EP 020: Is Open AI in trouble?

Dec 23, 2025

Gil Luria, head of technology research at D.A. Davidson, shares his insights on the AI landscape and the challenges facing OpenAI. He discusses the staggering $1.4T commitments and the need for renegotiation as OpenAI races against big players like Google and Meta. The conversation also touches on the rising competition in AI, the importance of private funding, and potential shifts in advertising strategies as companies explore monetizing chat interfaces. Luria suggests that for OpenAI to thrive, it may require a shift in leadership focus and a more sustainable business approach.

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INSIGHT

OpenAI Overextended And Must Refocus

Sam Altman has overpromised and signed contracts OpenAI likely cannot fulfill at scale.
Gil Luria expects OpenAI will need to refocus on frontier models and chat to avoid catastrophic failure.

INSIGHT

Value Concentrated At The Top Now

Today most profits from the AI stack accrue to NVIDIA and hyperscaler cloud providers.
Over time value will shift toward chat, APIs, and productivity wins that users will pay for.

ADVICE

Plan For Realistic Financing, Not Fantasies

Expect OpenAI to raise tens of billions, not trillions, and prioritize core products.
Do not assume federal guarantees will back runaway private compute ambitions.

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In this episode, Doug sits down with Gil Luria, head of technology research at D.A. Davidson, for a wide-ranging and candid discussion on the current state of the AI arms race.Key Takeways:OpenAI has over-promised on the $1.4T of commitments to ORCL, CRWV, etc… and likely has to renegotiate and reduce the scope of its ambitions across the AI value chain to focus on their core like ChatGPT. There are big competitors in the LLM race, such as GOOG and META, so OpenAI will need deep pockets that are willing to bet on Altman to keep the story rolling. Raising capital in the private markets is the near-term solution to solve the funding gap…and all is ok at OpenAI as long as the funding keeps coming and the growth keeps beating expectations….not a lot of margin of error here. If it’s a game of who can lose money the longest, I would not want to bet against GOOG or META’’s cash flow machines. META could find discipline and reduce capex, don;t hold your breath as Zuck has a big ego and a big balance sheet. He’s sending a signal to the market that he is going after AGI and has the balance sheet to do it. Stock would be better off if META split into an infrastructure company and an asset light social media company. The stock price driver in the near-term is based on capex and Zuck’s desire to win the LLM race and AGI. Ugh.GOOG is now the consensus winner, low-cost AI provider and now with a SOTP story. Regulatory breakup behind them and now commercializing TPU’s and marginally ahead in the LLM race. If OpenAI starts to monetize its traffic or new position in the TOF, then it could pose a risk to the consensus long GOOG…No signs of that yet. Will check CarbonArc for the latest digital advertising alternative data. The OpenAI contracts with ORCL and CRWV are “known” to be be unattainable and if they are renegotiated, it could potentially be a positive catalyst for those related stocks that have already discounted a negative outcome depending on the new terms as the negative catalyst is past (potential short covering) or the overhang is removed. Disclosure: Not Investment advice. Host andor affiliates are long GOOG and META and short NVDA.📩 Subscribe for more deep-dive conversations and variant views: https://pitchthepm.beehiiv.com/subscribeDoug Garber on LinkedIn:https://www.linkedin.com/in/doug-garber-42aa508Episode partner:💡 Powered by AlphaSense. For complimentary access to their GenAI and expert call library, visit: https://www.alpha-sense.com/Pitch/