OpenAI Advances Compute Margins While Google Launches Gemini 3

OpenAI has significantly improved its "compute margin" for paid products, reaching 70% in October 2025. This marks a substantial increase from 52% at the end of 2024 and double the rate from January 2024. Despite these gains and having better compute margins than Anthropic for paid accounts, OpenAI has not yet achieved profitability. The company actively promotes its business version and paid software features, though it faces massive spending commitments and high cash burn, a concern for investors. Major tech players are also making significant AI moves. Alphabet, Google's parent company, is back on the "Bullpen" watch list after launching Gemini 3, which sets a new standard for large language models and runs on custom silicon developed with Broadcom. This custom silicon could become a new revenue stream. Bank of America reiterated a Buy rating on Meta Platforms, expecting upcoming catalysts like its 2026 expense guidance and the launch of its Large Language Model in the first half of 2026 to ease investor worries about AI spending. Microsoft is also poised for major growth in 2026, with Wedbush analysts predicting AI-driven changes to Azure cloud services could add an estimated $25 billion to its revenue by fiscal year 2026. In the hardware sector, Advanced Micro Devices (AMD) remains a top growth stock, with Bank of America maintaining a Buy rating. AMD's MI300 accelerator chip is expected to generate $4 billion in revenue in 2024 and $10 billion in 2025. Applied Materials, a key supplier to chipmakers like Intel, reported Q4 fiscal 2025 revenue of $6.72 billion, a 3% year-over-year increase, driven by rising AI capital expenditure. Meanwhile, the broader AI investment landscape is seeing a "third wave" of widespread AI adoption across various sectors, creating new opportunities for value investors. Other companies are navigating the evolving AI market. SoundHound AI, despite triple-digit revenue growth, faces investor caution due to profitability concerns and a high valuation of about 27 times sales. Kodiak AI Inc. experienced unusual options trading, with call options increasing 100% compared to typical daily volume. In the crypto space, the new DeepSnitch AI project is attracting investors with 100% bonus offers, aiming to provide real-time market signals and AI-driven insights, with a full platform rollout expected in late January.

Key Takeaways

• OpenAI significantly improved its "compute margin" for paid products to 70% in October 2025, up from 52% at the end of 2024, surpassing Anthropic's margins.
• Despite improved margins, OpenAI is not yet profitable and faces high spending commitments and cash burn.
• Alphabet (Google) launched Gemini 3, a new standard for large language models, running on custom silicon developed with Broadcom, potentially creating a new revenue source.
• Meta Platforms is expected to launch its Large Language Model (LLM) in the first half of 2026, aiming to address investor concerns about AI spending.
• Microsoft is projected by Wedbush to add an estimated $25 billion to its revenue by fiscal year 2026, driven by AI-powered Azure cloud services and Copilot deployments.
• Advanced Micro Devices (AMD) is positioned for significant growth, with its MI300 accelerator chip expected to generate $4 billion in 2024 and $10 billion in 2025 revenue.
• Applied Materials, a supplier to Intel and other chipmakers, reported Q4 fiscal 2025 revenue of $6.72 billion, a 3% year-over-year increase, driven by increasing AI capital expenditure.
• The AI investment market is entering a "third wave" focused on widespread AI adoption across sectors like retail, healthcare, finance, and advertising.
• SoundHound AI's stock stumbled despite triple-digit revenue growth, with investor concerns over profitability and a high valuation of approximately 27 times sales.
• DeepSnitch AI, a new crypto project, is offering 100% bonus offers for investors, aiming to provide AI-driven market insights with a full platform rollout in late January.

OpenAI improves profit from business sales

OpenAI has significantly improved its "compute margin" for paid products this year, according to a report from The Information. This internal figure, which measures revenue after running models for paying users, reached 70% in October 2025. This is a big jump from 52% at the end of 2024 and double the rate from January 2024. While OpenAI is not yet profitable, the company is actively promoting its business version and paid software features to industries like financial services. The report also notes OpenAI has better compute margins than Anthropic for paid accounts.

OpenAI boosts business sales profit margins

OpenAI has improved its "compute margin" for paid products, according to a report from The Information. This internal measure of revenue after computing costs reached 70% in October 2025. This marks a significant increase from 52% at the end of 2024 and double the rate seen in January 2024. Despite these gains, the ChatGPT creator has not yet shown a profit, which concerns investors. The report also states that OpenAI has better compute margins than Anthropic for paid accounts.

Investor warns caution on SoundHound AI stock

SoundHound AI stock (NASDAQ:SOUN) recently stumbled after a strong performance, despite showing triple-digit revenue growth and record sales in the first nine months of 2025. Investor David Jagielski warns about the company's profitability, high valuation, and heavy reliance on acquisitions for growth. He notes that while Q3 2025 revenue grew 68%, the adjusted net loss only improved by 13%. Jagielski estimates the stock trades at about 27 times sales, which he considers a high price for an unprofitable business growing mainly through acquisitions. He advises investors to be patient and take a wait-and-see approach. However, Wall Street analysts maintain a Moderate Buy rating with an average price target of $17.33, suggesting a 57% upside.

