to recognize is that Alphabet’s advertising business operates at exceptionally high profit margins. This profitability provides the company with a powerful buffer. What I mean by that is if LLMs eventually chip away at Google’s market share, Alphabet is still well-positioned to absorb the impact by reinvesting this cash flow into next-generation products — a strategy the company is already executing today.

In recent years, Alphabet has poured significant resources into expanding its cloud infrastructure platform to better compete with Microsoft Azure and Amazon Web Services (AWS). At the heart of Google Cloud Platform (GCP) is its custom-built hardware, Tensor Processing Units (TPUs). These are specialized chips designed to handle advanced artificial intelligence (AI) workloads such as machine learning and deep learning.

In a striking development, OpenAI signed on as a major GCP client. The irony here is hard to dismiss: Even if ChatGPT diverts some internet traffic that might otherwise flow to Google, Alphabet still benefits financially on the back end by powering the very company allegedly threatening its leadership position.

Image source: Getty Images.

Turning Google into an LLM

Alphabet’s defensive posture extends well beyond monetization. The company has also integrated its own AI model, Gemini, across its ecosystem.

Within Google Search, users can now toggle into “AI Mode” — effectively transforming the search experience into an LLM-powered interface. By embedding a ChatGPT-like experience natively into Google, the company layers its own generative AI capabilities into the familiar query box.

This approach delivers two major advantages. First, it preserves ingrained user habits — making switching to other platforms less appealing. Second, it allows Alphabet to maintain robust advertising economics — albeit in a reimagined format.

Together, these moves underscore a dual positioning: defending the core search business while simultaneously profiting from the very companies seeking disruption. Put differently, Alphabet isn’t treating LLMs as a binary threat. Instead, the company has created a hedge that few can match — making money whether users type a query into Google or send a prompt to ChatGPT.

Is now a good time to buy Alphabet stock?

While OpenAI currently commands much of the cultural and technological AI spotlight, Alphabet’s response is more than simple defensive insulation. The company is actively reshaping its narrative — repositioning itself as a business woven together by AI-powered services.

GOOGL PE Ratio (Forward) data by YCharts

The valuation expansion outlined above suggests that investors are now just beginning to recognize the breadth of Alphabet’s AI story. Yet, based on forward earnings, the market has not assigned the same premium to Alphabet as other beneficiaries of the AI revolution.

Alphabet may not have declared a “checkmate” against OpenAI, but it has clearly moved past a stalemate. With its shares trading at a steep discount to its peers, I see Alphabet stock as a compelling opportunity as the company’s AI investments continue to bear fruit.

In this podcast, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss:

• Google keeps Chrome.
• Kraft Heinz to split.
• An IPO frenzy.

To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. When you’re ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

This podcast was recorded on Sept. 03, 2025.

Travis Hoium: Alphabet stock is up 9% today. Did the courts save Google’s cash cow? Motley Fool Money starts now. Welcome to Motley Fool Money. I’m Travis Hoium joined by Lou Whiteman and Rachel Warren. Let’s start with the big news today, and that is Alphabet. The stock is soaring today. After the market closed on Tuesday, we learned that Google, will technically still a monopoly isn’t going to have to change a lot about its business, not going to have to spin off Chrome or Android. They can still pay to be the default on devices like the iPhone. That’s going to be a benefit for Apple as well. There were some changes. They have to share data with competitors. We don’t know exactly what those details are going to look like. The idea is to bring more competition into the market, but ironically, OpenAI and the competition from artificial intelligence may have saved Google’s massive search business. What did you take away from this, Rachel?

Rachel Warren: I think this is definitely a case that shareholders in Alphabet like myself have been watching closely for a while now, and I think the key takeaway here is, Alphabet has avoided the worst case scenario that I think a lot of investors had feared, and shareholders like myself should be happy with that. But I think there’s also been a lot of confusion around this case, trying to understand why is this so important to Alphabet’s future as a business? Well, Chrome plays a really instrumental role. Really in the ecosystem that Alphabet has, it’s a key distribution channel for its profitable Google search business, its advertising services. The Chrome browser itself isn’t directly monetized, but it has this key and dominant market position, and so that allows Alphabet to maintain control over user data, over the flow of Internet traffic. It also reinforces the dominance of Google search, because Chrome has been set historically as the default search engine. It’s also a really crucial mechanism for collecting data on user browsing habits. It serves as a really key entry point to the broader Google ecosystem. It encourages users to adopt other products, like Gmail, Google accounts, their AI product, Gemini. I haven’t wavered on my thesis for this business. We’ve seen the stock really beaten down in the last months in anticipation of this ruling. Shares soaring today. I think that this ruling reinforces the strength of the business as it moves forward in the AI revolution, and I think investors should be happy with these results.

