Like having the hottest A-lister on your arm, being a company merely associated with the OpenAI hype machine can send your street cred soaring these days. On Monday, Advanced Micro Devices Inc. shares surged 24% on the back of a deal to sell OpenAI chips, adding some $63.4 billion to its market value. But the gains didn’t end with AMD, as Bloomberg News reported:
Figma Inc. climbed as much as 16%, HubSpot Inc. added 11% and Salesforce Inc. gained 4.2%. Online travel companies also saw brief pops, with Expedia Group, Inc., and TripAdvisor Inc., both advancing at least 7%. Even shares of toymaker Mattel Inc. jumped nearly 6%.
What these companies had in common was their involvement in the keynote address at OpenAI’s developer day in San Francisco — the “nerdapalooza” for those building products using AI.
One segment showed how toy designers at Mattel Inc. were experimenting with AI video generation to envision a completed new product from a basic design sketch. “That is a very cool new way to build toys,” OpenAI Chief Executive Officer Sam Altman said. And he’s right! Though I’d say the stock moves seemed less about how the application of AI might aid those businesses — which is still to be determined — and more a reflection of investors’ excitement of hitching a ride to wherever the $500 billion OpenAI rocket ship is headed.
One prediction is into a fiery crash. I’ve noted before the many weaknesses facing OpenAI as it seeks to compete with rivals whose legacy businesses mean they are better positioned to keep investing in this new technology over the long-term. Google and Meta Platforms Inc. can rely on their advertising empires for cash, while Amazon.com Inc. has e-commerce and cloud operations. OpenAI lacks a similar kind of money-making machine. Its business is made up of machines that burn an unprecedented amount of cash — $115 billion by 2029, according to one estimate — forcing it to go cap-in-hand to investors with alarming frequency.
But at Monday’s developer day, OpenAI started laying out in greater detail its plan for building the backbone of a stronger business, one that is less sexy than the promise of “artificial general intelligence” or a Jony Ive-designed iPhone competitor and more, but makes practical applications out of some of the things OpenAI has actually been able to achieve.
