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OpenAI has signed a seven-year, US$38 billion deal to buy cloud services from Amazon.com, in its first big push to power its AI ambitions after a restructuring last week that gave the ChatGPT maker greater operational and financial freedom. The agreement, announced on Monday, will give OpenAI access to hundreds of thousands of Nvidia graphics processors to train and run its artificial intelligence models. The deal underscores the AI industry’s insatiable appetite for computing power as companies race to build systems that can rival or surpass human intelligence. OpenAI CEO Sam Altman has said the start-up is committed to spending US$1.4 trillion to develop 30 gigawatts of computing resources – enough to roughly power 25 million US homes. The deal is also a major vote of confidence for the e-commerce giant’s cloud unit, Amazon Web Services (AWS), which some investors feared had fallen behind rivals Microsoft and Google in the AI race. Those fears were somewhat eased by the strong growth the business reported in the September quarter. Amazon shares hit an all-time high on Monday, with the company set to add nearly US$140 billion to its market value. The stock was last up 5 per cent, following a near-10 per cent jump on Friday. Microsoft shares had briefly dipped on the news. “This is a hugely significant deal (and is) clearly a strong endorsement of AWS compute capabilities to deliver the scale needed to support OpenAI,” said PP Foresight analyst Paolo Pescatore. “Scaling frontier AI requires massive, reliable compute,” said Altman. “Our partnership with AWS strengthens the broad compute ecosystem that will power this next era and bring advanced AI to everyone.” OpenAI will begin using AWS immediately, with all planned capacity set to come online by the end of 2026 and room to expand further in 2027 and beyond. Amazon planned to roll out hundreds of thousands of chips, including Nvidia’s GB200 and GB300 AI accelerators, in data clusters built to power ChatGPT’s responses and train OpenAI’s next wave of models, the companies said. Amazon already offers OpenAI open weight models on Amazon Bedrock, which offers multiple AI models for businesses using AWS. Altman has said that eventually, he would like OpenAI to add 1 gigawatt of compute every week – an astronomical sum as each gigawatt currently comes with a capital cost of over US$40 billion. OpenAI’s sweeping restructuring last week moved it further away from its non-profit roots and removed Microsoft’s first right to refusal to supply compute services in the new arrangement. OpenAI was laying the groundwork for an initial public offering that could value the company at up to US$1 trillion, Reuters has reported. But surging valuations of AI companies and their massive spending commitments, which total more than US$1 trillion for OpenAI, have raised fears that the AI boom is turning into a bubble. While OpenAI’s relationship with Microsoft, which the two forged in 2019, has helped push Microsoft to the top spot among its Big Tech peers in the AI race, both companies have been trying to reduce reliance on each other. OpenAI has already tapped Alphabet’s Google to supply it with cloud services, as Reuters first reported in June. It also reportedly struck a deal with Oracle to buy US$300 billion in computing power for about five years. The hefty commitments from OpenAI have raised some eyebrows on Wall Street, with analysts and investors questioning how the loss-making company will fund all those deals. Last week, OpenAI also agreed to purchase US$250 billion of Microsoft’s Azure cloud services as part of the restructuring deal. While OpenAI’s annualised revenue run rate is expected to reach about US$20 billion by the year end, losses in the company are also mounting, sources have told Reuters.