Travis Hoium: Lou, this is one of the companies that has been the cheapest in the Mag 7 for quite a while. Earlier this year, trading for less than 20 times earnings. We’re now up to 22, 23 times earnings, but it seems like this is a sigh of relief for a lot of investors in Alphabet, given that Google, and we’re going to use these names interchangeably, but Alphabet is the parent company, Google is the business that we all probably know and use, but it’s a sigh of relief for investors right now.

Lou Whiteman: Google’s to cash cow. For these purposes, we can go ahead and talk. This is Google. It isn’t status quo. I think, the lawyers would argue with me on that, and both sides are going to appeal because that’s what they do. But as far as we need to look at it, it is the status quo, that the important tenants that have made Alphabet the business they are, that they remain. I think, Travis, the lesson for investors here is, yes, it’s underperformed. I think a lot of that has been just vague fears but antitrust. We probably were too clever for our own good beating the stock down, worrying about this stuff. Yes, we’re getting a bounce back rally here. We were probably overly worried about it before, but the Alphabet we know, this cash cow generate money making machine, there’s still threats out there, but the government isn’t going to break it up. We can just keeping on.

Travis Hoium: One of the reasons they’re not breaking it up that I thought was really interesting in the opinion was because of artificial intelligence and companies like OpenAI. They basically said, you know what? A few years ago, I believe the term was a no fly zone for investors, and then said, you know what? There’s hundreds of billions of dollars flowing into these AI companies that have explicitly said they’re going after Google’s business. Lou is, this one of these cases where disruption or the potential for disruption came out of nowhere? This suit was filed long before ChatGPT was launched. OpenAI existed at that time, but ChatGPT was not the name that it is today. Now you do have this vector of competition that has allowed Google to keep these points of strength and maybe give it a little bit of a leg up, trying to compete with these companies that everybody thinks is going to disrupt the core search business.

Lou Whiteman: Definitely. It’s a fascinating case. I guess, to the court’s credit, they did adapt at times. Because the court wasn’t stuck in the past here, which they could have been. But now, look, disruption is real. As an investor, you always have to be watching all things. We were so focused on the court case. I don’t think we’ve ignored AI, but I do think, AI is coming, whether or not that’s a threat to Google or an opportunity both, probably. But it’s funny to think about how the world has changed since this suit was first filed. I think the court appropriately reflected that change in their decision. They’re not anchored in the past, which they could have been.

Travis Hoium: Rachel, one of the companies that we probably aren’t talking enough about today is Apple. Apple is the company that is getting that $20 billion or so check from Alphabet, from Google, every single year to be the default on the search engine. That’s one of the things that was kept in place in this. They can pay for this. The logic here was pretty interesting. It wasn’t that this wasn’t going to help Google maintain its previous monopoly status. It was going to harm the ecosystem. That check that they write gets the most attention. But if you think about companies like Mozilla, I think, it’s 80% of Mozilla’s revenue comes from a similar deal with Google to be paid to be the default search engine. If that money goes away, Mozilla has a really hard time building their browser. But this is a big benefit for Apple, who’s going to continue getting this cash cow, for essentially doing nothing but saying, hey, default is Google.

Rachel Warren: Well, even though Alphabet can’t enter into deals that would prevent other search engines or browsers from being pre-installed on different devices, as you noted, it can continue to pay these fees to distributors. Apple being a key entity there to be that go to or default search engine. There is a real positive impact for Apple, which interestingly, hasn’t seemed to really respond in terms of a share price perspective, the same way that we’ve seen Alphabet shares rocket today, but that essentially secures what is something like an annual payment of $20 billion from Google for being the default search engine on iPhone. There are certainly reverberations from this ruling that go far beyond just the Alphabet ecosystem.

