In a move that’s turning heads across the tech industry, OpenAI has struck a groundbreaking cloud computing deal with Google, its direct rival in the AI race. According to insider sources reported by Reuters, the agreement was finalized in May 2025 and will see Google Cloud provide vital computing infrastructure for OpenAI’s rapidly expanding artificial intelligence operations.
This unlikely partnership is not only surprising but also significant. It signals a major shift in how AI companies are navigating the massive demand for computing power—or what insiders refer to as “compute.” OpenAI, the creator of ChatGPT, has traditionally relied heavily on Microsoft Azure to power its data infrastructure. But with demand exploding due to the rapid rise of AI tools, OpenAI is spreading its wings—diversifying beyond Microsoft and adding Google to its roster of cloud partners.
A New Era of Strategic Collaboration
While the two companies are fierce competitors—especially in generative AI and chatbot dominance—this deal is a win-win. For Google, it strengthens the credibility of its cloud platform, which has already signed major clients like Apple and AI startups Anthropic and Safe Superintelligence. For OpenAI, the deal helps alleviate compute bottlenecks, ensuring its AI models can continue to scale and improve.
Google’s stock jumped 2.1% following the announcement, while Microsoft dipped slightly by 0.6%. Analysts at Scotiabank called the deal “somewhat surprising,” noting it shows both companies are willing to put rivalry aside in the face of shared technological challenges.
Behind the Scenes of the Power Play
This move also follows a series of strategic partnerships OpenAI has made in recent months, including a $500 billion infrastructure initiative called Stargate, developed alongside Oracle and SoftBank, and multi-billion dollar agreements with CoreWeave for additional compute resources.
According to Reuters, the Google deal was in the works for months but was delayed by contractual ties between OpenAI and Microsoft. Now that those restrictions are loosening—alongside talks of renegotiating Microsoft’s equity stake in OpenAI—new alliances are becoming possible.
High Stakes and Higher Costs
For Google, the timing couldn’t be more critical. The tech giant is investing heavily in its tensor processing units (TPUs), AI chips once reserved for internal projects. These are now powering external partnerships and helping Google compete directly with Amazon and Microsoft in the cloud space.
Alphabet, Google’s parent company, is facing pressure to justify its projected $75 billion AI-related capital spend in 2025. Selling compute to competitors like OpenAI could help offset that—but it also puts strain on internal capacity, potentially impacting Google’s own AI projects.
As the AI arms race accelerates, this collaboration shows that even the fiercest rivals can come together when the stakes—and the compute requirements—are high enough.
