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Behind Sam Altman’s ‘Code Red’ Response to OpenAI Competitors’ Gains

Yahoo Finance•December 06, 2025 at 12:30 AM•Full Content

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Detected Companies & Sentiment

Alphabet Inc.

"strong competitive advantage"

NVIDIA Corporation

"mixed signals"

Gist

OpenAI faces intense pressure from Google's Gemini 3 and rival AI advances, prompting CEO Sam Altman to declare a 'code red' and prioritize core product development amid rising financial and competitive challenges.

LLM Summary

Sam Altman declared a 'code red' at OpenAI amid growing competition from Google's Gemini 3, which is gaining users and outperforming ChatGPT in benchmarks. OpenAI is shifting focus to its core product, facing massive projected losses and a $207 billion funding gap by 2030, while Google's use of in-house TPUs threatens Nvidia's dominance in AI hardware.

Full Article Content

Behind Sam Altman’s ‘Code Red’ Response to OpenAI Competitors’ Gains

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Sean Craig

Wed, December 3, 2025 at 12:01 AM EST 3 min read

[NVDA

-0.53%](/quote/NVDA/ "NVDA")

* OPAI.PVT

[GOOG

+1.16%](/quote/GOOG/ "GOOG")

[CRM

+5.30%](/quote/CRM/ "CRM")

ANTH.PVT

“I expect the vibes out there to be rough for a bit.” So said Sam Altman in a memo to staff last month. And the vibe shift has indeed been fast and furious.

OpenAI’s leader declared a “code red” to staff in a new memo, first reported by The Information, as the world’s most valuable startup comes under siege from a wave of emergent AI rivals.

The Replacements

--------------------

Altman’s memo went out just as Google launched its impressive new Gemini 3. The Alphabet subsidiary said its new chatbot bested ChatGPT and Anthropic’s Claude in a series of key tests, and Altman conceded the release could “create some temporary economic headwinds” for OpenAI. Take it from one convert, Salesforce CEO Marc Benioff, who last month tweeted: “I’ve used ChatGPT every day for 3 years. Just spent 2 hours on Gemini 3. I’m not going back.”

ChatGPT still maintains a massive, 800 million-strong and growing weekly user base and is backed by OpenAI’s world-class research. In this week’s memo, Altman promised the release of a new reasoning model next week that bests Gemini. Still, the Google chatbot’s user numbers are soaring, up to 650 million in October from 450 million in July. The search giant has the built-in advantage of offering Gemini through integration with its other products. Calling it a “critical moment,” Altman will focus on improving ChatGPT at the expense of other projects including health, shopping, and personal assistant AI agents. A quick look at the financials makes clear why shoring up the company’s core product is imperative:

Anthropic, whose Claude has won business customers for its powerful coding capabilities, forecasts it will break even in 2028, according to documents obtained last month by The Wall Street Journal*. OpenAI, meanwhile, expects $74 billion in operating losses that year, equal to 75% of revenue, and doesn’t foresee a profit until 2030.

* With $1.4 trillion in computing commitments through 2033, OpenAI needs continued growth to keep up with its expected cash burn. HSBC analysts determined that, even if its revenue reaches $200 billion by 2030 (up from some $20 billion this year), the company will need to bridge a $207 billion shortfall with debt, equity fundraising or expedited revenue growth.

It’s All Connected: Google’s AI advances are delivering headaches all around. The search giant trains Gemini on its own Tensor Processing Units (TPUs), rather than semiconductor giant Nvidia’s graphics processing units (GPUs) that are popular with rivals. While Nvidia’s chips are more versatile, the purpose-built AI TPUs come cheaper and use less power, and Google’s AI rise has led to some jitters among investors. Nvidia is down roughly 1.2% since Gemini 3 was released on November 18, while Broadcom — which helped develop Google’s chips — is up 11.5%.

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Behind Sam Altman’s ‘Code Red’ Response to OpenAI Competitors’ Gains
====================================================================

Error in rendering player

Error Code: 400-404

Session Id: u82bfsuj (Pls: fd6b18bf-e12f-44cd-8e15-86a7185b9955)

Sean Craig

Wed, December 3, 2025 at 12:01 AM EST 3 min read

[NVDA

-0.53%](/quote/NVDA/ "NVDA")
* [OPAI.PVT](/quote/OPAI.PVT/ "OPAI.PVT")

[GOOG

+1.16%](/quote/GOOG/ "GOOG")

[CRM

+5.30%](/quote/CRM/ "CRM")

[ANTH.PVT](/quote/ANTH.PVT/ "ANTH.PVT")

“I expect the vibes out there to be rough for a bit.” So said Sam Altman in a memo to staff last month. And the vibe shift has indeed been fast and furious.

OpenAI’s leader declared a “code red” to staff in a new memo, first [reported](https://www.theinformation.com/articles/openai-ceo-declares-code-red-combat-threats-chatgpt-delays-ads-effort) by The Information, as the world’s most valuable startup comes under siege from a wave of emergent AI rivals.

**The Replacements**
--------------------

Altman’s memo went out just as Google launched its impressive new Gemini 3. The Alphabet subsidiary [said](https://blog.google/products/gemini/gemini-3/) its new chatbot bested ChatGPT and Anthropic’s Claude in a series of key tests, and Altman conceded the release could “create some temporary economic headwinds” for OpenAI. Take it from one convert, Salesforce CEO Marc Benioff, who last month [tweeted](https://x.com/Benioff/status/1992726929204760661): “I’ve used ChatGPT every day for 3 years. Just spent 2 hours on Gemini 3. I’m not going back.”

ChatGPT still maintains a massive, 800 million-strong and growing weekly user base and is backed by OpenAI’s world-class research. In this week’s memo, Altman promised the release of a new reasoning model next week that bests Gemini. Still, the Google chatbot’s user numbers are soaring, up to 650 million in October from 450 million in July. The search giant has the built-in advantage of offering Gemini through integration with its other products. Calling it a “critical moment,” Altman will focus on improving ChatGPT at the expense of other projects including health, shopping, and personal assistant AI agents. A quick look at the financials makes clear why shoring up the company’s core product is imperative:

* Anthropic, whose Claude has won business customers for its powerful coding capabilities, forecasts it will break even in 2028, [according](https://www.wsj.com/tech/ai/openai-anthropic-profitability-e9f5bcd6?mod=DJ_TDU) to documents obtained last month by *The* *Wall Street Journal*. OpenAI, meanwhile, expects $74 billion in operating losses that year, equal to 75% of revenue, and doesn’t foresee a profit until 2030.
* With $1.4 trillion in computing commitments through 2033, OpenAI needs continued growth to keep up with its expected cash burn. HSBC analysts [determined](https://www.ft.com/content/23e54a28-6f63-4533-ab96-3756d9c88bad) that, even if its revenue reaches $200 billion by 2030 (up from some $20 billion this year), the company will need to bridge a $207 billion shortfall with debt, equity fundraising or expedited revenue growth.

**It’s All Connected:** Google’s AI advances are delivering headaches all around. The search giant trains Gemini on its own Tensor Processing Units (TPUs), rather than semiconductor giant Nvidia’s graphics processing units (GPUs) that are popular with rivals. While Nvidia’s chips are more versatile, the purpose-built AI TPUs come cheaper and use less power, and Google’s AI rise has led to some jitters among investors. Nvidia is down roughly 1.2% since Gemini 3 was released on November 18, while Broadcom — which helped develop Google’s chips — is up 11.5%.

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