OpenAI's advertising engine is revving up fast, and according to one Wall Street analyst, the big tech giants should probably check their rearview mirrors.
Gil Luria, who heads technology research at D.A. Davidson, says OpenAI's ad business has hit a $1 billion annualized revenue run rate. That's a tenfold jump from just $100 million six months ago. And while that's still a drop in the bucket compared to the overall digital ad market, Luria thinks it's just the beginning.
Speaking to CNBC, Luria laid out a scenario where OpenAI could eventually build an advertising business worth tens of billions of dollars. The key driver? A shift in how OpenAI makes money. Right now, the company relies heavily on subscriptions, but Luria expects it to lean more into advertising as it monetizes its roughly 1 billion users.
"From the ad buyer's perspective, buying an ad on ChatGPT is the most equivalent to buying Google Search," Luria said.
That's a direct shot at Google's core business. Luria, who rates Alphabet's stock a Hold, sees Google Search as the most exposed to OpenAI's ad push. Why? Because advertisers can use ChatGPT ads in a way that closely mirrors search advertising. If you're a marketer looking to reach people actively seeking information, ChatGPT is starting to look like a viable alternative to the search giant.
Google monetizes its consumer business primarily through advertising, while OpenAI currently generates roughly 90%-95% of its revenue from subscriptions and only a small portion from ads. As that mix shifts, Luria expects OpenAI to compete more directly for a finite pool of consumer advertising dollars.
But it's not just Google that should be worried. Luria, who rates Meta a Buy, also sees pressure building on social media platforms. As consumers spend more time learning, conversing, and seeking advice through AI products from OpenAI, Anthropic, and others, some of that attention is likely to come at the expense of traditional media and social media.
That dynamic could squeeze Meta, TikTok, and even Google's YouTube, which competes for consumer attention in its own right.
Luria draws a clear line between the consumer market and enterprise AI. Consumer attention is finite, he argues, while enterprise spending represents a more open-ended growth opportunity. In other words, the battle for your eyeballs is a zero-sum game, and AI is increasingly winning.
The market seems to be taking note. On Monday, Alphabet shares were down 2.35% at $338.46, and Meta Platforms shares were down 1.14% at $571.44 at the time of publication.
So, what's the takeaway? OpenAI's ad business is no longer a curiosity. It's a real, growing force that could reshape the digital advertising landscape. For Google, the threat is existential. For Meta and TikTok, it's a slow bleed of attention. And for advertisers, it's a new option that looks a lot like the old one, just with a chatbot attached.
