Amazon inks $38bn deal with OpenAI for Nvidia-powered cloud services

Partnership marks OpenAI's biggest infrastructure push yet

OpenAI has signed a seven-year, $38 billion deal with Amazon to purchase massive cloud computing capacity powered by Nvidia chips.

The agreement, announced Monday, is OpenAI's first major commitment since a corporate restructuring last week granted the ChatGPT maker greater financial and operational independence.

Under the deal, OpenAI will gain access to hundreds of thousands of Nvidia's most advanced AI processors, including the GB200 and GB300 accelerators, hosted across Amazon Web Services (AWS) datacentres worldwide.

The infrastructure will be used to train and operate the company's expanding suite of AI models, including future versions of ChatGPT.

CEO Sam Altman has previously stated that OpenAI aims to invest as much as $1.4 trillion to build 30GW of computing capacity, equivalent to the power consumed by roughly 25 million US homes.

"Scaling frontier AI requires massive, reliable compute," Altman said in a statement on Monday.

"Our partnership with AWS strengthens the broad compute ecosystem that will power this next era and bring advanced AI to everyone."

AWS will begin supplying computing power to OpenAI immediately, with all targeted capacity expected to come online by the end of 2026.

The agreement also includes options for OpenAI to expand its partnership with Amazon in future years.

Major win for Amazon

For Amazon, the OpenAI partnership is a significant strategic victory. The company has struggled to keep pace with Microsoft and Google in the AI race, both of which have benefited from early, deep partnerships with AI startups.

"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," said Matt Garman, CEO of AWS.

The announcement sent Amazon's shares to a record high, rising 5% on Monday following a 10% surge on Friday.

The rally added nearly $140 billion to the company's market value, signalling investor confidence that AWS remains a formidable force in cloud computing's AI future.

The Amazon deal adds to OpenAI's rapidly growing list of multi-billion-dollar cloud commitments.

Just last week, the company agreed to spend $250 billion on Microsoft's Azure services, despite removing Microsoft's exclusive rights to supply compute as part of its restructuring.

OpenAI has also struck a $300 billion partnership with Oracle for datacentre capacity, a $22.4 billion agreement with CoreWeave, and maintains ongoing collaborations with Google Cloud Platform.

These commitments have raised eyebrows on Wall Street, where analysts question how the still-unprofitable company will finance such an aggressive expansion.

Sources familiar with OpenAI's finances told Reuters the company's annualised revenue run rate is expected to reach about $20 billion by year's end, though losses continue to mount.

The latest deal also comes as OpenAI lays the groundwork for a potential initial public offering (IPO) that could value the company at up to $1 trillion, according to reports.

Such a valuation would place the San Francisco-based startup among the most valuable privately held companies in the world.

Altman has said he envisions adding 1GW of compute power each week, a breath-taking pace that would require billions in capital investment.

Each gigawatt of compute capacity, analysts estimate, carries a price tag exceeding $40 billion in infrastructure, chips and power.