Amazon Plans $10 Billion Investment in Sam Altman’s AI Startup OpenAI

According to CNBC and Reuters, who cited people with knowledge of the situation, Amazon and OpenAI are negotiating a possible billion-dollar investment in the AI startup. Amazon may invest more than $10 billion in OpenAI in addition to a deal to use its AI processors, according to the two publications' stories.

According to CNBC and Reuters, the deal's specifics are "very fluid" because the two businesses are still in the preliminary stages of negotiations. OpenAI may be worth more than $500 billion as a result of the possible agreement with Amazon. According to a Reuters article from October, OpenAI is preparing an IPO that could raise its valuation to up to $1 trillion, which coincides with the conversations regarding the possible deal.

Specifics of the Deal          

The initial media site to report on the discussions with Amazon, The Information, stated that OpenAI intends to use Amazon's Trainium chips, which are rivals to those made by Nvidia and Google. According to the story, the AI startup is also trying to offer Amazon a corporate version of ChatGPT.

It's unclear, though, if the agreement covers integrating ChatGPT's services, such as its much-anticipated shopping experience, for which Amazon is creating its own apps. According to the information, the Amazon funding might open the door for a larger fundraising round with more investors.

Why this Deal is a Game-Changer for OpenAI?

Months after the Sam Altman-led company finished restructuring in October and formally outlined the conditions of its cooperation with Microsoft, the possible OpenAI-Amazon agreement has surfaced. As a result, it had greater flexibility and the capacity to collaborate widely within the AI ecosystem.

The Microsoft agreement eliminated significant barriers to OpenAI's capacity to raise money and obtain computing resources by transforming the company into a public benefit corporation run by a non-profit with an interest in OpenAI's financial success.

Microsoft has supported and spent over $13 billion in OpenAI since 2019. But according to the October terms, Microsoft will no longer be able to decline to serve as OpenAI's computing supplier, enabling the AI firm to work with outside parties on its own projects. The business owns a 27% share in OpenAI and is the sole reseller of the AI company's models to its own cloud customers.