Surprise? OpenAI To Connect With Google Cloud For AI Data Center Capacity, Says Report

OpenAI is reportedly adding Google's cloud computing unit to its data center partners, despite ChatGPT's competition with Google's search business. This move comes as OpenAI diversifies its cloud infrastructure, already partnering with Microsoft, Oracle, and CoreWeave, committing $11.9 billion to CoreWeave over five years, with a $350 million equity investment. Google's stock rose over 2% following the news, with the company reaffirming its $75 billion capital spending plan for 2025, including investments in AI and cloud computing capacity.

Analysis

OpenAI is reportedly diversifying its cloud infrastructure by adding Google Cloud to its roster of data center partners, a development considered notable given the competitive dynamic where OpenAI's ChatGPT poses a threat to Google's core internet search advertising business. This strategic move complements OpenAI's existing relationships with Microsoft, its primary cloud services provider and largest investor, Oracle for the 'Stargate' data center project, and CoreWeave, with whom OpenAI recently signed a five-year deal involving an $11.9 billion payment commitment and a $350 million equity investment in CoreWeave. The pursuit of additional cloud capacity, potentially through Google, is likely driven by the substantial computational demands for training AI models and processing applications, especially as capacity from Stargate and CoreWeave will take time to fully materialize. In response to this news, Google's stock (GOOGL) rose over 2% to approximately $179.80, even though it has seen a roughly 5% decline in 2025. Alphabet has reiterated its commitment to $75 billion in capital spending for 2025, largely directed towards bolstering its artificial intelligence and cloud computing capabilities, the latter of which saw a 28% revenue increase in Q1. From a technical standpoint, Google stock holds a strong IBD Composite Rating of 92 and an Accumulation/Distribution Rating of B, indicating moderate institutional buying. However, its Relative Strength Rating of 65 is below the typical benchmark of 80 for leading stocks, and the stock needs to form a new base to be considered technically actionable. Its 21-day Average True Range (ATR) is 2.8%, signifying moderate daily price volatility.

Key Decisions for Investors

• Investors should view the potential OpenAI partnership as a positive catalyst for Google Cloud, potentially enhancing its competitive standing and revenue outlook in the AI infrastructure space, and monitor for official confirmation and deal specifics.
• While Google's Q1 cloud revenue growth of 28% and its $75 billion AI-focused capital expenditure plan are encouraging, the stock's mixed technical indicators, such as a Relative Strength Rating of 65 and the current need for a new base, suggest a need for careful consideration of entry points.
• Consider the strategic implications of Google's ability to attract a major AI player like OpenAI, as this underscores its growing capabilities in cloud computing and its commitment to being a significant enabler of the AI revolution, which could be a long-term positive despite current stock technicals.