Amazon is exploring a substantial investment of up to $10 billion in OpenAI, the artificial intelligence laboratory behind ChatGPT, according to multiple reports from CNBC, Bloomberg, and The Information. The potential deal would not only provide OpenAI with significant capital but also establish a reciprocal relationship where OpenAI utilizes Amazon’s custom-designed AI chips.
Deal Details and Valuation
If finalized, the investment would value OpenAI at over $500 billion, marking another milestone in the rapid growth of the AI firm. This move comes as Amazon seeks to strengthen its position in the competitive AI landscape, having already committed $8 billion to Anthropic, a direct competitor to OpenAI. The company recently unveiled advancements in its Trainium AI chip series and continues to integrate AI capabilities into its Amazon Web Services (AWS) cloud platform.
Circular Investment Trends in AI
The proposed Amazon-OpenAI deal exemplifies a growing trend in the AI industry: circular investments. Major tech players like Amazon, Nvidia, and Microsoft are increasingly investing in AI startups while simultaneously locking them into long-term contracts for hardware, cloud computing, and chip usage. OpenAI’s recent transition to a for-profit structure has facilitated these deals, allowing it to diversify beyond its early backer, Microsoft (which currently holds a 27% stake).
Recent AI Partnership Examples
The circular nature of these deals is further illustrated by several recent transactions:
- March 2023: OpenAI invested $350 million in CoreWeave, which then used the funds to purchase chips from Nvidia—the same chips OpenAI uses for AI training.
- October 2023: OpenAI acquired a 10% stake in AMD and agreed to utilize their AI GPUs. A separate agreement with Broadcom also secured chip usage.
- November 2023: OpenAI signed a $38 billion cloud computing deal with Amazon, further solidifying the partnership.
Implications
This deal would reinforce the interconnectedness of the AI ecosystem, where hardware and software development are deeply intertwined. The trend of major tech companies investing in and securing exclusive access to emerging AI startups is likely to continue, shaping the future of AI innovation.
Amazon and OpenAI have not yet publicly confirmed the negotiations.
