Amazon (AMZN) stock jumped roughly 5% Monday morning after the company announced a $38 billion deal with OpenAI (OPAI.PVT) for the ChatGPT developer to access hundreds of thousands of Nvidia’s (NVDA) AI chips through its cloud computing infrastructure.
Under the partnership, OpenAI will run its AI workloads on Nvidia’s GPUs (graphics processing units) housed within Amazon’s AI servers. The companies said OpenAI would immediately start using AI infrastructure provided by Amazon’s cloud segment, Amazon Web Services, scaling to the full computing capacity outlined in the deal before the end of 2026.
The move is just the latest in OpenAI’s string of deals with cloud providers and chipmakers. OpenAI also has a $300 billion deal with Oracle (ORCL) and agreements with AI data center provider CoreWeave (CRWV) worth more than $22 billion. The AI developer recently announced agreements with Broadcom (AVGO), AMD (AMD), and Nvidia (NVDA).
The circular AI deals have added to fears of a market bubble and raised concerns that AI demand could be overstated.
OpenAI’s costs are set to surpass $1 trillionby the end of the decade, while its revenue remains far below that value, raising questions about whether the company can pay for its latest AI infrastructure commitments.
Meanwhile, OpenAI last week announced a new agreement with Microsoft (MSFT) allowing the startup to transform into a for-profit public benefit corporation, paving the way for the ChatGPT maker to go public. The company is reportedly laying the groundwork for an IPO that would value it at $1 trillion, according to Reuters.
Amazon last week reported third quarter earnings that surpassed analyst expectations and pushed its stock to an all-time high.
Additionally, AWS said last Wednesday that it has completed a massive AI data center project and was set to provide OpenAI’s rival Anthropic with one million of its custom AI chips by the end of 2025.
By Yahoo News
Email your news TIPS to Editor@Kahawatungu.com — this is our only official communication channel