Invest in AI's third wave with value ETFs

The BNY Investments team describes AI investing in three waves, with the world now entering the third wave. The first wave focused on AI infrastructure and hardware, while the second wave addressed power systems for scaling AI operations. The current third wave involves widespread AI adoption across many sectors, including retail, healthcare, finance, and advertising. This creates new opportunities for value investors to find companies integrating AI to boost productivity. The BNY Mellon Dynamic Value ETF (BKDV) offers an active way to invest in value stocks, using both quantitative and fundamental research. BKDV looks for companies with strong intrinsic value, solid business fundamentals, and positive momentum. As of October 10, 2025, BKDV has attracted about $127 million in net flows over the past three months.

Kodiak AI sees unusual call options trading

Kodiak AI Inc. (NASDAQ:KDK) experienced unusual options trading activity on Monday. Traders bought 9,853 call options for the company. This amount represents a 100% increase compared to the typical daily volume of 4,923 call options.

Bank of America keeps Buy rating on Meta

Bank of America analyst Justin Post reiterated a Buy rating on Meta Platforms Inc. (NASDAQ:META), believing upcoming catalysts could ease investor worries about AI spending. Meta's stock has lagged behind the NASDAQ and Alphabet in 2025, despite a 16% increase in its 2026 earnings estimates. Investors are concerned about rising operating costs and AI investments. However, Meta's 2026 expense guidance and the launch of its Large Language Model (LLM) in the first half of 2026 are seen as positive signs. The firm also suggests that management's comments on the cost of building LLMs versus licensing them could improve investor confidence. Meta continues to expand its advertising capabilities and invest significantly in artificial intelligence and the metaverse.

Applied Materials growth surges as AI demand rises

Applied Materials Inc. (NASDAQ:AMAT), a key supplier to the semiconductor industry, has seen its Growth score in Benzinga’s Edge Stock Rankings jump significantly. This surge reflects the company's strong recent quarterly performance, driven by increasing AI capital expenditure. Applied Materials provides essential equipment, software, and services to major chipmakers like Intel Corp., Taiwan Semiconductor Manufacturing Co. Ltd., and Micron Technology Inc. The company reported Q4 fiscal 2025 revenue of $6.72 billion, a 3% increase year-over-year. It also provided strong guidance for the current quarter, expecting revenues of $6.85 billion and adjusted earnings between $1.98 and $2.38 per share, both exceeding analyst estimates.

DeepSnitch AI offers bonuses amid crypto market shifts

The crypto market faces uncertainty as Jump Trading is hit with a $4 billion lawsuit related to the 2022 Terra collapse. Amid this, the new DeepSnitch AI project is attracting investors with 100% bonus offers. DeepSnitch AI aims to provide traders with real-time market signals, AI-driven insights, and on-chain intelligence through agents like SnitchFeed, SnitchGPT, and SnitchScan, which are already live. The platform's full rollout is expected in late January. While Dogecoin's price prediction remains uncertain, falling 4% recently, DeepSnitch AI offers utility-driven exposure with bonuses like DSNTVIP50 and DSNTVIP100 for larger purchases.

Bank of America keeps Buy rating on AMD

Bank of America analyst Vivek Arya maintained a Buy rating on Advanced Micro Devices Inc. (NASDAQ:AMD), though he lowered the price target to $260 from $300. Arya sees 2026 as the middle of a ten-year AI infrastructure growth period, positioning AMD as a top growth stock. The analyst expects AMD's MI300 accelerator chip to be a major growth driver, potentially generating $4 billion in revenue in 2024 and $10 billion in 2025. He also believes the company's data center segment will continue to grow due to high demand for AI and cloud computing. AMD's acquisition of Xilinx further strengthens its market position.

Wedbush predicts huge AI growth for Microsoft

Wedbush analyst Dan Ives expects Microsoft to see a major boost in growth during 2026, driven by artificial intelligence. Ives believes the market is underestimating the potential of Microsoft's Azure cloud services and its AI-driven changes. Wedbush maintains an Outperform rating and a $625 price target, calling Microsoft a "core winner" in the AI space. The firm's checks with partners show strong interest in Copilot and Azure deployments, which could add an estimated $25 billion to Microsoft's revenue by fiscal year 2026. Wedbush sees Microsoft as the leader in enterprise AI, expecting over 70% of its customer base to use AI features within three years.

Alphabet returns to watch list after AI advances

Alphabet, Google's parent company, is back on the "Bullpen" list of stocks to watch after a previous exit in March. The earlier decision was based on concerns about Google's Gemini competing with OpenAI's ChatGPT and a Justice Department lawsuit. Since then, Google launched Gemini 3, which sets a new standard for large language models and runs on custom silicon developed with Broadcom. This custom silicon could also become a new revenue source. Additionally, a court ruled in Alphabet's favor regarding the Chrome browser and its partnership with Apple. Jim Cramer suggests Google could be a better AI partner for Apple's Siri upgrade, especially as OpenAI faces massive spending commitments and high cash burn despite its high valuation.

Sources

• OpenAI sees better margins on business sales, report says
• OpenAI Sees Better Margins on Business Sales, Report Says
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• Kodiak AI Target of Unusually Large Options Trading (NASDAQ:KDK)
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• This Intel Supplier Sits At The Center of The AI Value Chain And The Market Is Finally Catching On: Growth Score Spikes - Applied Materials (NASDAQ:AMAT), Intel (NASDAQ:INTC)
• Dogecoin Price Prediction: Jump Trading Hit With Lawsuit As DeepSnitch AI Draws Investors With 100% Bonuses
• BofA Maintains Buy on AMD, Views 2026 as the Midpoint of a Decade-Long AI Infrastructure Cycle
• Why Wedbush expects a big AI-driven growth year for Microsoft By Investing.com
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