In the most recent investment agreement linking the AI startup to its infrastructure suppliers, Amazon is in negotiations to invest over $10 billion in OpenAI and offer it additional chips and processing capacity.
According to people familiar with the situation, Amazon is negotiating a deal that would raise OpenAI's valuation to $500 billion.
According to the people, any agreement is anticipated to involve OpenAI renting additional data center space to run its models and tools, including ChatGPT, and use Amazon's Trainium line of AI chips.
According to the persons, the negotiations, which were initially reported by the Information, are still in their early stages.
The anticipated transaction coincides with the start-up's separation from Microsoft, its first investor. In late October, the two businesses reorganized their partnership, enabling OpenAI to reach agreements for data centers with competing cloud providers.
A few days after reaching an arrangement with Microsoft, the start-up committed to spending $38 billion over seven years on server rentals when it negotiated an agreement with Amazon.
That arrangement would be supplemented by the proposed cloud and investment pact.
In order to deliver processors and other processing infrastructure, OpenAI has already secured $1.5 trillion in long-term agreements with Nvidia, Oracle, AMD, and Broadcom.
Some investors are alarmed by the dealmaking frenzy because they are worried about the circular structure of many of these agreements. In addition to receiving significant investments from others, OpenAI has acquired interests in certain of its infrastructure providers.
Tech executives, such as Sam Altman, the CEO of OpenAI, have been actively pursuing deals, citing the enormous potential benefits of the expanding use of big language models.
When it comes to securing agreements with vendors, OpenAI is not alone. While utilizing their hardware and services, rival model builder Anthropic has obtained a total of almost $26 billion from Amazon, Google, Microsoft, and Nvidia.
Amazon has contributed almost $8 billion to Anthropic since 2023, making it one of the company's biggest supporters.
Amazon will not be able to sell the start-up's most sophisticated closed-weight models on its developer platform as a result of the agreement with OpenAI. Up until the early 2030s, Microsoft maintains exclusive rights.
Additionally, OpenAI's efforts to diversify the processors it uses for model training and operation have advanced with the transaction.
In a multiyear agreement, the leading chipmaker Nvidia has promised to spend up to $100 billion in OpenAI, and the start-up will also buy millions of its AI processors.
However, OpenAI has also reached semiconductor agreements with Broadcom and AMD, which consented to sell OpenAI up to 10% of their stock.
Amazon's expanding chips division would benefit greatly from the partnership with OpenAI, whose technology is already utilized to train Anthropic's top models. Both Anthropic and the search engine behemoth's Gemini model use Google's CPUs, also referred to as Tensor Processing Units.
A business partnership involving the company's online marketplace is also being discussed between Amazon and OpenAI. In an effort to develop new e-commerce revenue streams, the start-up has already signed agreements with Etsy, Shopify, and Instacart.
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