BofA Says AI Hyperscalers Ultimately Face Risks Due to OpenAI

(Seoul=Yonhap Infomax) Yong Wook Kwon – Bank of America (BofA) has warned that artificial intelligence (AI) hyperscalers—large-scale technology giants—could ultimately face challenges stemming from OpenAI’s massive capital expenditure cycle.

In a statement to Business Insider on the 22nd (local time), BofA said, “Hyperscalers are rushing to sign contracts with OpenAI, but this has trapped them in a competitive relationship with the company.”

BofA noted, “OpenAI is spending more on investments than its anticipated revenues,” adding, “If OpenAI succeeds, it will pose an even greater competitive threat to technology companies.”

At the same time, the bank cautioned, “If OpenAI fails to meet its internal targets, the contracted computing resources may be underutilized, resulting in excess capacity and potentially reducing profits across the cloud industry.”

According to BofA, OpenAI has signed large-scale agreements with Microsoft (NASDAQ: MSFT), Google (NASDAQ: GOOGL), Amazon Web Services (NASDAQ: AMZN), and Oracle (NYSE: ORCL).

BofA analyzed, “OpenAI will continue to grow and eventually become a competitive threat to hyperscalers in both enterprise and consumer markets, including areas such as advertising and agent-based transaction platforms.”

The bank further projected, “OpenAI is likely to enter marketing and advertising spending in the near future, which could negatively impact major players like Meta (NASDAQ: META) and YouTube.”

BofA stated, “Overall, OpenAI is targeting $41 billion in new product revenue by 2030, which will likely include advertising and e-commerce fees. This would account for about 8% of our 2030 forecast for the advertising and e-commerce fee industry.”

Despite the short-term benefits that contracts with OpenAI may bring to companies—such as surges in share prices—BofA argued that OpenAI should be recognized as a threat to large technology firms.

ywkwon@yna.co.kr

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