Amazon to invest $10B in OpenAI and provide chips for ChatGPT maker: report

OpenAI is in early-stage discussions to raise at least $10 billion from Amazon.com Inc., a move that could significantly deepen ties between the ChatGPT maker and the world’s largest cloud-computing provider, reported Information.

The talks also include the possibility of OpenAI adopting Amazon’s in-house Trainium chips, according to the report citing a person with knowledge of the matter.

If completed, the deal could value OpenAI at more than $500 billion, underscoring the continued surge in capital flowing into artificial intelligence leaders.

The negotiations remain preliminary, and terms could still change, the person said.

Still, the discussions highlight intensifying competition among technology giants to secure strategic positions in the rapidly expanding AI ecosystem.

Amazon’s push to challenge Nvidia

A potential agreement would mark a notable milestone for Amazon’s relatively young semiconductor division.

Nvidia Corp. currently dominates the market for the advanced chips used to train and run large AI models, but cloud providers and major technology companies are increasingly exploring alternatives to reduce costs and reliance on a single supplier.

Amazon’s Trainium chip sits at the center of that strategy.

Designed to handle the intensive calculations behind AI models, Trainium is positioned as a cheaper and more energy-efficient alternative to Nvidia’s graphics processing units, according to Amazon.

The company hopes this pricing advantage will appeal to AI developers seeking to manage soaring infrastructure costs.

The effort mirrors similar moves across the industry.

Developers such as Meta Platforms Inc. have begun testing rival chips from companies including Alphabet Inc.’s Google, reflecting broader attempts to diversify hardware options as demand for AI computing power accelerates.

Strategic stakes in cloud and AI

The discussions also reflect Amazon Web Services’ broader challenge in AI.

While AWS remains the world’s largest provider of rented computing power and data storage, it faces fierce competition in attracting AI developers, particularly from Microsoft Corp.

Microsoft is one of OpenAI’s largest backers and has tightly integrated the startup’s models into its own cloud and software products.

OpenAI and Amazon already announced a major partnership last month under which AWS will supply the startup with $38 billion of cloud computing capacity over seven years.

That deal was centered on the use of hundreds of thousands of Nvidia chips, highlighting how central Nvidia hardware remains even as alternatives are explored.

The new talks reportedly began around October, following OpenAI’s completion of a lengthy corporate restructuring.

As part of that overhaul, Microsoft took a 27% ownership stake in OpenAI, after negotiations that lasted nearly a year, according to earlier reporting by the Information.

Valuation surge and market concerns

OpenAI was last valued at $500 billion in an employee share sale, briefly surpassing Elon Musk’s SpaceX to become the world’s largest startup by valuation.

The rapid rise reflects an investment frenzy around companies seen as leaders in a technology with the potential to reshape entire industries.

At the same time, some Wall Street analysts have cautioned that the pace of investment could be forming a bubble.

They point to the circular nature of certain deals, where companies invest heavily in potential customers to sustain demand for their own products.

Against that backdrop, a deeper partnership between OpenAI and Amazon would illustrate both the scale of opportunity in AI and the growing interdependence among its biggest players.