Artificial intelligence (AI) is big business. Companies involved in it, either via hardware or software, went like gangbusters in 2025. Palantir Technologies is up 160% over the past year, and Nvidia surged 32% over the same time frame. And now the market is looking to the company that took AI mainstream. But should it be?
When OpenAI launched ChatGPT in 2022, it became the talk of the town overnight. It wasn't the first large language model (LLM), but it was the first to see widespread use and adoption.
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OpenAI is not publicly traded right now, but late last year it began signaling that it wanted to go public and began laying the groundwork for a potential $1 trillion initial public offering (IPO), Reuters reported.
The company's chief financial officer, Sarah Friar, reportedly has mentioned 2027 as a target, but some speculate it could come in 2026. Either way, it's going to be big. Or is it?
When it first went live, ChatGPT was really the only game in town. That's no longer the case. In 2023, OpenAI controlled 50% of the entire enterprise LLM market. Today its share has fallen to 25% and has been overtaken by Anthropic, which now has 32% market share. Alphabet's (GOOGL 0.08%) (GOOG 0.06%) Google Gemini is also quickly gaining market share and currently holds 20% of the market, according to venture capital firm Menlo Ventures.
Anthropic is also reportedly aiming for an IPO, potentially as soon as this year. But I think it could potentially be Alphabet that comes out on top in the AI race and delivers 2026's 100% gain.
Google it
Alphabet was one of the biggest success stories of the original dot-com boom. And there is one simple reason I see it becoming the dominant player in AI and reaping the bulk of the market's returns: It has all the resources it needs to dominate the AI space, while OpenAI is desperate for cash.
OpenAI, despite being the hottest name in AI and one of the most anticipated IPOs in decades, is hemorrhaging money. It's a private company, so it doesn't release full financial data, but The Wall Street Journal reported in November that the company anticipated spending $22 billion by the end of 2025 versus just $13 billion in sales, for a net loss of $9 billion. That means the company has to spend $1.69 to make $1.
OpenAI expects those losses to continue through 2028, which is the same year Anthropic aims to break even. OpenAI doesn't anticipate profitability until 2030 at the earliest.
Alphabet, on the other hand, topped $100 billion in revenue for the third quarter of 2025, up 16% year over year. Net income increased by 33% to $34.9 billion, and diluted earnings per share (EPS) increased by 35% over the same time frame.
The company also grew its free cash flow by 39% to $24.46 billion, and it holds $98.5 billion in its cash reserves to just $44.2 billion in debt, which means it could pay off its total debt load twice over. Put simply, OpenAI is burning money while Alphabet has money to burn.
And the latter is certainly putting its vast resources to work. In late December, Alphabet acquired Intersect, a data center energy infrastructure company, for $4.75 billion in cash plus assumption of Intersect's debt.
The buyout didn't even put a dent in Alphabet's cash reserves while expanding the company's ability to build more data center capacity for Gemini.
With Alphabet's resources, it can buy anything an AI company might need without going broke. It can poach engineers from other companies and build data centers. And it can buy as much electricity as it needs: In October, it agreed to a 25-year energy purchase plan with NextEra Energy that will see the Duane Arnold nuclear power plant in Iowa resurrected.
The original tech giant
I've long thought that as soon as the existing tech giants, such as Alphabet, Microsoft, and Apple, entered the AI space in earnest, start-ups like OpenAI would have a much harder time. AI is an incredibly capital-intensive industry.
Data centers can cost $7 million to $12 million per megawatt of IT load just to construct. Running one is even pricier. Electricity and equipment maintenance costs $10 million to $25 million a year.
Alphabet is one of the first true tech giants, and this giant is throwing its weight behind its AI program.
That's why it's been eating OpenAI's market share, that's why it beat every other stock in the Magnificent Seven with a 65% return last year, and that's why I think Alphabet could very well be the AI play for 2026.