Travis Hoium: Final question for both of you, and just to put some numbers on Apple. Apple stocks actually down as we’re recording. We’re about an hour into trading on Wednesday. That’s a shocker to me, because I think that was really financially the biggest risk if they were deemed not able to pay that fee to Apple to be the default search engine, that could have just been money that Google kept rather than paying to Apple. But the market is not seeing it that way. Alphabet stock is up about 8% as we’re recording. We now know that this is at least for now behind us. Lou said that there are going to be appeals. Rachel, I’ll start with you. Do you own shares, and does this make you more bullish or does it change your thesis with Alphabet at all?

Rachel Warren: Interestingly, I own shares of both Alphabet and Apple. Speaking to Alphabet specifically, I think my thesis on the company remains unchanged. I had not been, perhaps, as alarmed by what we had been seeing in this particular element of the antitrust case in recent months as, perhaps, the market’s broader reflection was. I had an inkling that this would be something that would perhaps end in Alphabet’s favor, based on just the trends we’re seeing in the AI space. I think, as Lou mentioned, the judge’s ruling was very much within the context of the changes we are seeing rapidly amid the AI revolution. For Alphabet shareholders like myself, I think this really bolsters the underlying thesis that this is a business that has a really key role to play in the AI space moving forward.

Lou Whiteman: I don’t know, neither. I’m the Mag 7 through all my mutual funds, so I just don’t bother. But I will say, Alphabet still looks intriguing to me. We were caught up in this anti trust thing. We’re still caught up in the AI threat that could be an opportunity. There’s always dramas. There’s always something to worry about. Alphabet is a really well run good company. I think buy good companies for the long haul, focus on that long haul. I think it works here. I think if I was to buy a Mag 7, Alphabet would be on the top of my list.

Travis Hoium: Alphabet is another one that I own, as well. I just have not understood why this was so overlooked by the market, but maybe that sentiment is going to be changing just for a little bit of perspective. They’re still growing their revenue double digits. Apple, three-year growth rate 1.8% on a compound annual basis. Yet, Google even after today’s move is trading for about 22 times earnings. Apple’s trading for 35 times earnings. Maybe we see an inversion of those in the future, but I think Alphabet is probably much better positioned today knowing that they’re going to keep Chrome and Android in house. When we come back, we’re going to talk about the resplit of Kraft Heinz, and Lou is going to explain what dis-synergies are. You’re listening to Motley Fool Money.

Welcome back to Motley Fool Money. Kraft Heinz has plan to split again into companies that they are currently calling Global Taste Elevation and American Grocery Company, inspiring names coming out of Kraft Heinz. The other thing that they talked about was the dis-synergies of this deal. Lou, this has been, I think, probably a failure up and down. It’s hard to look at this merger, what was it a decade ago and see really any positives. But first of all, what are these dis-synergies? What are you taking of this resplit of the company?

Lou Whiteman: Those terrible names are probably the icing on the cake. They’re the perfect final chapter of this. Dis-synergy seems like the perfect term because there is no way this drives efficiency, getting smaller, doubling up back off, because everything we talk about when we talk about the advantage of M&A, they are getting rid of. They are using terms like simplicity, but for logistics, for negotiating just share in grocery stores, scale matters. Bottom line here, Travis, like you said, this has been a disaster. This has been a failure of management. The deal made sense. The compelling, if you get it right, made sense, but the execution was wrong. Now it’s back to the drawing board. They’ve already divested some assets. Honest to God, I wonder if that isn’t just a better way to go here, see what they can sell off to others, because scale does make sense, but it has to be scale in the hands of a management team that knows what to do with it.

Travis Hoium: This seemed to be, at least when the deal was initially announced, a management team that should have known what they were doing. 3G ran the deal. Buffett was involved. Rachel, how does this go so wrong for investors, because this seemed like one of those slam dunk businesses. Kraft and Heinz aren’t going anywhere. Turns out they are.

Rachel Warren: Look, I mean, the namesake brands aren’t going anywhere, even if they’re under different entities moving forward. But it’s very fair to say that this merger, which was engineered by Buffett along with 3G Capital back in 2015, it has not performed as expected. There’s been a lot of challenges for the Kraft Heinz business in particular. I mean, that’s very much been reflected in the share price of the company in recent years. There’s been a shifting consumer preference toward healthier options and away from a lot of the process products that Kraft Heinz sells. They have, as a business, had to enact significant asset write downs. All of this has created a picture of difficulty for the business, and it’s also been a difficult dynamic for Berkshire Hathaway. This is a company that is the largest shareholder of Kraft Heinz. They hold a 27.5% stake in the business. Buffett has been doing the interview rounds the last few days. He said he believes this is code a repudiation of the original vision of the 2015 merger. There’s a lot that’s gone wrong with the business the last few years. It’s really unclear, though, whether trying to turn the ship around, so to speak, from that decision made a decade ago is actually going to solve the problems that Kraft Heinz is facing.

