Amazon shares hit a record high after it signed a seven-year, US$38 billion (A$58.1 billion) deal to sell cloud services to OpenAI.
The e-commerce and cloud computing giant’s Amazon Web Services (AWS) unit will provide its infrastructure to enable OpenAI to train and run its artificial intelligence (AI) models.
The agreement will give OpenAI access to hundreds of thousands of NVIDIA graphics processor units to train and run its artificial intelligence models like ChatGPT.
“Scaling frontier AI requires massive, reliable compute," OpenAI co-founder and CEO Sam Altman said in a media release.
“Our partnership with AWS strengthens the broad compute ecosystem that will power this next era and bring advanced AI to everyone.”
Amazon shares (NASDAQ: AMZN) closed $9.78 (4.00%) higher at $254.00, valuing it at $2.71 trillion, after earlier hitting a new peak of $258.60.
This is OpenAI’s first major deal after a corporate restructuring that gave it greater operational and financial freedom to achieve its AI growth objectives and demonstrates AWS ability to compete with Microsoft (NASDAQ: MSFT) and Alphabet’s (NASDAQ: GOOG) Google in the AI race.
“AWS's leadership in cloud infrastructure combined with OpenAI's pioneering advancements in generative AI will help millions of users continue to get value from ChatGPT,” OpenAI said in a media release.
Altman has committed the company to investing $1.4 trillion to develop 30 gigawatts of computing resources, which would be sufficient to supply 25 million U.S. homes.
"This is a hugely significant deal (and is) clearly a strong endorsement of AWS compute capabilities to deliver the scale needed to support OpenAI," PP Foresight analyst Paolo Pescatore was quoted in a Reuters story as saying.
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.
