According to Manufacturing.net, OpenAI and Amazon have signed a massive $38 billion deal that allows the ChatGPT maker to run its artificial intelligence systems on Amazon’s U.S. data centers. The agreement gives OpenAI access to “hundreds of thousands” of Nvidia’s specialized AI chips through Amazon Web Services and was announced on Monday. Amazon shares immediately jumped 4% following the news. This comes less than a week after OpenAI altered its partnership with Microsoft, which had been its exclusive cloud provider until early this year. California and Delaware regulators also just approved OpenAI’s plan to form a new business structure to more easily raise capital and make profit. Amazon stated that OpenAI will start using AWS compute immediately, with all capacity targeted for deployment before the end of 2026 and potential expansion into 2027 and beyond.
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<h2 id="cloud-wars”>The Cloud Provider Shuffle
So OpenAI is basically playing the field now. For years, Microsoft was their exclusive cloud provider – that relationship was practically written in stone. But now they’re diversifying big time. First they worked with Oracle, now this massive Amazon deal. It’s like they’re collecting cloud providers like trading cards.
Here’s the thing though – this isn’t just about getting better pricing through competition. AI models are absolute energy hogs, and ChatGPT alone serves hundreds of millions of users. They need computing power on a scale that’s almost hard to comprehend. We’re talking about infrastructure commitments totaling over $1 trillion across all their deals. That’s trillion with a T.
The Burning Money Question
Now let’s talk about the elephant in the room. OpenAI doesn’t actually make a profit yet. They’re making all these billion-dollar deals while burning through cash at an incredible rate. Some investors are getting nervous about what they call the “circular” nature of these arrangements – cloud providers are essentially fronting infrastructure hoping for future returns.
Sam Altman basically told doubters to chill last week, saying revenue is “growing steeply” and they’re making a “forward bet” that growth will continue. But seriously, when you’re committing to $38 billion in cloud spending before you’re even profitable, that’s one hell of a bet. How long can this continue before investors start getting really nervous?
What This Means for Everyone Else
For other AI companies and developers, this deal signals that the cloud giants are all-in on AI infrastructure. Amazon already backs Anthropic, Microsoft has OpenAI (sort of), Google has its own models – the battle lines are being drawn. The good news? There’s going to be massive computing capacity available. The bad news? Smaller players might get priced out.
And for enterprises looking to build AI applications, this means the underlying infrastructure is becoming more robust and competitive. More competition usually means better pricing and services down the line. But right now, we’re in the land grab phase where everyone’s throwing billions at the problem hoping it pays off later.
The real question is whether the AI revenue will actually materialize to justify these astronomical infrastructure investments. We’re about to find out.
