Amazon commits $38 billion to procure Nvidia AI chips through partnership with OpenAI for hyperscale data center deployment.
Amazon.com Inc.'s cloud unit has signed a $38 billion deal to supply OpenAI with computing power, as the ChatGPT maker will pay Amazon Web Services for access to hundreds of thousands of Nvidia Corp. graphics processing units as part of a seven-year deal. The partnership validates Amazon's ability to compete in the AI infrastructure space, as OpenAI will use these chips deployed across AWS's global data center network. Amazon shares rose 4.5% to $255.29 as the markets opened on Monday, while Nvidia rose 3.3% to $209.20.
The arrangement is the latest indication of OpenAI's transition from research lab to an artificial intelligence powerhouse that has reshaped the technology industry. The company has committed to spending $1.4 trillion on infrastructure to build and power its AI models, an unprecedented binge that has prompted concerns about an investment bubble. For Amazon, which has struggled to compete in the AI age, the deal is an endorsement of its ability to build and run enormous networks of data centers. AWS Chief Executive Officer Matt Garman stated, "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."
Amazon is the world's largest seller of rented computing power but until Monday had been an outlier, having watched as competitors including Microsoft Corp., Oracle Corp., and Alphabet Inc.'s Google Cloud Platform all signed agreements with OpenAI. Microsoft announced a new commitment from OpenAI to spend some $250 billion on its Azure cloud unit, Oracle inked a $300 billion deal to provide OpenAI with data centers, and OpenAI has a $22.4 billion deal with CoreWeave Inc., a leader among neo-clouds pitching services to AI developers. Bloomberg Intelligence analysts Anurag Rana and Andrew Girard wrote that "Adding AWS as a key cloud provider can ease some pressure for OpenAI, especially as it continues to farm out more contracts to neocloud providers like CoreWeave, which operates at a much smaller scale than AWS," and noted AWS could also help OpenAI expand internationally.
Under the deal, OpenAI will immediately start using AWS computing power, with all targeted capacity to be provided before the end of 2026 and the option to expand work with AWS in subsequent years. Amazon will deploy hundreds of thousands of chips, including Nvidia's GB200 and GB300 AI accelerators, in clusters designed to help ChatGPT produce responses and train next-generation models. OpenAI CEO Sam Altman said, "Scaling frontier AI requires massive, reliable compute. Our partnership with AWS strengthens the broad compute ecosystem that will power this next era and bring advanced AI to everyone."
Amazon is also among the biggest backers of Anthropic PBC, the AI developer founded by OpenAI veterans. The Seattle-based company announced last week that a data center complex built for the startup and powered by hundreds of thousands of AWS's homegrown Trainium2 AI chips was operational. Last month, Google said it would supply up to 1 million of its specialized AI chips to Anthropic, a deal worth tens of billions of dollars.