Amazon in Talks to Invest $10 Billion in OpenAI Amid $500 Billion Valuation
Amazon.com Inc is in advanced discussions to invest around $10 billion in OpenAI, the developer of ChatGPT, in a move that could value the artificial intelligence firm at more than $500 billion, according to a source familiar with the matter.
Potential Milestone Ahead of Possible IPO
The talks come as OpenAI prepares for a potential initial public offering that could value the company at up to $1 trillion, as previously reported by Reuters in October. The negotiations between Amazon and OpenAI remain fluid, with no final agreement yet in place, the source added, requesting anonymity due to the private nature of the discussions.
This approach marks a significant step for OpenAI as it continues to broaden its partnerships beyond its non-profit origins. The company has already restructured its governance model to allow for greater financial flexibility while retaining a public benefit mission.
Microsoft’s Ongoing Role and Structure
Following its major investment, Microsoft holds a 27% stake in OpenAI and enjoys exclusive rights to offer OpenAI’s models to its cloud customers. The deal between the two companies transformed OpenAI into a public benefit corporation controlled by a non-profit entity. This structure lifted many of the restrictions that previously limited OpenAI’s ability to attract large-scale investment and access essential computing power.
Expanding Partnerships and Technology Use
According to The Information, which first disclosed the Amazon talks, OpenAI intends to use Amazon’s Trainium chips. These chips compete directly with those developed by Nvidia and Google, signalling OpenAI’s interest in diversifying its hardware partnerships.
The same report noted that the Amazon funding could lead to a wider capital raise involving multiple investors. It also mentioned that OpenAI is exploring the possibility of offering an enterprise version of ChatGPT to Amazon. However, it remains unclear whether the agreement would include ChatGPT-powered shopping tools that Amazon is developing for its own platforms.
OpenAI and Microsoft have not yet responded to Reuters’ requests for comment regarding the reported discussions.
with inputs from Reuters