The AI Race Just Flipped — Why Smart Money Is Watching Google Again
OpenAI’s lead is shrinking faster than anyone expected. Here’s what the data actually shows.
TLDR;
ChatGPT has 900 million weekly users but growth is slowing (5% Aug-Nov 2025)
Google’s Gemini grew 30% in the same period — six times faster
Sam Altman issued a “code red” memo to OpenAI staff
OpenAI is raising at an $830 billion valuation while burning billions
The competitive dynamics are shifting — and that changes the investment thesis
The Data Behind The Headlines
Everyone celebrated when Sam Altman announced 800 million weekly active users at Dev Day. The number has since grown to nearly 900 million, and ChatGPT could cross 1 billion before the year ends.
Those are remarkable numbers. But they’re not the numbers that matter.
Here’s what the data actually shows:
The Growth Gap:
MAU Growth: ChatGPT +5% vs Gemini +30% (6x faster)
Time in App: ChatGPT +6% vs Gemini +120% (20x faster)
Market Share: ChatGPT losing 3 pts, Gemini gaining 3 pts
The Size Gap:
Weekly Users: ChatGPT ~900M vs Gemini (not reported)
Monthly Users: ChatGPT ~810M vs Gemini ~346M (2.3x larger)
ChatGPT is still the market leader by a wide margin. But in high-growth markets, trajectory matters more than position.
What Sam Altman’s “Code Red” Memo Actually Means
After seeing the Gemini growth numbers, Sam Altman sent an internal memo to OpenAI employees. The key message: “Stay focused through short-term competitive pressure” and “expect the vibes out there to be rough for a bit.”
For context, this is the CEO of a company valued at $500 billion — potentially raising at $830 billion — telling his team to brace for rough times.
Why the concern?
1. Growth is slowing at the worst possible time.
OpenAI is raising at a 40-50x revenue multiple based on a $20 billion annual run rate. That valuation only makes sense if growth continues at the current pace. A growth slowdown doesn’t just hurt the narrative — it threatens the entire funding model.
2. Google’s distribution advantage is kicking in.
Gemini is embedded in Android, Chrome, Google Workspace, and Search. Two times more U.S. Android users engage with Gemini through the operating system than through the standalone app. Google doesn’t need users to switch products. They just need to make Gemini the default experience.
3. The product gap is closing.
When Google launched Bard in 2023, it was clearly inferior to ChatGPT. Gemini 3 is a different story. It matches or exceeds ChatGPT on several benchmarks. For many use cases, the products are now functionally equivalent.
The Financial Picture
OpenAI’s financials are unlike anything we’ve seen in private tech:
Annual revenue run rate: $20 billion (up from $5.5B in late 2024)
Current valuation: $500 billion (October 2025 secondary)
Potential next round: $830 billion valuation, $100 billion raise
Revenue multiple: 40-50x (comparable to early-stage SaaS, not infrastructure)
Cash on hand: $64+ billion (after multiple mega-rounds)
The company is not yet profitable. OpenAI has said it expects to reach profitability around 2030. Between now and then, they’ll need to continue raising at aggressive valuations while building out infrastructure that costs billions per year.
That’s a fundamentally different business model than Google, which can fund AI development from existing cash flows.
Why Google’s Structural Advantage Matters
Google’s AI investment is expensive, but it’s funded from profitable operations. OpenAI’s AI investment is funded by venture capital and strategic partners.
This creates a different risk profile:
Google can afford a long war. They don’t need AI to generate returns on a specific timeline. They need AI to protect their search monopoly and enable new product categories. If Gemini takes 5 years to match ChatGPT’s user engagement, Google can wait.
OpenAI needs continuous wins. Their valuation depends on maintaining narrative momentum. A few quarters of slow growth — or a major product stumble — could make the next round significantly harder.
The distribution advantage compounds this. Google has immediate access to:
3+ billion Android devices
Billions of Chrome users
Millions of Google Workspace customers
The dominant search engine
OpenAI has to acquire each user individually through app downloads, direct visits, and API integrations.
Bottom Line
The AI race isn’t over. It’s entering a new phase.
ChatGPT is still the market leader, but Google is executing a classic catch-up playbook: improve the product, leverage distribution, and wait for the first mover to stumble.
For businesses, this competition is good news. Prices will fall. Products will improve. But it also means the market is moving faster than ever.
The question isn’t whether AI will transform your industry. The question is whether you’ll be ready when it does.