Recent developments in artificial intelligence have created significant waves in the stock market, with AI products from companies like Alphabet, Anthropic, and Altruist reshaping industries ranging from software to financial services. However, one name has notably faded from market focus: OpenAI.

The former benchmark in the AI field appears to have been overtaken by competitors, at least according to prevailing market sentiment. Nevertheless, Wall Street has not abandoned the developer of ChatGPT nor the group of companies deeply intertwined with it.

Brian Barbetta, Co-Head of the Wellington Management Technology Team and Co-Portfolio Manager for the Global Innovation Strategy, stated, "It is highly probable that OpenAI will launch a new model at some point this year, reclaiming market attention and reversing the perception that it has fallen behind. At that time, stocks associated with OpenAI are also expected to benefit."

In recent months, shares of companies linked to OpenAI have faced substantial pressure. A basket of OpenAI-related stocks has declined by 13% year-to-date, while a comparable basket of Alphabet-related stocks has surged by 22%. A shift in market sentiment is urgently needed.

On Thursday, the OpenAI stock basket rose by 0.2%, while the Alphabet basket jumped by 1.2%.

However, investment professionals increasingly believe that OpenAI's lag is a temporary phenomenon. Should market sentiment continue to improve, shares of key partners such as NVIDIA, Oracle, Microsoft, CoreWeave, and Advanced Micro Devices could be poised for a rebound.

Market perception of OpenAI's technological leadership began to shift after Alphabet's Gemini model received widespread acclaim last autumn. This year, Anthropic's Claude model has taken center stage, repeatedly triggering declines in the stock prices of companies seen as competing with OpenAI.

Barbetta commented, "Other AI companies are performing well, but so far, there is no evidence that their success has substantially impacted OpenAI in terms of growth or usage volume."

The next shift in sentiment could reopen opportunities for OpenAI. Recent reports indicate that ChatGPT's revenue trends are improving. Earlier this month, the company also released a new version of its Codex AI programming assistant, which received strong endorsement from CEO Sam Altman.

The next key catalyst is a new round of financing for OpenAI, which would reflect investor confidence in the still-unprofitable company, especially against the backdrop of Anthropic's rising prominence. OpenAI plans to raise up to $100 billion. Reports suggest NVIDIA is close to finalizing a $200 billion investment, with Microsoft and Amazon also in discussions to invest.

Barbetta noted, "If financing is completed at a higher valuation, it indicates that investors who have conducted due diligence acknowledge its progress. This is a vote of confidence and could, at a minimum, reduce short-term risks for companies within its ecosystem."

Mizuho Securities' trading desk wrote in a Wednesday report that OpenAI's financing momentum "appears positive," further improving market sentiment towards its ecosystem.

Daniel O'Regan, Managing Director of Equity Trading at Mizuho, wrote, "This stands in stark contrast to last week when both Amazon and Google announced massive capital expenditure guidance. Many short sellers interpreted this as intensified competition for OpenAI, but that trading rationale has quickly reversed."

The core issue for companies in OpenAI's ecosystem lies in its ongoing ability to raise capital and the pace of its revenue growth. According to HSBC calculations from last November, there is an approximately $207 billion gap between OpenAI's revenue and expenditure plans from now until 2033. If users migrate to competing products, bridging this gap will become even more challenging.

Thomas DiFazio, Chief ETF Strategist at Roundhill Financial, stated, "If OpenAI cannot answer investor questions about how it will close the spending-revenue gap, this will be reflected in the stock performance of companies in its ecosystem."

He added, "The rise of Anthropic has complicated the market's view on whether OpenAI can deliver on its promises. If Anthropic becomes the leader, it will inevitably impact confidence in OpenAI's ability to keep up with growth or whether its growth premium is justified."

Roundhill is adjusting its AI investment portfolio to reflect Alphabet's AI leadership, marginally reducing exposure to OpenAI-related stocks. However, DiFazio emphasized that market sentiment could shift back in favor of OpenAI, providing support for related stocks.

Oracle is one of the most prominent companies closely tied to OpenAI. Its stock price has halved since its peak last September, largely reflecting market concerns about its partnership with OpenAI. Investors are worried both about Oracle's massive investments in expanding its cloud computing infrastructure (and the additional risk from debt issuance) and about OpenAI's ability to fulfill its spending commitments to Oracle.

However, this sentiment is beginning to change. D.A. Davidson recently upgraded its rating on Oracle, citing a more optimistic view on OpenAI.

DiFazio said, "Oracle has faced some pressure due to its close relationship with OpenAI. If OpenAI can demonstrate its capabilities with a new model, it would be crucial for Oracle."

Other significant technology news includes SoftBank Group returning to profitability for the quarter, with Masayoshi Son's investment in OpenAI paying off due to valuation increases, solidifying his position as an OpenAI investor. Cisco issued a weaker-than-expected quarterly profit outlook, sparking concerns that rising memory chip prices are impacting its profits. Southeast Asian ride-hailing and delivery platform Grab provided a full-year revenue forecast that fell short of expectations, indicating pressure from weak consumer spending. WhatsApp stated that the Russian government is implementing a "comprehensive ban" on its services to promote the use of official domestic applications. Samsung has begun mass production of its latest HBM4 memory chips, shipping them to an undisclosed client, taking a lead in the high-end AI memory market.

Earnings preview for Thursday includes pre-market reports from Diebold Nixdorf, IPG Photonics, and TripAdvisor. Post-market reports will come from Cohu, Tucows, Applied Materials, Arista Networks, PDF Solutions, Pinterest, SPS Commerce, Twilio, Tyler Technologies, and Yelp.