Amazon eyes $10B investment in OpenAI: A seismic shift in AI chip race?

Amazon is in talks to invest more than $10 billion in Sam Altman’s OpenAI, aiming to sell its AI-powered chips and computing power to ChatGPT maker.

According to Reuters, the potential deal could push OpenAI’s valuation above $500 billion, signalling a major shift in the competitive AI landscape.

As per sources privy to the matter, under this highly-anticipated agreement, OpenAI will be entitled to use Amazon’s Trainium series of AI chips and expanded data center capacity to run its tools and AI models, including ChatGPT.

These chips will reportedly help OpenAI to compete with Nvidia and Google.

The potential deal comes at a time when OpenAI is looking for an initial public offering (IPO), thereby soaring the company's valuation up to $1 trillion, as reported by Reuters in October.

“The talks between the two firms are very fluid and at early stages,” the source said.

Strategic flexibility for OpenAI

The recent move highlights OpenAI’s ability to widen its partnerships after the company uncoupled itself from early backer Microsoft.

These two tech companies restructured their partnership in late October, allowing OpenAI to enter various deals with rival cloud providers, raising capital and securing computing resources.

Under the deal, Microsoft holds a 27 percent stake in OpenAI and received exclusive rights to sell OpenAI models to its customers.

OpenAI-Amazon partnership

Earlier this year, OpenAI reached a deal with Amazon, committing to spend $38 billion renting servers over 7 years.

According to information, more than $10 billion financing from Amazon could also help OpenAI in raising broader funding rounds.

In addition, OpenAI is also eying to sell ChatGPT’s enterprise version to Amazon. However, the details of this deal are still unclear.

Besides Amazon, OpenAI is also involved in tech deals, involving Nvidia, Oracle, Broadcom, and AMD, aiming to supply computing infrastructure and chips.

According to investors, the circular nature of many agreements could intensify the AI race and fears surrounding the AI bubble.

Both Amazon and OpenAI have not yet commented on the deal.