Amazon is discussing a $10 billion investment in OpenAI along with supplying Trainium AI chips and additional cloud computing services through Amazon Web Services, according to the Financial Times.
The proposed investment would elevate OpenAI’s valuation above $500 billion. Discussions highlight potential issues in OpenAI’s investment structures, particularly circular agreements where funds cycle back for chips and data centers. OpenAI and Amazon are also exploring collaboration on Amazon’s online marketplace. This would mirror OpenAI’s existing arrangements with retailers such as Etsy, Shopify, and Instacart, where OpenAI provides AI assistance for operations.
Despite any new agreement, Amazon would lack access to market OpenAI’s most advanced models on its developer cloud platform. Microsoft retains exclusive rights to these models through the 2030s under prior commitments. OpenAI recently modified its partnership with Microsoft to permit sourcing data center capacity from alternative providers beyond Microsoft’s infrastructure.
Concurrently, OpenAI secured agreements with NVIDIA, Oracle, AMD, and additional firms to expand data center capabilities and obtain or lease AI chips. Under the potential Amazon arrangement, OpenAI would incorporate Amazon’s Trainium AI chips into its operations and lease further data center capacity from Amazon Web Services.
This builds on OpenAI’s existing pledge of $38 billion to rent servers from Amazon Web Services across the next seven years. Such commitments underscore OpenAI’s substantial reliance on external compute resources to support its AI development.
Investors have raised concerns over the circular dynamics in these transactions. OpenAI receives capital infusions and redirects significant portions back to the investors for infrastructure or chip purchases. For instance, SoftBank and Oracle have allocated a combined $400 billion toward constructing new data centers dedicated to OpenAI’s computing requirements. OpenAI’s operations have resulted in financial losses exceeding its revenue to date.
