OpenAI has sealed an agreement with Amazon Web Services (AWS) worth $38 billion over the next seven years. This is the first major contract for the company responsible for ChatGPT with Amazon, and marks a turning point in its strategy: stop depending exclusively on Microsoft and, on the other hand, have access to infrastructure and computing capacity at any cost.
Alliances. As explained from NYTfrom 2019 to 2023, OpenAI bought all of its computing capacity from Microsoft, its main investor, which has allocated $13 billion to the startup. The contract stated that OpenAI could only contract with other vendors if Microsoft approved. However, last week both companies renegotiated the termseliminating Microsoft’s preemptive right and allowing OpenAI to freely contract with any cloud provider.
What does the agreement include?. OpenAI will immediately begin running operations on AWS infrastructure, using hundreds of thousands of Nvidia graphics processing units in the United States. According to Dave Brown, vice president of computing and machine learning services at AWS, “this is completely separate capacity that we are installing. Some of that capacity is already available and OpenAI is using it.” The first phase will employ existing AWS data centers, although Amazon will build additional infrastructure in the coming years.
More investment in infrastructure. The movement adds to the race of massive spending by OpenAIwhich in recent weeks has announced deals worth approximately 1.4 trillion dollars with companies such as Nvidia, Broadcom, Oracle and Google. Added to this are projects for build new data centers together with OracleSoftBank and the United Arab Emirates, among others. The company also wanted to reaffirm its commitment to Microsoft, committing to purchase an additional $250 billion in Azure services.
Signs of business maturity. For OpenAI, diversifying its cloud providers and ensuring long-term capacity represents a crucial step towards a more than likely IPO. Sam Altman, CEO of the company, recognized recently on a livestream that an IPO is “the most likely path” given the company’s capital needs. Furthermore, just as points out According to CNBC, CFO Sarah Friar said the recent corporate restructuring is a necessary step toward that goal.
Doubts about the AI bubble. While OpenAI and Big Tech increase their spending, Amazon, Google, Meta and Microsoft have already allocated more than $360 billion in capital investments last year, and some financial analysts They already warn of a possible bubble. As AI evolves in leaps and bounds and OpenAI generates billions in annual revenue, its huge infrastructure spending makes the company not yet profitable. However, the strong feeling of market enthusiasm around artificial intelligence means that the company continues to increase its value greatly.
What it means for Amazon. The pact is significant not only because of its volume, but because AWS has close ties to Anthropicdirect rival of OpenAI. Amazon has invested billions in Anthropic and is building a data center campus of $11 billion in Indiana designed exclusively for your workloads. After now knowing this news, Amazon shares have risen approximately 5%.
Cover image | OpenAI and İsmail Enes Ayhan
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