With OpenAI’s recent release of its AI browser, the historic level of capital expenditures being made in the current AI arms race may accelerate even further, if that is possible.

From the reciprocal, and some have said circular, nature of hundreds of billions in commitments in investment, tied to future chip purchases, to the extent to which GDP growth is reliant on this boom, some have said this is a bubble. A Harvard economist estimates 92% of US GDP growth in the first half of 2025 was due to investment in AI.

But much more needs to be understood about the connection between the breakneck investment in AI and the business models that underpins the entire economy: the advertising technology (Ad Tech) industrial complex.

For the past 25 years the infrastructure of the internet has been engineered to extract advertising revenue. Search Engine Marketing, the advertising business model at the core of Google, is perhaps the greatest business model of all time. Meta’s advertising business, based on engagement and attribution, is a close second. And right behind both of these is Amazon’s advertising business, powered by its position as the largest online retailer. While a smaller portion of Amazon‘s topline, its highly profitable advertising business makes up a disproportionate percentage of Amazon’s profits. So much so that nearly every major retailer has spun up their own version of retail media networks, all driving significantly to the bottom lines and market capitalization of massive companies like Walmart, Kroger, Uber (and UberEats), Doordash and many more.

In fact, these platforms have been using AI to refine their advertising business models for years, in the form of algorithmic models that powered their search and recommendation engines, and to increase engagement and better predict purchase decision, seeking an ever-greater share of all commerce, not just what is typically thought of as “advertising.” These three multi-trillion-dollar market cap companies either
wholly, or substantially, derive their profits from advertising. And now they are using some portion of those historically profitable advertising revenues to fuel infrastructure investments at a level the world has not seen outside of War Time spending by governments.

But at the same time, the latest wave of AI has the potential to disrupt the very same trillions in market cap that is fueling it. AI will, without question, change how people search (Google), shop (Amazon) and are entertained (Meta). Answers delivered without clicking around the web. AI-assisted shopping. Infinite personalized content creation.

If AI represents such a potential existential risk, why are Google, Meta and Amazon such a huge part of the current arms race to invest in AI? The “moonshot” outcome of would be that achieving Artificial General Intelligence, or Super Intelligence, AI that can do anything a human can, but better, would unlock so much value that it would dwarf any investment.

But there is more immediate urgency to protect, or disrupt, the advertising business model fueling the trillions in market cap and hundreds of billions of current investment, before someone else does. While the seminal paper that launched this phase of AI, “Attention is All You Need” was written by mostly Google researchers, it was OpenAI and Microsoft, and now Grok as well, that launched the current AI arms race. And they are not remotely as dependent on the current advertising industrial complex. In fact,
Sam Altman has called the feeds of the major platforms using AI to maximize advertising dollars, “the first at-scale misaligned AIs.” He is clearly stating which businesses he believes OpenAI is trying to disrupt.

Pinterest shares plummeted 20% on Wednesday after lackluster third-quarter earnings as advertising took a hit from larger retailers dealing with tariffs.

The company posted a profit of 38 cents per share adj., while analysts polled by LSEG expected earnings of 42 cents per share. However, the platform’s revenue did meet analyst estimates of $1.05 billion.

“Tariff-related weakness showed up for the first time in our digital ads universe and will reinforce PINS’ lack of customer diversity for the bears and higher macro sensitivity,” RBC wrote in an analyst note.

Third-quarter sales in the U.S. and Canada came in at $786 million, lower than StreetAccount’s estimates of $799 million.

Pinterest finance chief Julia Donnelly said during the earnings call that the company faced “some pockets of moderating ad spend” in the two countries during the quarter due to unnamed “larger U.S. retailers” that faced pressure on their margins from tariff-related issues.

Donnelly added that the company expects these trends to continue with the addition of a new tariff from President Donald Trump that will impact the home furnishings category.

Several banks lowered their price targets following the earnings report, pointing to increasing competition from larger social platforms like Instagram and TikTok and concerns over macro headwinds.

Citi analyst Ronald Josey noted that the company’s international monetization could “plateau or decelerate faster than expected.”

However, 81% of analysts still maintained an outperform or buy rating.

JPMorgan remained overweight on the stock despite lowering its price target, as the company leans into more artificial intelligence initiatives.

“We recognize that near-term macro pressure & PINS’s outsized exposure to big retailers & home furnishings may keep the shares range-bound near-term, but we remain constructive on PINS’ user growth, deepening engagement, & overall monetization potential,” JPMorgan’s Doug Anmuth wrote.

The company also issued a weak fourth-quarter forecast, expecting revenue to come between $1.31 billion and $1.34 billion. The midpoint of that range, $1.325 billion, missed Wall Street’s projections of $1.34 billion.

“I did not think they were nearly as negative on the holiday season as people are making it out,” CNBC’s Jim Cramer said Wednesday on “Squawk on the Street.” “They are very muted. [CEO] Bill Ready is not a guy that likes to talk his books up.”

Rosenblatt analyst Barton Crockett downgraded shares to neutral from buy, citing concerns for how the company will be able to compete against the surging growth of chatbot capabilities.

“Chatbots are not meaningfully in Pinterest’s space today,” Crockett wrote. “Google has a comparable service, Mixboard, that seems more a test than a meaningful push. But it is absolutely likely, we believe, that as chatbots ramp up advertising and content for consumers with commercial intent, that Pinterest’s wheelhouse will become their wheelhouse.”

Bank of America analyst Justin Post noted that while revenues fell short, the company is continuing to post steady growth and is in “the early stages of realizing AI-driven gains.”

Ready said in the earnings call that the company is working to integrate more AI throughout the platform, including a new feature that will curate personalized boards for users. Pinterest also rolled out an AI-powered personal shopping assistant at the end of October.

“Our investments in AI and product innovation are paying off,” Ready said in a statement. “We’ve become a leader in visual search and have effectively turned our platform into an AI-powered shopping assistant for 600 million consumers.”

Cybersecurity startup Armis has raised $435 million in a funding round that values the company at $6.1 billion.

“The need for what Armis is doing and what we are building, in this cyber exposure management and security platform, is just increasing,” CEO and co-founder Yevgeny Dibrov told CNBC. There’s “very unique and huge demand right now, and we are continuing to grow.”

Goldman Sachs Alternatives’ growth equity fund anchored the investment, with participation from CapitalG, a venture arm of Alphabet. The security firm brought on Evolution Equity Partners as a new investor.

Armis helps businesses secure and manage internet-connected devices and protect them against cyber threats. The company chose Goldman’s growth fund due to its strong track record helping companies accelerate growth toward initial public offerings, Dibrov said.

“This is the partner for us to go to the next stage and continue to build here a real generational business to get to the Hall of Fame of cyber and SaaS businesses,” he said.

In September, Bloomberg reported that the company was exploring as much as seven stake offers. Dibrov told CNBC the funding round was an outcome of those talks.

Founded in 2016, Armis in August said it surpassed $300 million in annual recurring revenues. The California-based company achieved that milestone less than a year after topping $200 million in ARR.

Armis raised $200 million in an October 2024 funding round with General Catalyst and Alkeon Capital. Previous backers have included Sequioa Capital and Bain Capital Ventures. Armis also raised $100 million in a secondary offering in July.

Dibrov said Armis is aiming for an IPO at the end of 2026 or early 2027, but he said he’s in no rush and is waiting on “market conditions.” The company’s primary goal is to hit $1 billion in annual recurring revenue, he said.

“Going public will be before that,” he said.

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