Amazon Reportedly in Talks for $10B OpenAI Investment

Amazon Considers Significant Investment in OpenAI

Amazon is reportedly engaged in preliminary discussions regarding a potential investment of up to $10 billion in OpenAI. This prospective deal, as reported by CNBC, would involve OpenAI utilizing Amazon's AI chips.

Potential Valuation and Prior Investments

Should this agreement come to fruition, OpenAI's valuation could surpass $500 billion, according to a Bloomberg source. Initial reports concerning this matter were published by The Information.

Amazon has been actively seeking to broaden its involvement in the competitive field of artificial intelligence. Previously, the company established a partnership with and invested $8 billion in Anthropic, a competitor to OpenAI.

Recent Developments in Amazon's AI Infrastructure

Earlier this month, Amazon introduced the newest version of its Trainium series of chips. Furthermore, the development of the subsequent generation of these chips was outlined, enhancing its cloud computing services through Amazon Web Services.

OpenAI's Shift to a For-Profit Model

The news of this potential investment arrives several months after OpenAI completed its transition to a for-profit structure. This change allows for greater flexibility in securing investments from sources beyond its initial backer, Microsoft, which currently holds a 27% stake.

The Growing Trend of Circular Deals in AI

An investment by Amazon in OpenAI would represent the latest example of a growing trend within the AI sector. This involves major hardware manufacturers and cloud service providers forming agreements with emerging AI companies to leverage their technologies.

Conversely, these AI startups commit to utilizing the data centers and chips of these larger companies for the purpose of training their AI models.

Recent AI Investment Activity

In March of last year, OpenAI invested $350 million in CoreWeave, which subsequently used these funds to acquire chips from Nvidia. These chips then provide computational power to OpenAI, increasing CoreWeave's revenue and enhancing the value of OpenAI's investment.

Further demonstrating this trend, in October, OpenAI agreed to acquire a 10% stake in AMD and committed to utilizing the chipmaker’s AI GPUs. A chip usage agreement with Broadcom was also finalized that same month.

Most recently, in November, OpenAI entered into a $38 billion cloud computing agreement with Amazon.