A new wave of analyst commentary on Wall Street is reigniting discussion around what some are calling the “OpenAI puzzle” for Amazon and Google. Despite securing major cloud contracts with OpenAI, both tech giants are simultaneously navigating the competitive risks posed by the very same company.
Analysts at Morgan Street Research, in a note to clients on Friday, said investors are increasingly questioning how Amazon (AMZN) and Alphabet’s Google (GOOGL) should balance OpenAI’s value as a cloud customer against its rising competitive threat across search, e-commerce, and enterprise AI.
Shares of Amazon were slightly lower in early Friday trading, while Google stock moved higher as investors digested the report.
AI Cloud Deals With OpenAI Create Strategic Tension
Amazon and Google have both signed multi-year, high-value cloud computing agreements with OpenAI, securing massive workloads tied to model training, inference, and enterprise deployments.
However, OpenAI’s rapid advances—particularly through ChatGPT integrations—are increasingly viewed as competition for their core business lines.
Pressure on Google Search
ChatGPT continues to influence user behavior in information search, reducing reliance on traditional search engines for certain queries. Although Google Search remains dominant, analysts say generative AI has introduced a new competitive layer for the first time in decades.
E-Commerce Competition for Amazon
OpenAI’s partnerships with major retailers—enabling ChatGPT-based shopping and instant checkout—create a new front in digital commerce, an area Amazon has largely dominated.
This dual dynamic is what analysts describe as “a balancing act with high stakes.”
Analysts: ‘Success or Failure, The Risk Remains’
The Morgan Street report outlines a two-sided risk:
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If OpenAI continues to scale successfully, Amazon and Google face greater competitive pressure in search, shopping, cloud AI, and developer tools.
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If OpenAI falls short of growth expectations, the company may underuse its contracted server capacity, potentially leading to unused cloud inventory and lower industry-wide cloud margins.
OpenAI is estimated to represent well under 10% of cloud revenue for both companies—small, but strategically important.
Is There a Middle Ground?
Analysts argue a possible “neutral scenario” could emerge where:
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AI adoption expands the overall tech market,
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multiple AI giants coexist,
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and the economic gains spread across cloud providers rather than shifting entirely to new challengers.
Notably, the report highlights that Google’s search volumes have shown far more resilience than early predictions suggested when ChatGPT first launched.
Market Reaction: Google Climbs, Amazon Slips
Morgan Street reiterated Buy ratings on both Amazon and Google, citing:
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Amazon’s potential for accelerated AWS growth through enterprise AI demand.
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Google’s strong momentum with its Gemini 3 model and growing cloud footprint.
In Friday morning trading:
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Amazon (AMZN) dipped slightly to $217.10.
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Alphabet (GOOGL) gained more than 3%, reaching $300.12.
The broader tech market shows ongoing volatility as investors reassess whether the AI boom can maintain its current pace. Following Nvidia’s strong quarterly results, tech stocks briefly rallied before retreating on concerns about valuation and demand sustainability.
Year-To-Date Performance Diverges
Amazon and Google have moved in opposite directions throughout 2025:
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Google stock is up 55% YTD, outpacing most mega-cap tech peers.
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Amazon stock is down roughly 2% for the year, despite recovering earlier on strong AWS numbers.
Google maintains an elite Composite Strength Rating of 99, signaling robust fundamentals and technical performance. Amazon holds a solid 86, reflecting strength but lagging behind its major AI competitors.