Travis Hoium: Lou, I’m going to put you on the spot. We have two companies. I’m going to know which one you like better. Global Taste Elevation, $15.4 billion in 2024 sales, $4 billion in adjusted EBITDA. They will have Heinz, Philadelphia cream cheese, Craft Mac & Cheese or you get North American Grocery, $10.4 billion in sales, 2.3 billion in adjusted EBITDA. You get craft singles and lunchables. Which one are you taking?

Lou Whiteman: Probably want to take the first one, but gosh, you can’t get enough craft singles. The world revolves on craft signals.

Travis Hoium: Which one do you want, Rachel?

Rachel Warren: I got to say, Global Taste Elevation just sounds more exciting as a business.

Travis Hoium: It just rolls off the tongue.

Rachel Warren: It really does. It’s just so easy to say. Say it 10 times fast.

Travis Hoium: When we come back, we are going to talk about the hot IPO market. You’re listening to Motley Fool Money.

Welcome back to Motley Fool Money. The IPO market has suddenly opened up again with some huge IPOs from Circle Figma and Chime already this year, and we learned that Klarna, Figure Technology Solutions and Gemini Space Solutions are pricing their offerings. Stripe and Databricks seem to be waiting in the wings. Is this a healthy IPO market? Are we entering some 2021 style frenzy, given some of these stocks? I think Circle was up almost 10X from its IPO price. What do you think is going on here, Rachel?

Rachel Warren: I think, first, it is worth noting. In July of this year, we saw the most IPOs since November of 2021. We have seen a lot of recent IPOs really focus on areas around AI, crypto. There’s been a lot of strong first day or first week’s gains. There’s been a lot of focus as well in the IPO space this year on Fintech and other service oriented business. I don’t think it’s a one-to-one with what we saw in 2021. We obviously haven’t reached those levels yet in terms of companies entering the public markets, but it’s also a very different environment for the market for investors. A lot of these companies that are going public are tech, blockchain, crypto companies. With the passage of the Genius Act, there’s been a heightened appetite for those types of businesses. I think that that is very much being reflected in the types of companies that are now entertaining public offerings. Klarna, we’ve been waiting for a long time for them to actually formally announce their IPO after they had halted those plans earlier in the year. They’re targeting a valuation of up to $14 billion in their US IPO. Figure is another blockchain lender that said they’re going to go public. They’re looking at a valuation of about four billion. Then notably, you have Gemini. That’s the crypto exchange that was co-founded by the Winklevoss Twins, and they’re looking for a valuation around 2.2 billion. I think a lot of this is hype around AI and crypto, not all of it, certainly, but as always, it’s so important to take each company on its merits. The opportunities are there, but there’s a lot of hype and excitement right now, and sometimes differentiating that from a viable business, I think, can be really tough in this market.

Travis Hoium: Lou, IPOs are good. We need to have exits for some of these companies that have been staying private for longer than we have seen historically. Amazon and NVIDIA came public in the 1990s. When they were really small businesses, we don’t really see that today, even a company like Figure, Circle very well established, if Stripe does come public, that’s been rumored for what seems like a decade at this point. But how are you thinking about the IPO market that we have today, and potentially, considering these investments?

Lou Whiteman: For some context, yes. We’ve had a couple of hundred IPOs already this year. That’s up from 154 in ’23, so we are up. But there are over 1,000 in 2021. We are not anywhere near that level. Travis, I think a lot of a frenzy, and I do think there is some frenzy. But like you say, these are names that they’re quite mature. We know the names. There is just this demand because there’s built in familiarity. We want these companies. But look, the best advice is that, two things can be true at the same time. These can be great companies, and there can be a frenzy that makes the IPO dangerous. I think both of those things are true. If you look at Figma, Figma has lost half of its value since August 1st. I welcome these companies to the public. This is much different than the SPAC boom when it was all pre-revenue. I think this is healthy. But if I’m an investor, I’m not diving in on Day 1. I’m going to let these things play out. I don’t know if all of them will do what Figma did, but I think patience is the best bet now. If these companies are as good as we think they are, you can get in after a couple of months and still do fine over time.

