Amazon poised for major multibillion investment in OpenAI amid surging AI demand

Amazon is reportedly preparing to invest as much as 10 billion dollars in OpenAI, the artificial intelligence company behind ChatGPT, indicating intensifying competition in the high stakes market for AI development. The deal could value OpenAI at more than 500 billion dollars, according to sources familiar with the discussions. Amazon’s shares registered a modest rise of 0.6 percent following the initial coverage by a technology industry publication, which has since been corroborated by multiple outlets.

The talks coincide with OpenAI’s reported plans for an initial public offering, with a potential valuation possibly reaching 1 trillion dollars. The proposed investment would involve OpenAI making strategic use of Amazon’s proprietary Trainium accelerator chips, devices designed to compete directly with those from Nvidia and Google. The fluid nature of the negotiations suggests additional investors may participate, potentially expanding the scope of the fundraising effort.

Recently, OpenAI entered a 38 billion dollar agreement to procure cloud computing services from Amazon, enabling the AI developer to operate its workloads on the Amazon Web Services platform using Nvidia chips. Both organisations have described this arrangement as a long-term, strategic partnership. The rapid progress in artificial intelligence technology has driven demand for advanced computing infrastructure, positioning AWS as a critical resource for development and deployment.

In September, OpenAI established a partnership with Nvidia to build and utilise at least 10 gigawatts of AI data centre capacity using Nvidia’s chips, with Nvidia pledging up to 100 billion dollars in capital, commensurate with rollout milestones. OpenAI has also signed an agreement with Oracle worth up to 300 billion dollars for additional technology services, further underscoring the scale of its ambitions and the importance of external partners to its growth strategy.

Founded in 2015 as a not for profit research initiative, OpenAI rose to international prominence after the widely publicised launch of ChatGPT in 2022. The company recently completed a restructuring with its major shareholder Microsoft, converting to a public benefit corporation under non-profit control. This change was designed to improve OpenAI’s access to funding and computing resources as it expands into new markets while maintaining a commitment to public interest objectives.