Amazon’s stock saw a notable increase of 4% on Monday following the announcement of a significant $38 billion partnership with OpenAI, the developer behind ChatGPT. This deal allows OpenAI access to hundreds of thousands of Nvidia’s AI chips through Amazon’s cloud computing services.
As part of this collaboration, OpenAI will utilize Nvidia’s graphics processing units (GPUs) within Amazon’s AI servers. The companies indicated that OpenAI would begin leveraging Amazon Web Services (AWS) infrastructure immediately, aiming to scale fully to the computing capacity outlined in the agreement by the end of 2026.
This partnership is part of a growing trend for OpenAI, which has recently secured multiple agreements with major cloud service providers and chip manufacturers. Among its notable partnerships, OpenAI has entered into a $300 billion deal with Oracle, along with contracts with AI data center provider CoreWeave worth over $22 billion. Additionally, the company has agreements in place with Broadcom, AMD, and Nvidia.
While the flurry of deals has sparked concerns over a potential market bubble and raised questions about the sustainability of AI demand, OpenAI’s operational expenses are projected to exceed $1 trillion by the decade’s conclusion, while its revenues currently do not reflect this projection. This has led to skepticism regarding the company’s capability to fulfill its infrastructure commitments.
In a related move last week, OpenAI announced a partnership with Microsoft that will enable it to transition into a for-profit public benefit corporation, which could pave the way for an initial public offering (IPO). Reports suggest that OpenAI is preparing for an IPO that could value the company at $1 trillion.
Amazon also reported robust third-quarter earnings last week that surpassed analysts’ forecasts, contributing to a surge in its stock price to an all-time high. Further enhancing its position in the AI sector, AWS recently completed a major AI data center project and is set to supply 1 million custom AI chips to OpenAI’s competitor, Anthropic, by 2025.
This strategic move between Amazon and OpenAI signals a significant advancement in the competitive landscape of AI technology and highlights the growing importance of cloud infrastructure in supporting AI innovations.