Alphabet Stock Slips As OpenAI Expands Model Availability To Google Cloud

Google will fund a 1GW virtual power plant with Voltus on the PJM grid, adding 1,070MW to a prior 100MW agreement. The plant aggregates spare capacity from businesses and homes, reducing grid strain and saving participants money. Google aims to support grid reliability and local communities. This is Google's second major power deal this month, following an 890MW nuclear power agreement.

Tucows' Ting Fiber subsidiary will transfer a $322.8M fiber lease in Colorado Springs to Google Fiber by March 31, 2027. The agreement replaces Ting as the tenant for the remaining lease term, with Tucows' parent guaranty ending post-closing. The deal is subject to customary conditions.

Google and Voltus expanded their agreement to build a 1-gigawatt virtual power plant in the PJM grid region. The project aggregates flexible energy capacity from businesses and homes, offering economic benefits to participants. This follows a 100-megawatt agreement earlier this year, marking a significant expansion.

Alphabet's (GOOGL) Google has partnered with OpenAI to offer its latest models, including GPT-6 Astra and Codex, on Google Cloud. This deal allows enterprise customers to access OpenAI's tools through Google Cloud's Model Garden and Marketplace, leveraging existing spending commitments. The move aims to strengthen Google Cloud's position as a neutral AI platform, potentially increasing enterprise relationships and revenue, despite competing with OpenAI in generative AI.

Alphabet (GOOGL) shares fell 1.72% to $334.41 on Wednesday. CEO Sundar Pichai noted Google Cloud is sacrificing short-term revenue to prioritize AI development. The company expects $195B-$205B in capital expenditures this year, with Q2 Google Cloud revenue up 82% to $24.8B. Analysts remain cautious, and Alphabet faces legal pressure over AI model claims. The company will report Q3 earnings on October 28.

Bank of America forecasts Alphabet (GOOGL) will spend $300B on capital expenditures in 2027 for AI and data centers. While maintaining a Buy rating and $430 price target, the bank questions if Google's AI and cloud businesses can generate enough cash to justify the spending. Alphabet reported $119.8B in Q2 sales, with Google Cloud growing 82%. BofA expects Q3 sales of $111.4B and negative free cash flow of $12.4B, higher than analyst estimates.