Recent developments in artificial intelligence have once again created significant waves in the U.S. stock market. Chatbots from companies such as Alphabet (GOOGL.US) and startups like Anthropic and Altruist are reshaping industries ranging from software to financial services. However, one notable name has been largely absent from these discussions: OpenAI. The former kingmaker of AI has been perceived by the public as being overtaken by its competitors. Still, Wall Street is not ready to abandon the developer of ChatGPT and its related companies.

Brian Barbetta, Co-Head of the Technology Team and Co-Portfolio Manager for Global Innovation Strategy at Wellington Management, stated, "It is highly probable, if not certain, that OpenAI will launch a new model this year capable of setting trends again, reversing the perception that it has fallen behind. Stocks associated with OpenAI would naturally benefit from such a development."

In recent months, shares of companies linked to OpenAI have faced substantial pressure. So far this year, a portfolio of OpenAI-related stocks has declined by 13%, while a basket of Alphabet-related stocks has gained 21%. This makes the shift in market sentiment quite abrupt. Nevertheless, investment professionals are increasingly optimistic that OpenAI’s current slump is only temporary. If sentiment continues to improve, it could stimulate share price increases for its key partners, such as NVIDIA (NVDA.US), Oracle (ORCL.US), Microsoft (MSFT.US), CoreWeave (CRWV.US), and Advanced Micro Devices (AMD.US).

Last fall, Alphabet’s Gemini AI model received widespread acclaim, leading to a shift in perceptions about OpenAI’s leadership in the technology space. This year, Anthropic’s Claude model has taken center stage, triggering a sustained decline in the stock prices of companies viewed as its competitors. Barbetta commented, "Other AI companies are performing well too. But so far, we have not seen any evidence that their success has substantially harmed OpenAI in terms of growth or usage."

The next shift in market sentiment could reopen opportunities for OpenAI. According to a recent report, ChatGPT’s revenue trends are improving. Additionally, the company released a new version of its Codex AI coding agent earlier this month, which received high praise from CEO Sam Altman.

An upcoming key catalyst is OpenAI’s next round of funding, which will reflect investor willingness to fund the company’s loss-making operations, especially as Anthropic frequently makes headlines. OpenAI plans to raise up to $100 billion. At the same time, NVIDIA is reportedly close to finalizing a $20 billion investment deal, while Microsoft and Amazon are also said to be in investment talks.

Barbetta noted, "If capital flows in at a higher valuation, it indicates that investors who have conducted due diligence are satisfied with the company’s progress. This is a vote of confidence and could help mitigate near-term risks for companies in the supply chain."

In a report on Wednesday, Mizuho Securities’ trading desk described OpenAI’s funding momentum as "appearing quite constructive," which should help boost confidence in its ecosystem. Daniel O’Regan, Managing Director of Equity Trading at Mizuho Securities, wrote, "This stands in sharp contrast to the massive capital expenditure expectations announced by both Amazon and Google last week. Many short sellers interpreted this as increased competition for OpenAI, but that view appears to be reversing quickly."

For OpenAI’s competitors, the key questions are whether they can sustain fundraising and how quickly revenue can grow. HSBC estimates from November suggest a gap of approximately $207 billion between OpenAI’s revenue and its projected spending through 2033. If users shift to competing products, closing this gap will become even more challenging.

Thomas DiFazio, Chief ETF Strategist at Roundhill Financial, stated, "If they cannot address investor concerns about bridging the gap between spending commitments and revenue, we will see this reflected in the price movements of supply chain stocks." He added, "Anthropic’s rise has complicated perceptions about OpenAI’s ability to meet its obligations. If Anthropic becomes the leader, it would undoubtedly impact confidence in whether competing models can keep up with its growth or justify the premium associated with that growth."

Roundhill is adjusting its AI investment portfolio to acknowledge Alphabet’s leadership in AI, resulting in a slight reduction in its allocation to OpenAI-related stocks. However, DiFazio emphasized that market sentiment could shift back in favor of OpenAI, which would support its associated stocks.

Oracle (ORCL.US) is among the most prominent companies with a partnership with OpenAI. Since hitting a high in September, its stock has fallen by more than half. This weakness largely reflects market concerns about its relationship with OpenAI. Investors have questioned both the massive spending by Oracle to build cloud computing infrastructure—and the risks associated with its debt financing—as well as OpenAI’s ability to fulfill its spending commitments to Oracle.

Still, sentiment is beginning to change. DA Davidson recently upgraded Oracle’s stock rating, citing a more optimistic outlook on OpenAI. DiFazio remarked, "Given Oracle’s close ties with OpenAI, Oracle faces certain pressures. If OpenAI can demonstrate the effectiveness of its latest model, it could be crucial for Oracle."