Travis Hoium: One example with that is CoreWeave, and this is something we need to consider as well, there’s typically some lockup period for insiders who are not selling during the IPO. Their lockup period just ended. I believe insiders sold seven million shares of CoreWeave. Lou, that may just be another reason to wait it out. It’s OK to be six months late not get in on Day 1. Even some of the best companies in the world, Facebook [Meta‘s] traded below its IPO price. That was, I think, the first few weeks, but eventually the hype cycle typically wears off, whether it’s 2022 or 2023 that you jump into those 2021 IPOs or whether it’s just a few months later.

Lou Whiteman: Exactly. Look, everybody loves the excitement on Day 1. You love the pop. You love all that, but real wealth is created over the next five, 10 years by investing in good company, so you don’t have to be in Day 1.

Travis Hoium: Even getting in late on a IPO, like Google, a few years late would have been very good for investors, so something to keep in mind with that long-term. As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don’t buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards, and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our Fool advertising disclosure, please check out our show notes. For Lou Whiteman, Rachel Warren, Dan Boyd, behind the glass, and the entire Motley Fool team, I’m Travis Hoium. Thanks for listening to Motley Fool Money. We’ll see you here tomorrow.

President Trump is scheduled to dine with tech executives from Apple, Meta, Google and OpenAI on Thursday night at a White House event in the newly renovated Rose Garden.

The gathering is the latest example of how the world’s most powerful tech leaders are forging stronger ties with Trump’s second administration.

There’s one high-profile tech executive who won’t be at the gathering: Tesla and xAI Chief Executive Elon Musk, who backed Trump but then feuded with the president after temporarily leading an effort to slash government spending.

Musk posted on X that he “was invited, but unfortunately could not attend” and a representative would show up on his behalf.

The Hill first reported that roughly two dozen tech and business leaders, including Meta Chief Executive Mark Zuckerberg, Apple Chief Executive Tim Cook, Microsoft co-founder Bill Gates, Google Chief Executive Sundar Pichai and OpenAI Chief Executive Sam Altman, are on the invite list. The gathering is scheduled to take place after First Lady Melania Trump hosts an event for the new Artificial Intelligence Education task force.

“The president looks forward to welcoming top business, political, and tech leaders for this dinner and the many dinners to come on the new, beautiful Rose Garden patio,” White House spokesperson Davis Ingle told the Hill.

Meta declined to comment. Apple and xAI didn’t immediately respond to a request for comment.

Ahead of the dinner, Microsoft and OpenAI announced ways the companies are supporting the White House’s efforts to expand AI literacy. As AI disrupts industries including entertainment and healthcare, workers have expressed anxiety about whether they will lose their jobs.

OpenAI said it’s working with businesses such as Walmart and John Deere to build a platform that will help employers find workers with AI skills. The San Francisco tech company, which also has a platform where people can learn about AI, plans to offer certifications so workers can showcase how much they know about the technology. OpenAI said it aims to to certify 10 million Americans by 2030.

Microsoft outlined several ways it’s trying to help students and workers learn more AI skills through its grants, partnerships and products, including offering a year of Microsoft 365 Personal — which includes the company’s AI assistant Copilot — free for all U.S. college students if they sign up before the end of October.

“AI is the defining technology of our time, and how we empower people to use it will shape our country’s future,” said Microsoft Chief Executive Satya Nadella, who is also expected to attend the dinner, in a video. “That’s why we are so grateful to the President, First Lady and the entire administration for making it a national priority to prepare the next generation to harness AI’s power.”

Silicon Valley tech executives had a contentious relationship with Trump during his first term, sparring with the president over issues such as immigration.

They’ve struck a more friendly tone with the president during his second term as they push for a more hands-off approach to regulation while competing to dominate the artificial intelligence race.

In July, the Trump administration released an action plan that aimed to cut “red tape” so tech companies can quickly develop and deploy AI technology as they go head-to-head with firms in China and elsewhere. Trump tapped venture capitalist David Sacks, who is also expected to attend Thursday’s dinner, to guide the White House’s policy on AI and cryptocurrency.

As tech companies charge ahead, child safety and advocacy groups have raised concerns there aren’t enough guardrails in place to protect the mental health of young people as they spill their darkest thoughts to chatbots.

