OpenAI in Talks to Raise At Least $10 Billion From Amazon and Use Its AI Chips
Amazon is in talks to invest $10 billion or more in OpenAI, according to three people familiar with the discussions. The valuation would be higher than $500 billion, one of the people said.
The Amazon investment would help OpenAI afford some of the commitments it has made to rent servers from cloud providers, including from Amazon Web Services. OpenAI last month announced it would spend $38 billion renting servers from AWS over the next seven years, making AWS one of at least five cloud providers OpenAI uses to develop its artificial intelligence.
The deal could also help Amazon find a new customer for its Trainium AI server chips, which compete with the Nvidia AI chips that OpenAI primarily uses today. As part of the deal being discussed, OpenAI plans to use Trainium chips, two of the people said.
Amazon, however, won’t be able to sell OpenAI models to its cloud customers, as Microsoft, which owns about 27% of OpenAI equity, has secured an exclusive right to do so.
Amazon and OpenAI have discussed commerce partnership opportunities, one of the people said. OpenAI wants to turn ChatGPT into a shopping hub and has discussed earning fees for referring customers to retailers. It isn’t clear whether the Amazon-OpenAI deal would involve any arrangement related to such features in ChatGPT or AI-powered shopping features that Amazon is developing for its own apps.
OpenAI also wants to sell an enterprise version of ChatGPT to Amazon, the person said.
The talks are ongoing and the terms could change, two of the people said. The Amazon financing could prompt a broader fundraising with more investors, according to one of the people.
The conversations with Amazon kicked off around October after OpenAI completed its corporate restructuring, which converted its equity to traditional stock and would allow the company to eventually go public, this person said.
A deal would make Amazon one of several large technology firms, including Nvidia, to announce an investment in the ChatGPT maker, which has raised more than $45 billion in equity financing and was recently valued at $500 billion in a private share sale.
OpenAI still needs more cash, as it has projected it will burn more than $100 billion over the next four years as it spends money on servers and talent to develop and run its AI. OpenAI in the summer had told some investors it planned to raise about $90 billion in 2027. That could theoretically include an initial public offering.
The spending commitments have been piling up. OpenAI earlier this year committed to spending hundreds of billions of dollars on servers from both Microsoft and Oracle. It also struck deals to rent servers from Google, a major rival in developing AI, and AI cloud provider CoreWeave. And OpenAI has said it would spend billions of dollars developing its own data centers, and that it would possibly rent out servers to other companies too.
As it develops its own facilities, OpenAI is also developing its own AI server chips with Broadcom, primarily to run services such as ChatGPT rather than to train new models the way it does with Nvidia chips. It isn’t clear how much money OpenAI plans to spend on those chips. OpenAI has also agreed to use chips from another Nvidia rival, Advanced Micro Devices.
Nvidia, already a shareholder of OpenAI, recently said it could invest up to $100 billion in the company, starting with a $10 billion tranche tied to a construction milestone. But Nvidia recently said that the deal hasn’t been finalized.
For Amazon, an OpenAI deal would mirror the activities of Microsoft, its fiercest cloud-services rival. After Microsoft made large equity investments in OpenAI, it recently announced an investment in rival AI developer Anthropic and agreed to use that company’s AI.
Amazon, meanwhile, made a relatively early bet on Anthropic, investing in the company and agreeing to help sell its AI to cloud customers. But as Anthropic has done more business with Microsoft and Google, whose servers also power Anthropic’s tech, Amazon has gotten closer with OpenAI, culminating in the cloud deal last month.
Both Amazon and Google have invested billions of dollars in Anthropic, and Anthropic uses both Trainium chips and Google’s tensor processing units. Broadcom said last week that Anthropic would spend $21 billion purchasing Google TPUs, which Broadcom co-designs.
Amazon has been trying to develop its own state-of-the-art AI models but has struggled in that regard.