OpenAI looks to Amazon for a $38 billion cloud services agreement

Following a restructure last week that offered the ChatGPT manufacturer more operational and financial independence. OpenAI made its first significant move to further its AI goals by signing a seven-year, $38 billion deal to buy cloud services from Amazon.com.

Through the agreement, which was revealed on Monday. OpenAI will have access to hundreds of thousands of Nvidia graphics processors for the purpose of training and executing its AI models. As businesses strive to create systems that can equal or even exceed human intelligence, it highlights the AI industry’s ravenous desire for processing power.

According to OpenAI CEO Sam Altman, the company has pledged to invest $1.4 billion to create 30 gigawatts of computing capacity. Which is equivalent to powering almost 25 million households in the US.

The agreement is also a major vote of confidence for Amazon Web Services, the cloud division of the e-commerce behemoth. Which some investors were concerned had lagged behind competitors Google and Microsoft in the race for artificial intelligence. The company’s impressive growth in the September quarter allayed some of those concerns.

On Monday, Amazon’s stock reached a record high, increasing its market worth by around $140 billion. The news caused a temporary decline in Microsoft’s stock price.

“Scaling frontier AI requires massive, reliable computing,” said OpenAI co-founder and CEO Sam Altman. “Our partnership with AWS strengthens the broad computing 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 expected to be operational by the end of 2026 and room to expand further in 2027 and beyond.