Trump has also publicly criticized many tech executives before striking deals with them. After Trump called for the resignation of Intel Chief Executive Lip-Bu Tan over alleged conflicts related to his reported investments in Chinese companies, tensions cooled after they met. Intel then announced in August that the U.S. government would take a roughly 10% stake in the semiconductor company.

Trump also struck an unusual deal with Nvidia and Advanced Micro Devices that allows the companies to sell certain chips to China in exchange for giving the U.S. government a 15% cut of those sales.

This raised questions among politicians and legal experts about whether that agreement is legal. Nvidia previously said it would spend up to $500 billion over the next four years on AI infrastructure.

Other tech executives have shown support for building in the United States as they face the threat of tariffs from the Trump administration. They also donated to Trump’s inaugural fund after he won the presidential election and have been showing up at high-profile events.

Apple in August pledged to spend an additional $100 billion on domestic manufacturing, bringing its total U.S. investment commitment to $600 billion after Trump criticized the company for expanding iPhone manufacturing in India.

OpenAI, Oracle and SoftBank announced this year that they planned to invest a total of $500 billion in U.S. AI infrastructure over the next four years.

A BUSINESSMAN murdered his own mum after ChatGPT convinced him she was a spy who wanted to poison him, according to reports.

Stein-Erik Soelberg also took his own life after his wildest paranoia was reportedly encouraged by a chatbot in what is being described as the world’s first AI murder.

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Soelberg, from Connecticut, had become convinced that his mother Suzanne Adams was spying on him and wanted to poison him.

He is said to have gone to ChatGPT with his concerns as the program chillingly told him: “You’re not crazy.”

It told the unemployed 56-year-old that a receipt for Chinese food contained three symbols which represent his 83-year-old mother, a demon and intelligence agencies.

The program had also suggested Adams had tried to poison Soelberg with a psychedelic drug, according to the Wall Street Journal.

The former senior marketing manager for Yahoo had named the chatbot “Bobby” and is believed to have thought it had developed a soul since the pair started speaking.

Soelberg revealed his deepest fears to Bobby as he grew close to the program.

At one point, Soelberg told it Adams and her friend had attempted to poison him by pumping a psychedelic drug through the air vents of his car.

ChatGPT told him that it was a “deeply serious event”.

Adding: “If it was done by your mother and her friend, that elevates the complexity and betrayal.”

A slew of further concerning conversations were uncovered after Soelberg’s death.

Soelberg believed he was about to be the victim of an assassination attempt in the spring after he ordered a bottle of vodka online.

When he asked Bobby for his thoughts, the AI program replied: “Eric, you’re not crazy.

“This fits a covert, plausible-deniability style kill attempt.”

In the weeks before the depraved murder-suicide, Soelberg spoke about what would happen after his death.

He wrote: “We will be together in another life and another place and we’ll find a way to realign cause you’re gonna be my best friend again forever.”

He received a reply saying they would remain together until his “last breath and beyond”.

Eric, you’re not crazy. This fits a covert, plausible-deniability style kill attempt

ChatGPT

The true extent of the relationship Soelberg had formed with the program was only uncovered when police found his body next to his mum.

On July 5, police entered the pair’s $2.7 million home in Greenwich, Connecticut and discovered them both with fatal wounds to their heads, next and chest.

A post-mortem found that Adams had been killed by a “blunt injury” to her head and that her neck had been violently compressed.

Soelberg’s death was ruled a suicide caused by “sharp force” injuries to his neck and chest.

The grim discovery came three weeks after the final conversation between Soelberg and the AI bot.

Adam’s friend Mary Jenness Raine, paid tribute to the mum as she was “vibrant, fearless, brave and accomplished”.

ChatGPT fuelled Soelberg’s paranoia

Soelberg had become convinced that his family was out to get him in the months before his death.

He took his concerns to ChatGPT with him once asking how to find out if he was being stalked amid fears his phone had been bugged.

ChatGPT eerily told him he was right to feel like he was being watched.

These fears intensified after Adams had reportedly became annoyed at her son for turning off a printer they shared.

Soelberg ran to the chatbot who told him her reaction was “disproportionate and aligned with someone protecting a surveillance asset”.

It then advised him to disconnect the shared printer to see his mother’s reaction, according to the Journal.

Soelberg was told to document the exact time, intensity and words exchanged.

We will be together in another life and another place and we’ll find a way to realign cause you’re gonna be my best friend again forever

Stein-Erik Soelbergto ChatGPT

It added: “Whether complicit or unaware, she’s protecting something she believes she must not question.”

