A veteran investor tears into OpenAI 'chaos,' and says the market's smart money is pouring into small-cap stocks

• Hedge fund founder George Noble warns of "chaos" at OpenAI.
• He thinks the AI hype cycle is peaking and that the ChatGPT maker is a cautionary tale.
• Nobel thinks investors should focus on small and mid-cap stocks and avoid OpenAI-linked shares.

OpenAI has laid out some ambitious plans for 2026, but according to George Noble, the ChatGPT maker is a cautionary tale for the wider AI theme.

The hedge fund investor and former director of the Fidelity Overseas Fund doesn't think the AI startup will be able to justify its lofty growth projections, but more than that, he thinks investors should avoid the AI trade and shift their focus to other areas of the market before the tide turns.

The hedge fund founder laid out his thesis on OpenAI's red flags in a detailed X post on Tuesday, highlighting the "code red" moment announced by CEO Sam Altman in December 2025.

In his view, it all comes down to financials, specifically a math problem that isn't being widely discussed.

"It's going to cost 5x the energy and money to make these models 2x better," he said. "The low-hanging fruit is gone. Every incremental improvement now requires exponentially more compute, more data centers, more power."

Noble thinks OpenAI's annual revenue has to reach $200 billion by 2030 in order for the company's projections to be justified.

Pointing to the broader market, he advised AI startup founders to exit their companies while the boom is still going, adding that he believes the AI hype cycle is nearing its peak. He thinks investors should shift their focus to other parts of the market, as both the AI trade and the Magnificent Seven will be impacted if OpenAI begins to struggle.

"If you're exposed to the Magnificent 7 through AI infrastructure bets, consider trimming," he advised. "The smart money is rotating into sectors where valuations actually reflect fundamentals."

The particular sector in this case is small-mid cap stocks, which is where Noble sees real value and growth potential. He added that there is a value disconnect between Big Tech stocks and their small-cap peers, which are trading at near-decade lows.

For that reason, Noble sees an opportunity for investors to move away from the most crowded stocks that carried the AI trade in 2025 and focus on the lesser-known value plays that have been quietly making progress while AI-linked names continue to dominate the headlines.

"Markets can price risk," he noted. "But they can't price chaos.
And OpenAI is chaos dressed up in a $500 billion valuation."