Amazon is negotiating a massive $10 billion investment in OpenAI, a move that would rocket the AI company’s valuation past $500 billion. The Financial Times reports that in exchange for the cash, Amazon wants OpenAI to rely heavily on its custom “Trainium” AI chips and rent significantly more space on Amazon Web Services (AWS).
The discussions extend beyond just infrastructure. The two companies are exploring ways OpenAI can help upgrade Amazon’s online marketplace, mirroring the assistance the AI firm provided to Etsy and Instacart. But there are limits to this partnership. Microsoft still holds the golden ticket: exclusive rights to market OpenAI’s smartest models to developers until the 2030s. So, even with a $10 billion buy-in, Amazon cannot offer those top-tier GPT models directly to its own cloud customers.
This news comes right after OpenAI loosened its ties with Microsoft to hunt for more computing power. The company recently signed deals with chipmakers such as Nvidia and AMD, as well as infrastructure providers such as Oracle. This new Amazon proposal piles on top of a previous commitment where OpenAI agreed to pay AWS $38 billion over seven years for server rentals.
However, the deal structure is causing concern among serious investors. It creates a “circular” flow of money. Amazon hands over investment capital, and OpenAI hands it right back to pay for Amazon’s servers and chips. This isn’t unique to Amazon; Softbank and Oracle are pouring a combined $400 billion into data centers specifically for OpenAI’s use.
Critics worry about the stability of this financial loop. OpenAI currently loses money. It relies on these massive cash infusions to keep the lights on, but it spends that money on the very companies investing in it. If investment money slows, cloud providers’ revenue drops, potentially popping the bubble. For now, though, the race to build the biggest AI brain continues, and Amazon wants to ensure its hardware runs the show.
