Amazon in Talks to Invest Over $10 Billion in OpenAI, Potential Valuing Above $500 Billion
Amazon is currently in negotiations to invest more than $10 billion in OpenAI, the developer behind ChatGPT, in a deal that could value OpenAI above $500 billion. This investment is expected to assist OpenAI in fulfilling its commitments to rent cloud capacity, including from Amazon's own cloud services.
OpenAI has announced plans to spend $38 billion on capacity from Amazon Web Services (AWS) over the next seven years. The Information reports that OpenAI intends to use Amazon Trainium chips, and this financing round could catalyze a broader fundraising effort involving other investors.
Over the next eight years, OpenAI’s compute spending is projected to reach $1.4 trillion. Despite this, the company is currently loss-making and has transitioned to a for-profit status. Microsoft holds approximately 27% ownership in OpenAI.
The company is also considering an initial public offering that might value it at up to $1 trillion, according to Reuters. Additionally, Oracle has reportedly invested $300 billion in data centers across Texas, New Mexico, Michigan, and Wisconsin; OpenAI is expected to repay a similar amount to utilize these sites.
Nvidia will supply chips to OpenAI and is also investing through a non-controlling stake. OpenAI has appointed former UK chancellor George Osborne, and CEO Sam Altman has issued a 'code red' directive to counter Google.
Discussions between Amazon and OpenAI include potentially selling a corporate version of ChatGPT to Amazon. Both OpenAI and Amazon have declined to comment on the ongoing talks.
