Welcome to Eye on AI, with AI reporter Sharon Goldman. In this edition, I compare OpenAI to a house made of…well, no one really knows. Also: OpenAI launches a ChatGPT app store (we’ll see if it fares better than their previous custom GPT store)…Google debuts a surprisingly powerful Flash version of its Gemini 3 model…and the U.K. AI Safety Institute finds that a large percentage of Britons have used chatbots for emotional support. Talk about an expensive building project. OpenAI is reportedly raising tens of fresh billions at a $750 billion valuation, including $10 billion from Amazon. It is pouring money into compute — and literally pouring concrete into the data centers that power AI chips—which the company says it needs to keep constructing the towering stack of models and applications that more than 800 million users now rely on.
The cost has inspired both awe and deep unease. Industry observers watch OpenAI’s expansion the way they might watch the Empire State Building rise — with a budget that keeps climbing as fast as the structure itself. (The actual Empire State Building, it’s important to note, only cost about $700 million in today’s money and came in under budget.) And some skeptics are increasingly convinced that the entire edifice is a monument to hubris that will come tumbling down before long.
Here’s how I think about it: If OpenAI is a house, it’s still in the early stages of construction — but no one agrees what it’s made of. The plans are undeniably ambitious, pushing the structure to unprecedented heights. Is this a house made of cards? Of teetering wooden pillars? Of solid concrete? The question is whether whatever structure is being built can actually hold the weight already being placed on it.
The experts are split
That uncertainty has split the experts I’ve spoken to. Technology analyst Rob Enderle said he would like to see OpenAI resting on a firmer foundation. “I would feel much more comfortable if they had a much stronger base in some of the basics,” he told me, particularly around making products trustworthy enough for enterprise businesses to increase adoption. He added that OpenAI has at times “gone off the rails” in terms of direction, pointing out that the company’s original independent safety and ethics oversight structures have been sidelined since CEO Sam Altman was reinstated after being briefly fired in November 2023. These days, he argued, OpenAI is trying to compete with everyone at once; reacting to rivals rather than executing a clear roadmap; and spending heavily without clear prioritization.
A recognition that it may have become distracted by trying to do much at once was part of the reason OpenAI CEO Sam Altman declared a “code red” at the company two weeks ago, as Fortune reported in an in-depth new feature this week. The story looks at the why, the how, and the what of OpenAI’s “code red” and why Altman has warned the company to brace for “rough vibes” and economic headwinds in the face of increased competition from Google and OpenAI. Altman is trying to light a fire under his team to refocus on OpenAI’s core ChatGPT offerings over the coming weeks. But, according to Enderle, this is all very reactive and not strategic enough.
Commenting on the company’s constant shipping — from new AI models and a new image generation model, to a web browser, shopping features inside ChatGPT, and a new app ecosystem launched just this week — alongside a massive Stargate data-center buildout, Enderle compared OpenAI to Netscape and other dot-com companies that got rich too fast and lost strategic discipline.
“They’re running so fast, they’re not really focusing on direction very much,” he said.
Others, however, strongly disagree. Futurum Research founder and CEO Daniel Newman told me that concerns about OpenAI’s house collapsing miss the bigger picture. “This is a multi-decade supercycle,” he said, likening the company’s current phase of AI to Netflix’s DVD-by-mail era — a precursor to the true paradigm shift that followed. From the perspective of unmet demand and long-term value creation, Newman believes OpenAI’s massive compute investments are rational, not reckless.
“I would call what [OpenAI] has today very high-quality three-dimensional simulations and architectural renderings of a future,” Newman said. The real question, he added, is whether OpenAI can win enough market share to build the mansion it’s envisioning.
“I think OpenAI’s real goal is to become a hyperscaler,” Newman said. “They’ll have the infrastructure, the applications, the data, the workflows, the agentic tools — and people will buy everything they now get elsewhere from OpenAI instead. It’s an incredibly ambitious goal. There’s nothing to say it will work. But if it does, the numbers make sense.”
Searching for stickiness, or glue
Lastly, I spoke to Arun Chandrasekaran, principal analyst at Gartner Research, who chuckled and ducked away from my house metaphor, but was willing to address whether OpenAI was at least building on solid ground.
“They are indeed growing really fast, and they are making an enormous amount of commitments far beyond what any company [of their size] has ever made,” he said. “It is a risky bet, I would argue, a strategy that does not come without risks.” A lot of it is predicated on how sticky their products are, he pointed out, both at the model and application layer.
“It depends on the switching costs from a customer perspective, and a few other factors in terms of whether the growth really pans out the way they’ve envisioned,” he said. “You’re talking about a high growth company, but the expectation is that they’re going to have to grow at a much faster clip than what they’re growing. The expectations are enormous.”
Stickiness, I said. Like glue? Nails? Something to hold the house up?
He laughed. “Yes — like glue. I say stickiness, you say glue.” And with that, here’s more AI news.
Sharon Goldman sharon.goldman@fortune.com @sharongoldman
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