OpenAI Teams Up with Google Cloud: Can This Deal Cure Microsoft Dependency?

TradingKey - On July 17, OpenAI updated its vendor list on its official website, confirming Google Cloud as one of its partners. This move reflects OpenAI's significant step toward diversifying its computing resource supply and further reducing dependency on its long-term partner, Microsoft.

The partnership will prioritize supporting ChatGPT services and APIs in the United States, Japan, the Netherlands, Norway, and the United Kingdom, enhancing OpenAI's global computational infrastructure capabilities in key regions.

The cooperation agreement was formally finalized in May this year. Previously, negotiations stalled due to OpenAI's exclusive agreement with Microsoft. However, Microsoft adjusted its collaboration model at the beginning of the year, shifting from an exclusive supply arrangement to a priority access mechanism, which created conditions for Google Cloud's involvement.

OpenAI's diversification strategy is expanding: it previously partnered with SoftBank and Oracle on the "$500 billion Stargate" initiative, aiming to cover 75% of global AI computing demand by 2030. It also signed a $12 billion five-year agreement with CoreWeave to focus on customized AI chips and distributed computing architecture development.

The addition of Google Cloud increases OpenAI's computing resource diversity, strengthens its bargaining power, and reduces dependency on a single supplier as well as supply chain risks.

This collaboration highlights the massive demand for cloud computing resources in large-scale AI model training, where cloud infrastructure has become a core competitive capability for major AI enterprises.

On July 16, Alphabet (GOOGL) shares closed at $182.97, gaining 0.53% intraday. TradingKey data shows the current Wall Street average target price is $202.948, implying an 11.51% upside potential from the current level.

(Source: TradingKey)