Amazon (AMZN) Stock: Tech Giant Makes $10 Billion Play for OpenAI

TLDR

• Amazon is in talks to invest more than $10 billion in OpenAI, though the exact amount remains under negotiation
• The deal would include OpenAI using Amazon’s Trainium AI chips to compete with Nvidia and Google hardware
• Amazon already invested $8 billion in OpenAI competitor Anthropic and signed a $38 billion cloud services deal with OpenAI in November
• The investment would expand Amazon’s position in the generative AI market as companies race for computing power
• OpenAI completed restructuring in October, allowing partnerships beyond Microsoft, which holds a 27% stake in the company

Amazon is negotiating an investment in OpenAI that could exceed $10 billion. The talks remain fluid with details still under discussion.

The deal goes beyond a simple cash investment. OpenAI would use Amazon’s Trainium chips as part of the partnership.

These chips compete directly with hardware from Nvidia and Google. Amazon Web Services has designed AI chips since around 2015.

Amazon.com, Inc., AMZN

AWS launched its Inferentia chips in 2018. The company released the latest generation of Trainium chips earlier this month.

The investment would expand Amazon’s footprint in the booming generative AI market. The e-commerce giant already placed an $8 billion bet on Anthropic, OpenAI’s primary competitor.

Building Multiple AI Partnerships

Amazon signed a $38 billion cloud services deal with OpenAI in November. That marked OpenAI’s first major contract with the cloud infrastructure leader.

The deal came after OpenAI restructured in October. That move gave OpenAI more freedom to partner with companies outside its Microsoft relationship.

Microsoft has invested more than $13 billion in OpenAI since 2019. But OpenAI no longer needs Microsoft’s approval for compute providers.

Microsoft maintains a 27% stake in OpenAI. The tech giant secured exclusive rights to sell OpenAI models to its cloud customers.

Other major players are making similar moves. Microsoft announced plans to invest up to $5 billion in Anthropic last month.

Nvidia also plans to invest up to $10 billion in the startup. The AI sector shows no signs of slowing down.

Expanding Cloud and Chip Business

The potential OpenAI investment highlights the massive demand for computing power in AI. Companies are racing to build systems that match or exceed human intelligence.

OpenAI has committed more than $1.4 trillion to infrastructure in recent months. Those deals include agreements with Nvidia, AMD, and Broadcom.

The Information reported OpenAI wants to sell an enterprise version of ChatGPT to Amazon. Details remain unclear about integrating ChatGPT features into Amazon’s shopping apps.

OpenAI is preparing for an IPO that could value the company at up to $1 trillion. The offering would mark a major milestone for the AI company.

OpenAI completed a secondary share sale in October totaling $6.6 billion. That deal allowed current and former employees to sell stock at a $500 billion valuation.

The restructuring made OpenAI a public benefit corporation controlled by a non-profit. This removed major constraints on raising capital and securing computing resources.

Amazon’s Trainium chips have become critical infrastructure for AI companies. The hardware helps firms train models and meet growing demand for compute power.

The talks between Amazon and OpenAI show how quickly partnerships are forming in AI. Companies are moving fast to secure positions in the market.

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