Amazon planning $10bn OpenAI investment as ChatGPT maker targets $500bn valuation

Amazon is reportedly in discussions to invest as much as $10 billion in OpenAI, the artificial intelligence company behind ChatGPT, in a move that could value the business at more than $500 billion and further intensify competition in the global AI market.

The talks, first reported by The Information and subsequently confirmed by multiple sources, are said to be at an early and fluid stage. News of the potential deal pushed Amazon shares up around 0.6 per cent, reflecting investor optimism around the deepening relationship between the world’s largest cloud provider and one of the most influential AI developers.

As part of the proposed investment, OpenAI is expected to increase its use of Amazon’s Trainium AI accelerator chips, which are designed to compete with Nvidia’s dominant processors and similar offerings from Google. The deal could also form the cornerstone of a broader fundraising round involving additional investors.

The discussions come as OpenAI explores longer-term capital options, including a potential initial public offering that could value the company at as much as $1 trillion. The rapid expansion of generative AI has driven extraordinary demand for computing power, placing cloud infrastructure providers such as Amazon Web Services (AWS) at the centre of the technology’s growth.

Amazon and OpenAI already have a substantial commercial relationship. Last month, OpenAI agreed to a $38 billion, multi-year deal to purchase cloud services from AWS, primarily to run its AI workloads using Nvidia chips. The companies described the agreement as a strategic partnership designed to support OpenAI’s rapidly expanding computational needs.

OpenAI has also struck a series of other landmark infrastructure deals. In September, it announced an agreement with Nvidia to build and operate at least 10 gigawatts of AI data centres, with Nvidia committing to invest up to $100 billion as capacity is rolled out. Separately, OpenAI has a cloud partnership with Oracle that could be worth as much as $300 billion over time.

Founded in 2015 as a non-profit research organisation, OpenAI rose to global prominence following the launch of ChatGPT in 2022, which helped bring artificial intelligence into mainstream use. Earlier this year, the company completed a major restructuring that converted it into a public benefit corporation. The new structure, overseen by a non-profit entity with a financial stake, was designed to remove constraints on OpenAI’s ability to raise capital and secure the vast computing resources required to train and run advanced AI models.

For Amazon, a significant equity stake in OpenAI would strengthen its position in the intensifying battle for AI leadership, while helping to drive adoption of its in-house Trainium chips and AWS infrastructure. If completed, the deal would mark one of the largest strategic investments yet in the generative AI sector and underline just how central artificial intelligence has become to the future of global technology and cloud computing.

Amy Ingham

Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.