Artificial intelligence powerhouse OpenAI plans to add the cloud computing unit of Google-parent Alphabet to its expanding list of data center partners, according to a report. Google stock rose amid the news. OpenAI's ChatGPT has threatened Google's core internet search advertising business, making a cloud deal surprising.
OpenAI and Google forged a cloud infrastructure deal in May, Reuters reported.
"The partnership would be surprising given how ChatGPT increasingly competes with both Google search and Gemini, but it also highlights Google's infrastructure and network advantages," said JPMorgan analyst Doug Anmuth in a report.
"It would also reflect Google's ability to optimize across different companies within Alphabet, despite potential competitive dynamics. While Google remains supply constrained, we expect greater capacity to come online in the second half of 2025."
OpenAI Taps Oracle, CoreWeave
Microsoft, the biggest investor in OpenAI, had been its primary provider of cloud computer services to train AI models and process software applications. OpenAI turned to Oracle last year as a new partner for the "Stargate" data center project.
In addition, CoreWeave recently signed a five-year deal with OpenAI, the leading developer of AI models and creator of ChatGPT. OpenAI has committed to $11.9 billion in payments over five years. Also, OpenAI is making a $350 million equity investment in CoreWeave stock as part of the deal.
But cloud capacity availability could be a factor in an OpenAI-Google deal. It'll take years for Stargate and CoreWeave to ramp up capacity for OpenAI.
Morgan Stanley analyst Brian Nowak in a report said investors should monitor what AI accelerators would be used to process OpenAI workloads, if the Google report is accurate. He noted that Google could run OpenAI workloads on Nvidia accelerators or its own home-grown "TPUs."
"We have not yet seen any definitive reports citing whether OpenAI will use TPUs or GPUs, and while it's not impossible that OpenAI uses TPUs, we think it's more likely that they rely on (Nvidia) GPUs for their compute capacity," he said.
Meanwhile, Google stock has retreated about 5% in 2025.
On its first quarter earnings call with Wall Street analysts, Google reiterated $75 billion in 2025 capital spending as it increases artificial intelligence investments. That includes investments in cloud computing capacity.
In Q1, Google's cloud computing unit's revenue rose 28%.
Additionally, Google is among artificial intelligence stocks to watch.
Also, the Relative Strength Rating of Google stock currently stands at only 65 out of a best-possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or better.
Google Stock: Technical Ratings
Google stock holds an Accumulation/Distribution Rating of B. That institutional ownership rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Further, Alphabet stock holds an IBD Composite Rating of 92 out of a best possible 99. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Meanwhile, GOOGL stock has a 21-day ATR of 2.8%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
IBD suggests stocks with ATRs of up to 8%.
Also, Alphabet stock needs to form a new base to be actionable.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
