It has been a year since ChatGPT emerged on the scene. OpenAI, the company behind the popular chatbot, has become a household name, and tech giant Microsoft invested billions into the business, giving it an advantage over Alphabet (GOOG 1.68%) (GOOGL 1.66%) and Amazon (AMZN 1.52%), which appear to be lagging behind when it comes to artificial intelligence (AI).
But could the recent turmoil at OpenAI change that? Here's why Alphabet and Amazon may have a lot to gain from OpenAI's recent high-profile drama.
Sam Altman is back, but that doesn't mean there won't be more fallout
OpenAI fired its CEO, Sam Altman, earlier this month, only to end up bringing him back after facing a lot of bad press. The reversal also came after hundreds of its employees threatened to quit over the firing. It's still unclear what the reason for the firing was. And while the company will likely try to downplay the risks, the damage done may be enough to convince customers that they should consider rival products for greater stability.
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And where there's smoke, there often is some fire. Even though Altman is back in charge, there may still be rifts between him and the company's board or other leaders within the organization.
There's twofold risk here for the business, as the company may lose customers as a result of the turmoil, and it may also end up losing key employees. Employees, like customers, value stability, and they have other options to choose from -- such as Amazon and Alphabet.
Reinstating Altman may have been a quick knee-jerk reaction to squash the negative press surrounding the business, but it may not be enough to allay worries. When hundreds of employees are ready to leave, that's a significant cause for concern.
Rivals could be attractive to customers and employees
A key consideration when it comes to relying on AI and using chatbots is data security and privacy. And if customers have doubts about a company's stability and long-term goals, that could hurt demand.
This is where Google's Bard may have an opportunity to swoop in and lure some customers and employees away from OpenAI. Amazon's Bedrock, which can help customers develop generative AI apps, is also now available and provides yet another alternative from a large, stable tech company.
ChatGPT does have a big lead right now, however. In September, there were more than 219 million website visits to Google Bard versus 1.5 billion visits to ChatGPT, according to data from Similarweb. That month, Amazon also announced it would be investing up to $4 billion into Anthropic, which makes a chatbot, Claude 2, a potential rival for ChatGPT. But that's still in early stages.
These tech giants, do, however, have plenty of resources at their disposal. Alphabet has generated free cash flow totaling $77.6 billion over the trailing 12 months, while Amazon has brought in $16.9 billion. These are formidable rivals that can afford to invest billions into their respective AI businesses and potentially lure away both customers and employees from OpenAI.
It's too early to tell what the end result will be from all this recent drama, but Amazon and Alphabet could have a lot to gain in the long run, especially as they focus more on AI.
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What should investors do?
If you're investing in AI, it's hard to go wrong with Microsoft, Alphabet, or Amazon. All three look to be big players in AI and can benefit from next-gen technologies.
The OpenAI drama may still not be over, and it's a development that investors should watch, as it may determine what steps Microsoft, Amazon, and Alphabet take in the future, and how their AI chatbots and services evolve. For now, there's nothing to suggest that ChatGPT won't still be the dominant chatbot in the near term. But in the long run, there's a lot that can change.
AI investors need to also be active investors because, regardless of which horse you pick in this race, it's sure to be an evolving and changing dynamic to follow.
