Amazon Eyes $10 Billion OpenAI Investment Amid Trend of Circular Deals

Amazon is reportedly exploring a significant investment of up to $10 billion in OpenAI, according to CNBC. As part of the potential agreement, OpenAI would utilize Amazon's AI chips.

Bloomberg, citing an unnamed source, indicates that the deal could value OpenAI at over $500 billion. The Information initially reported the story.

This move comes as Amazon seeks to broaden its involvement in the rapidly evolving AI landscape. Previously, Amazon invested $8 billion in Anthropic, an OpenAI competitor. Earlier this month, the e-commerce giant also introduced the latest version of its Trainium chips and detailed plans for future chip development, complementing its Amazon Web Services cloud computing offerings.

The potential investment follows OpenAI's recent transition to a for-profit model, granting it greater flexibility in pursuing investments beyond Microsoft, which holds a 27% stake as an early backer.

Amazon's potential investment exemplifies the increasing prevalence of circular deals within the AI industry. These arrangements involve major hardware manufacturers and cloud providers investing in emerging AI companies, who in turn commit to using the investors' data centers and chips for training their AI models.

For instance, OpenAI invested $350 million in CoreWeave this past March. CoreWeave then used these funds to purchase chips from Nvidia, its backer. These same chips provide computing power to OpenAI, increasing CoreWeave's revenue and ultimately enhancing the value of OpenAI's stake in CoreWeave. In October, OpenAI also agreed to acquire a 10% stake in AMD, committing to utilize the chipmaker's AI GPUs. That same month, OpenAI signed a chip usage agreement with Broadcom, and in November, the company signed a $38 billion cloud computing deal with Amazon.

Neither OpenAI nor Amazon have yet offered comments regarding the potential deal.