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The OpenAI Contagion: Quantifying the Blast RadiusThe market has a term for when a domina... The OpenAI Contagion: Quantifying the Blast Radius
The market has a term for when a dominant technology company enters a new sector and summarily erases billions in shareholder value from the incumbents: "getting Amazon'd." It’s a familiar narrative of disruption, a pattern etched into the stock charts of industries from groceries to pharmaceuticals. A new variant of this contagion is now propagating through the market, and my analysis suggests it’s both more virulent and operates on a different vector of attack. The pathogen, of course, is OpenAI.
The phenomenon of "getting OpenAI'd," as some have begun to call it, is not a future projection; it is a clear and present pattern of value destruction across the public markets. Unlike the slow, methodical encroachment of a traditional competitor, the OpenAI effect is triggered by press releases, product demos, and sometimes, nothing more than a cryptic post on social media. It functions less like a business strategy and more like a systemic shock. The data, when aggregated, is unambiguous.
Consider the case of Chegg, the ed-tech subscription service. In May 2023, the company didn’t just report earnings; it made a confession. CEO Dan Rosensweig stated that ChatGPT was having a direct impact on new customer growth. The market’s reaction was not a gradual repricing. It was a capitulation. The stock fell by nearly half—to be more exact, 48% in a single session. This wasn't a response to a new Chegg competitor launched by OpenAI. It was a reaction to the simple existence of a foundational model that was good enough for students to use as a substitute. The product wasn't even designed to compete with Chegg. It simply did.
This pattern of incidental annihilation is a recurring theme. In February 2024, OpenAI demonstrated Sora, its text-to-video model. The immediate casualty was Adobe, a titan of creative software. Its stock dropped over 7% on the news, erasing billions in market capitalization. The correlation is direct and undeniable. Sora was positioned as a threat to Adobe’s own AI video generator, Firefly, and investors immediately priced in the risk of future competition from a private, well-capitalized entity with a demonstrated record of leapfrogging established players. The fact that Adobe had its own partnership with OpenAI was irrelevant to the sell-off. The market saw a predator, not a partner.
The Pre-emptive Sell-Off: Pricing Capability, Not Products
The Threat of Latent Capability
What separates the OpenAI contagion from previous disruptive events is the market’s reaction to latent, rather than actualized, threats. The most compelling evidence for this is the broad sell-off in Software-as-a-Service (SaaS) stocks on September 30th. OpenAI announced a suite of internal AI tools for functions like sales, customer support, and document management. These were not products for sale. They were not being offered to other companies. Yet, the disclosure was sufficient to trigger significant declines in HubSpot, Docusign, ZoomInfo, and even the behemoth, Salesforce.
Why? Because the market is no longer just reacting to product launches. It is reacting to demonstrations of capability. The moment OpenAI proved it could build internal tools that replicate the core functions of these multi-billion dollar public companies, the terminal value of those companies was immediately repriced downward. Investors are extrapolating. If OpenAI can build these tools for itself, it is a trivial next step to productize and sell them. This aligns with a cryptic message from founder Sam Altman in August, where he mentioned "entering the fast fashion era of SaaS very soon." The market interpreted that not as a boast, but as a forward-looking statement of intent. The sell-off was the corresponding adjustment of risk.
The blast radius even extends to second-order effects in hardware. When Nvidia announced a $100 billion investment to accelerate OpenAI’s data center buildout, the immediate loser wasn’t another AI software firm. It was Broadcom. The stock dropped almost 2% on the news, a significant move for a company of its scale. The market’s logic is that a tighter integration between the premier AI chip designer (Nvidia) and the premier AI model developer (OpenAI) creates a consolidated power center that disadvantages other players in the semiconductor ecosystem.
And here, I have to admit, the data gets murky in a way I rarely see. While we can precisely track the public market value OpenAI is displacing, its own financial reality is almost entirely opaque. One of my primary sources for this analysis was a document bizarrely titled "OpenAI wraps $6.6 billion share sale at $500 billion valuation," dated October 2nd, 2025. The content of the document was, inexplicably, the standard cookie policy for a media company. This is the kind of data discrepancy that would typically invalidate a source. But in this case, the erroneous title itself serves as a crucial, if anecdotal, data point. It speaks to the private, often chaotic, flow of information surrounding OpenAI's valuation, which reportedly continues to escalate in secondary markets even as it inflicts damage on the public ones. We are measuring the shockwaves without a clear view of the epicenter.
This leads to a necessary methodological critique. Are we merely observing investor panic, an irrational herd behavior driven by hype? It's a valid question. Stock prices are, after all, measures of sentiment as much as fundamentals. However, the consistency of the pattern suggests otherwise. The reaction is not random. It is highly specific, triggered by discrete events, and logically correlated to the business models of the affected companies. A video demo hits the creative software sector. An admission of user substitution hits the ed-tech sector. The unveiling of internal business tools hits the enterprise SaaS sector. This is not noise; it is a clear signal. The market is efficiently pricing in a new, powerful, and unpredictable source of systemic risk.
The core of the issue is that OpenAI does not have to play by the same rules as the public companies it is disrupting. It does not have to worry about quarterly earnings, shareholder activism, or telegraphing its product roadmap years in advance. It can operate in relative secrecy, funded by enormous private capital injections (like the reported $6.6 billion tender offer), and unleash disruptive technology with little warning. For any public company whose business model can be replicated by a large language model, the risk profile has fundamentally, and perhaps permanently, changed.
The Asymmetric Ledger
My final analysis is this: we are witnessing a massive, one-sided transfer of value. But it isn't a transfer in the traditional sense. A private entity, its own valuation soaring in opaque secondary share sales, is systematically destroying tangible, verifiable public market value. The gains are concentrated and private; the losses are distributed and public. For every dollar of enterprise value created within OpenAI's private ecosystem, it appears to be erasing several dollars of value from the public markets it threatens. This is the asymmetric ledger that investors must now learn to balance.
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