OpenAI’s fast-growing advertising business could begin taking share from Alphabet Inc.’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, Meta Platforms Inc (NASDAQ:META) and ByteDance’s TikTok, with Google Search facing the greatest exposure, according to D.A. Davidson technology research head Gil Luria.
Luria, who rates Google Hold and Meta Buy, said OpenAI’s advertising business has reached a $1 billion annualized revenue run rate, up from about $100 million just six months ago.
OpenAI Could Build A Tens-Of-Billions Ad Business
Luria told CNBC that OpenAI’s current advertising revenue remains small compared with the broader market, but its roughly 1 billion users give it substantial room to expand.
He believes OpenAI could eventually build an advertising business worth tens of billions of dollars as it shifts its consumer monetization mix toward advertising and away from its heavy reliance on subscriptions.
As OpenAI scales that business, Luria expects it to take advertising share from Google, Meta and TikTok.
Google Search Faces The Most Direct Threat
Luria sees Google Search as the most exposed because advertisers can use ChatGPT ads in a way that most closely resembles search advertising.
"From the ad buyer’s perspective, buying an ad on ChatGPT is the most equivalent to buying Google Search," Luria said.
He noted that 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 spending.
AI Could Also Pull Attention From Social Media
Luria said increased engagement with AI services could also pressure traditional media and social platforms.
As consumers spend more time learning, conversing and seeking advice through products from OpenAI, Anthropic and other AI providers, Luria expects some of that attention to come at the expense of traditional media and social media.
That dynamic could create additional pressure for Meta, TikTok and Google, particularly because Google also competes for consumer attention through YouTube.
Luria distinguished the consumer market from enterprise AI, saying consumer attention remains finite while enterprise spending represents a more open-ended growth opportunity.
Price Action: 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 on Monday, according to Benzinga Pro data.
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