Amazon in Talks to Invest Up to $10 Billion in OpenAI

Amazon is reportedly in discussions to invest up to $10 billion in OpenAI.

According to The Information on Thursday (local time), Amazon and OpenAI have been negotiating the investment since October. The discussions come as OpenAI and Microsoft, its core backer since the early days, signed a new partnership agreement while restructuring OpenAI's corporate structure. Under the new agreement, OpenAI committed to using an additional $250 billion worth of Microsoft's cloud services. In return, OpenAI gained the ability to use cloud providers other than Microsoft.

As a result, OpenAI has agreed to a $38 billion cloud services contract with AWS, the world's largest cloud provider, over the next seven years. The Financial Times reported that "the two companies are also discussing service partnerships including online shopping utilizing ChatGPT."

If the investment is finalized, OpenAI could raise its valuation to as much as $500 billion. This is expected to positively impact OpenAI's initial public offering, which is being pursued with a target of the second half of next year at the earliest. OpenAI, which issued a "code red" alert this month in response to Google's aggressive pursuit with its generative AI service Gemini 3.0, has been fighting back by releasing new AI models such as GPT-2.5 at monthly intervals.

For Amazon, the deal would secure a major customer for its self-developed AI chip Trainium. Bloomberg noted that for Amazon, which needs to catch up with competing products such as Nvidia's graphics processing units and Google's Tensor Processing Units, a supply contract with OpenAI would be a significant achievement. Amazon is positioning Trainium as a key weapon to gain prominence in the AI sector.

For OpenAI, securing Trainium would reduce its dependence on Nvidia. OpenAI signed a $100 billion investment deal with Nvidia in September, committing to purchase large quantities of Nvidia GPUs, but is simultaneously pursuing supply diversification. This explains why OpenAI has also signed chip supply contracts with other semiconductor manufacturers including Broadcom and AMD.

However, this investment could reignite controversy over "circular transactions." Since the structure involves OpenAI receiving Amazon's investment and then purchasing Amazon's AI chips, it resembles the previous $100 billion AI chip deal with Nvidia. Such circular transactions among AI companies are one of the main arguments behind concerns about an AI bubble, which has emerged as a major market variable recently. Bloomberg analyzed that "Wall Street is warning that circular transactions increase the risk of AI investments."