OpenAI signs $38 billion cloud services deal with Amazon, marking a new era in AI

OpenAI has signed a seven-year, $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 startup is committed to spending $1.4 trillion to develop 30 gigawatts of computing resources - enough to roughly power 25 million U.S. homes.

The deal is also a major vote of confidence for the e-commerce giant's cloud unit, Amazon Web Services, which some investors feared had fallen behind rivals Microsoft and Google in the artificial intelligence 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 $140 billion to its market value. The stock was last up 5%, following a near-10% 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.

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"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 Amazon Web Services immediately, with all planned capacity set to come online by the end of 2026 and room to expand further in 2027 and beyond.

Amazon plans 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.

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