Amazon Eyes Massive Investment in OpenAI, Plans to Provide Trainium Chips

OpenAI and Amazon Discuss Expanded Data Center Collaboration

Discussions are underway between Amazon and OpenAI concerning a potential $10 billion investment, alongside the provision of additional AI chips and cloud services from Amazon, as revealed by The Financial Times. Such a move would elevate OpenAI's valuation above the $500 billion mark, yet it risks intensifying scrutiny over their investment strategies, particularly those involving complex financial engagements with chip technology and data infrastructure.

Amazon and OpenAI are also exploring the possibility of collaboration in enhancing Amazon's online marketplace, echoing similar partnerships that OpenAI has forged with platforms like Etsy, Shopify, and Instacart. Nonetheless, due to an existing contract, OpenAI's most advanced AI models cannot be marketed on Amazon's developer cloud platform, as Microsoft retains exclusive rights to these until past the next decade.

Revised Agreements with Microsoft and New Collaborations

OpenAI has recently renegotiated terms with Microsoft, permitting the use of data center resources from a broader range of providers. Concurrently, OpenAI has entered agreements with major tech firms such as NVIDIA, Oracle, and AMD to bolster its data infrastructure and secure or lease AI processing hardware.

This prospective agreement with Amazon stipulates that OpenAI will utilize Amazon's proprietary Trainium AI chips and expand its server rental agreements with Amazon Web Services (AWS). This is in addition to the substantial $38 billion contract OpenAI has agreed to for server leasing from AWS over the forthcoming seven years.

Investor Concerns Over Circular Investments

These financial maneuvers have triggered investor apprehension due to their intricate, cyclical nature. Deals like the recent one with Amazon illustrate how OpenAI often channels investment funds back to the originating firms for infrastructure and chip procurement. The figures involved are immense, highlighted by Softbank and Oracle's combined $400 billion investments in new data center construction to meet OpenAI's computational demands. As it stands, the financial picture for OpenAI shows more losses than profits.