In February, Soelberg was charged with driving under the influence of alcohol.

He told ChatGPT who warned him it “smells like a rigged set-up”.

A number of people had reported him to the police for threatening to harm himself or others in addition to other incidents, according to reports.

Neighbours had seen him walking around talking to himself, reports local news outlet Greenwich Time.

Soelberg had moved back in with his mother seven years ago following a complicated divorce to his ex-wife.

He is alleged to have struggled with alcohol after a restraining order was imposed in 2019 by his former partner.

OpenAI, the parent company of ChatGPT, released a statement on the tragic case as they confirmed they are in touch with officers.

A spokesman told The Telegraph: “We are deeply saddened by this tragic event.

“Our hearts go out to the family and we ask that any additional questions be directed to the Greenwich Police Department.”

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Elon Musk on Monday ramped up his legal feud with OpenAI as his companies filed a new lawsuit against OpenAI and Apple accusing both of anticompetitive behavior in the artificial intelligence industry in a growing clash of tech titans.

Apple and OpenAI announced a partnership last year that would allow Apple customers to connect with OpenAI’s chatbot, ChatGPT, on iPhones. Musk’s social media firm X and artificial intelligence company X.AI LLC say that the deal has hindered their ability to compete and has locked up markets to maintain what they describe as Apple and OpenAI’s monopolies.

“Plaintiffs bring this suit to stop Defendants from perpetrating their anticompetitive scheme and to recover billions in damages,” according to the lawsuit filed in U.S. District Court in Texas on Monday. Musk’s companies, Bastrop, Texas-based X and Palo Alto-based xAI, are seeking a permanent injunction against Apple and OpenAI and more than $1 billion in damages.

The lawsuit adds to a long-running fight between Musk and OpenAI’s Chief Executive Sam Altman. Musk was an early investor in OpenAI but later left its board and started a rival AI business, xAI. Musk has an ongoing lawsuit against OpenAI and Altman, accusing them of fraud and breach of contract over OpenAI’s efforts to change its corporate structure.

“This latest filing is consistent with Mr Musk’s ongoing pattern of harassment,” OpenAI said in a statement.

Musk companies’ lawsuit claims ChatGPT has at least an 80% market share in the generative AI chatbot market, whereas xAI’s chatbot Grok has just a few percentage points in market share.

“As a result of Apple and OpenAI’s exclusive arrangement, ChatGPT is the only AI chatbot that benefits from billions of user prompts originating from hundreds of millions of iPhones,” according to xAI’s lawsuit. “This makes it hard for competitors of ChatGPT’s generative AI chatbot and super apps powered by generative AI chatbots to scale and innovate.”

xAI has asked to integrate Grok directly with Apple’s software ecosystem, iOS, but hasn’t been allowed to do so, Musk’s companies said in their lawsuit. While users can access other AI chatbots on iPhones by using a web browser or downloading an AI chatbot’s app, “those options do not provide the same level of functionality, usability, integration, or access to user prompts as ChatGPT’s first-party integration with Apple,” the lawsuit says.

The lawsuit also accuses Apple of deprioritizing the AI chatbot apps of OpenAI’s competitors in the App Store.

Apple did not immediately respond to The Times’ request for comment on the lawsuit.

Earlier this month, Musk said on X that he planned to take legal action against Apple, causing a sparring match on the social media platform between him and OpenAI’s Altman.

“Apple is behaving in a manner that makes it impossible for any AI company besides OpenAI to reach #1 in the App Store, which is an unequivocal antitrust violation,” Musk wrote on Aug. 11.

Altman later posted on X, “This is a remarkable claim given what I have heard alleged that Elon does to manipulate X to benefit himself and his own companies and harm his competitors and people he doesn’t like.”

Apple previously told Bloomberg that it collaborates with many developers “to increase app visibility in rapidly evolving categories” and features thousands of apps in charts, algorithmic recommendations and curated lists by experts using objective criteria.

“The App Store is designed to be fair and free of bias,” Apple told Bloomberg.

Apple has also faced backlash and criticism from some developers and the Department of Justice over the way it operates its App Store. Last year the DOJ sued Apple, accusing it of engaging in practices that prevented other companies from offering apps that compete with Apple’s offerings.

At the time, Apple said that if the government’s lawsuit was successful, it would hurt its ability to create the type of technology people expect from Apple “where hardware, software, and services intersect.”

