Amazon Secures $38 Billion Cloud Deal with OpenAI to Power Massive AI Expansion

Amazon.com Inc.'s cloud division has secured a $38 billion agreement to meet OpenAI's extensive need for computing power. This deal will see Amazon Web Services (AWS) providing access to numerous Nvidia Corp. graphics processing units over seven years. The announcement on Monday led to a rise in Amazon shares, reflecting the significance of this partnership.

OpenAI's shift from a research entity to a major player in artificial intelligence is evident through its commitment to invest $1.4 trillion in infrastructure for AI model development. This massive expenditure has raised concerns about a potential investment bubble in the industry.

Amazon's Strategic Advantage

This collaboration is a testament to Amazon's capability in constructing and managing vast data center networks, especially as it navigates the AI landscape. "As OpenAI continues to push the boundaries of what's possible, AWS's best-in-class infrastructure will serve as a backbone for their AI ambitions," stated AWS CEO Matt Garman.

Amazon's stock increased by 4.5% to $255.29 when trading began in New York on Monday, while Nvidia saw a 3.3% rise, reaching $209.20. As the leading provider of rented computing power globally, AWS had previously been an exception among US cloud-computing firms not supporting OpenAI until now.

Other Major Cloud Partnerships

Microsoft Corp., OpenAI's largest investor and former exclusive cloud provider, recently confirmed OpenAI's plan to spend approximately $250 billion on its Azure cloud services. Oracle Corp. has also signed a $300 billion agreement with OpenAI for data centers, and earlier this year, Alphabet Inc.'s Google Cloud Platform was identified as one of ChatGPT's supporters.

The startup has additionally entered into a $22.4 billion contract with CoreWeave Inc., which is part of the emerging neo clouds targeting AI developers with their offerings.

Expanding Global Reach

"Adding AWS as a key cloud provider can ease some pressure for OpenAI," noted Bloomberg Intelligence analysts Anurag Rana and Andrew Girard last week, predicting such an arrangement. They highlighted that AWS could facilitate OpenAI's international expansion due to its extensive global data center network.

The agreement stipulates that OpenAI will immediately begin utilizing AWS computing resources, with all planned capacity available by the end of 2026 and potential for further collaboration beyond that period.

Technological Advancements

Amazon plans to deploy numerous chips, including Nvidia's GB200 and GB300 AI accelerators, organized in clusters designed to assist ChatGPT in generating user responses or training future models. "Scaling frontier AI requires massive, reliable compute," said OpenAI CEO Sam Altman.

"Our partnership with AWS strengthens the broad compute ecosystem that will power this next era and bring advanced AI to everyone." Additionally, Amazon is one of Anthropic PBC's significant supporters—a company founded by former OpenAI members.

A recent announcement revealed that a data center complex built for Anthropic is operational, powered by hundreds of thousands of AWS's proprietary Trainium2 AI chips. Last month, Google committed up to 1 million specialized AI chips for Anthropic under a multibillion-dollar agreement.