OpenAI is under pressure as Google, Anthropic gain ground
Sam Altman is feeling the pressure.
The OpenAI CEO sent a memo to his staffers on Monday outlining a “code red” effort to improve its chatbot ChatGPT, according to multiple reports. Altman said OpenAI will be pulling back on investments in areas like health, shopping and advertising as it works to prioritize ChatGPT, the reports said.
OpenAI declined to comment on Tuesday.
“Our focus now is to keep making ChatGPT more capable, continue growing, and expand access around the world — while making it feel even more intuitive and personal,” Nick Turley, head of ChatGPT at OpenAI, wrote in a post Monday on X.
The Information was first to report on the memo.
More than 800 million people use ChatGPT each week, but the company is facing increasingly stiff competition from rivals like Google and Anthropic.
Google announced its latest artificial intelligence model, Gemini 3, last month, which topped industry benchmarks and was widely lauded by users, researchers and developers across social media.
The company said its Gemini app has 650 million monthly active users while AI Overviews, which appear at the top of search results, have 2 billion monthly users.
Altman congratulated Google on the launch, writing in a post on X last month that Gemini 3 “looks like a great model.”
Anthropic, meanwhile, has shown strong momentum with enterprises.
As of September, the startup said it has more than 300,000 business customers, up from less than 1,000 just two years ago. Large accounts, which Anthropic defines as customers that each represent more than $100,000 in run-rate revenue, grew more than seven times in the past year, the company said.
OpenAI launched as a nonprofit research lab in 2015, but has quickly become one of the fastest-growing commercial entities on the planet following the launch of ChatGPT three years ago.
The company’s valuation has swelled to $500 billion as it’s worked to deploy its technology around the globe.
In recent months, OpenAI has made more $1.4 trillion in infrastructure commitments in a deal-making blitz. The staggering sum has raised eyebrows and prompted questions about how the company will be able to afford those commitments.
Altman has repeatedly brushed off concerns.
Last month, OpenAI said it is on track to reach more than $20 billion in annualized revenue run rate this year, with plans to grow to hundreds of billions in sales by 2030.
In a lengthy post on X in November, Altman said large infrastructure projects take time to build, which is why the company needed to start now.
“This is the bet we are making, and given our vantage point, we feel good about it,” Altman wrote.
Weeks later, Altman seems to be feeling the heat.
WATCH: Enterprise AI adoption will be crucial to ChatGPT’s success, says Big Technology’s Alex Kantrowitz
Cheng Xin | Getty Images
Okta on Tuesday topped Wall Street’s third-quarter estimates and issued an upbeat outlook, but shares fell as the company did not provide guidance for fiscal 2027.
Shares of the identity management provider fell more than 3% in after-hours trading on Tuesday.
Here’s how the company did versus LSEG estimates:
- Earnings per share: 82 cents adjusted vs. 76 cents expected
- Revenue: $742 million vs. $730 million expected
Compared to previous third-quarter reports, Okta refrained from offering preliminary guidance for the upcoming fiscal year. Finance chief Brett Tighe cited seasonality in the fourth quarter, and said providing guidance would require “some conservatism.”
Okta released a capability that allows businesses to build AI agents and automate tasks during the third quarter.
CEO Todd McKinnon told CNBC that upside from AI agents haven’t been fully baked into results and could exceed Okta’s core total addressable market over the next five years.
“It’s not in the results yet, but we’re investing, and we’re capitalizing on the opportunity like it will be a big part of the future,” he said in a Tuesday interview.
Revenues increased almost 12% from $665 million in the year-ago period. Net income increased 169% to $43 million, or 24 cents per share, from $16 million, or breakeven, a year ago. Subscription revenues grew 11% to $724 million, ahead of a $715 million estimate.
For the current quarter, the cybersecurity company expects revenues between $748 million and $750 million and adjusted earnings of 84 cents to 85 cents per share. Analysts forecast $738 million in revenues and EPS of 84 cents for the fourth quarter.
Returning performance obligations, or the company’s subscription backlog, rose 17% from a year ago to $4.29 billion and surpassed a $4.17 billion estimate from StreetAccount.
This year has been a blockbuster period for cybersecurity companies, with major acquisition deals from the likes of Palo Alto Networks and Google and a raft of new initial public offerings from the sector.
Okta shares have gained about 4% this year.
WATCH: Earnings will drive small cap outperformance, says Bank of America’s Jill Carey Hall
Marvell Technology Group Ltd. headquarters in Santa Clara, California, on Sept. 6, 2024.
David Paul Morris | Bloomberg | Getty Images
Semiconductor company Marvell on Tuesday announced that it will acquire Celestial AI for at least $3.25 billion in cash and stock.
The purchase price could increase to $5.5 billion if Celestial hits revenue milestones, Marvell said.
Marvell shares rose 13% in extended trading Tuesday as the company reported third-quarter earnings that beat expectations and said on the earnings call that it expected data center revenue to rise 25% next year.
The deal is an aggressive move for Marvell to acquire complimentary technology to its semiconductor networking business. The addition of Celestial could enable Marvell to sell more chips and parts to companies that are currently committing to spend hundreds of billions of dollars on infrastructure for AI.
Marvell stock is down 18% so far in 2025 even as semiconductor rivals like Broadcom have seen big valuation increases driven by excitement around artificial intelligence.
Celestial is a startup focused on developing optical interconnect hardware, which it calls a “photonic fabric,” to connect high-performance computers. Celestial was reportedly valued at $2.5 billion in March in a funding round, and Intel CEO Lip-Bu Tan joined the startup’s board in January.
Optical connections are becoming increasingly important because the most advanced AI systems need those parts tie together dozens or hundreds of chips so they can work as one to train and run the biggest large-language models.
Currently, many AI chip connections are done using copper wires, but newer systems are increasingly using optical connections because they can transfer more data faster and enable physically longer cables. Optical connections also cost more.
“This builds on our technology leadership, broadens our addressable market in scale-up connectivity, and accelerates our roadmap to deliver the industry’s most complete connectivity platform for AI and cloud customers,” Marvell CEO Matt Murphy said in a statement.
Marvell said that the first application of Celestial technology would be to connect a system based on “large XPUs,” which are custom AI chips usually made by the companies investing billions in AI infrastructure.
On Tuesday, the company said that it could even integrate Celestial’s optical technology into custom chips, and based on customer traction, the startup’s technology would soon be integrated into custom AI chips and related parts called switches.
Amazon Web Services Vice President Dave Brown said in a statement that Marvell’s acquisition of Celestial will “help further accelerate optical scale-up innovation for next-generation AI deployments.”
The maximum payout for the deal will be triggered if Celestial can record $2 billion in cumulative revenue by the end of fiscal 2029. The deal is expected to close early next year.
In its third-quarter earnings on Tuesday, Marvell earnings of 76 cents per share on $2.08 billion in sales, versus LSEG expectations of 73 cents on $2.07 billion in sales. Marvell said that it expects fourth-quarter revenue to be $2.2 billion, slightly higher than LSEG’s forecast of $2.18 billion.
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