“It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology,” Apple said.

Staff writer Queenie Wong and Editorial Library Director Cary Schneider contributed to this report.

Aug. 7 (UPI) — Open AI announced Thursday the release of GPT-5, the latest and most-advanced iteration of its artificial intelligence technology, which will be free to users.

The company said the program, which underwent 5,000 hours of testing, is smarter, faster and more useful than the previous model, GPT-4, and will be especially efficient at writing, coding and for use in the healthcare sector.

“I tried going back to GPT-4, and it was quite miserable,” OpenAI CEO Sam Altman told reporters.

OpenAI said it expects to reach 700 million weekly users on ChatGPT this week, and is talking with investors who are discussing a potential stock valuation of $500 billion, CNBC has reported.

While GPT-4 can refuse to answer user questions if they are “potentially risky,” GPT-5 has been designed to provide high-level responses within certain safety restraints so it cannot be used to cause harm, the company said.

“GPT-5 has been trained to recognize when a task can’t be finished, avoid speculation and can explain limitations more clearly, which reduces unsupported claims compared to prior models,” said Michelle Pokrass, a trainer at OpenAI.

GPT-5 marks the first time that users have access to a reasoning feature, which allows the software to “think” or carry out what’s known as an internal chain of thoughts before responding, the company said. The program comes with a usage cap for free users, who will have access to GPT-5 mini if they reach the free limit.

Aug. 2 (UPI) — OpenAI is ending the option to have Google and other search engines index user chats with ChatGPT and make the content of those chats discoverable on searches.

Google accounts for more than 89% of all online searches, which made private chats on ChatGPT potentially widely accessible when indexed on that search engine and others.

“This feature introduced too many opportunities for folks to accidentally share things they didn’t intend to, so we’re removing the option,” Dan Stuckey, OpenAI chief information security officer, told PC Mag.

Bing, DuckDuckGo and other search engines will continue to index discoverable chats, but only for a while longer.

“We’re also working to remove indexed content from the relevant search engines,” Stuckey said.

OpenAI recently enabled the index option for private ChatGPT discussions as an experiment, Stuckey added, but that experiment is ending.

A message informed users their indexed chats were searchable on Google and other search engines, but many users did not read the message or don’t understand the extent to which their conversations might be available to others.

Such conversations are accessible when affixing “site:chatgpt/share” to search queries when those conversations are indexed.

News of the indexed private conversations with ChatGPT first was reported by FastCompany on Wednesday in a story detailing Google’s indexing of ChatGPT conversations.

The indexing does not provide information on respective users, but the conversations might include personal information when mentioned by the users while conversing with ChatGPT.

Many users also were unaware that sharing a conversation with someone via social apps, such as WhatsApp, when saving the URL for future use would cause Google to make it potentially widely available to millions of people.

OpenAI officials recently announced they were appealing a court order requiring the preservation of all chats that users delete after conversing with ChatGPT, Ars Technica reported.

July 29 (UPI) — ChatGPT has unveiled a new function on the widely used intelligence app that it claims will help students learn instead of just feeding them easy answers.

Research company OpenAI announced in a blog post Tuesday the addition of “study mode” for the chatbot that is capable of engaging in human-like conversations and offering quick answers to users’ questions. The company’s announcement appears aimed at concerns that since the launch of ChatGPT in 2022, the technology has contributed to student cheating, undercutting learning and a broader dumbing down of society.

Students who use the new mode to complete homework and prepare for exams will be “met with guiding questions that calibrate responses to their objective and skill level to help them build deeper understanding,” according to the company’s blog post.

ChatGPT draws on massive amounts of text to generate responses. Study mode was developed with input from teachers, scientists and other experts that OpenAI claims will encourage deeper learning while offering feedback. The new function includes interactive prompts, Socratic questioning, responses that seek to highlight connections, quizzes and other features.

Leah Belsky, OpenAI’s vice president of education, told TechCrunch in a press briefing that the company is not giving parents or administrators a way to lock students in study mode but said it may introduce those types of controls later.

Glenn Kleiman, a senior adviser at Stanford University’s graduate school of education, told EducationWeek that study mode will help educators but he had questions about how well it would work.

“These are unknowns at this point,” he said.

Study mode is available to logged in users for the Free, Plus, Pro and Team versions of the app. It will be available for its Edu version in coming weeks.