OpenAI CEO Sam Altman has declared a "Code Red" status to prioritize improvements to ChatGPT while delaying other initiatives, including advertising plans, according to an internal memo. Although OpenAI has not publicly confirmed its advertising sales development, sources reveal the company is testing various ad formats, including e-commerce-related placements.

The move highlights OpenAI's struggle to maintain its market dominance as competition intensifies. Google (GOOGL.US) recently launched Gemini 3, its "smartest" AI model yet, which has outperformed ChatGPT in early benchmarks. Gemini 3 achieved record scores across multiple academic benchmarks, surpassing OpenAI's GPT-5.1 model in reasoning, factual accuracy, and mathematical capabilities.

Meanwhile, AI startup Anthropic has secured a $350 billion "strategic partnership" with Microsoft (MSFT.US) and NVIDIA (NVDA.US), signaling a shift in supply chain alliances that could erode OpenAI's computing advantage. User growth metrics also show tightening competition—Google reports 650 million monthly active users for Gemini, while Altman claimed ChatGPT reached 800 million weekly active users in October.

OpenAI's commercial momentum may slow as it refocuses on core technology. Despite launching multiple products (including AI browser Atlas and video tool Sora 2), the company struggles to monetize its massive user base. Only 5% of ChatGPT's 800 million monthly users pay the $20 subscription fee, generating insufficient revenue to offset its $13.5 billion H1 2025 net loss.

The valuation bubble concern looms as OpenAI's nearly $1 trillion valuation lacks corresponding profitability. Recent mega-deals with NVIDIA ($100 billion investment), Oracle ($300 billion cloud agreement), and AMD (equity warrants for next-gen chips) have drawn criticism for creating "circular financing" risks. Analysts warn these arrangements could collapse if AI adoption doesn't generate expected returns.

While some view recent AI stock corrections as healthy adjustments, regulatory bodies like the Bank of England and IMF have drawn parallels to the dot-com bubble. However, continued heavy investments by tech giants (Microsoft, Amazon, Meta, Google) suggest the AI development cycle remains in early stages.