OpenAI craze continues as Amazon plans to invest $10 billion in Sam Altman's AI startup: Report

Amazon and OpenAI are in talks about a potential investment in the artificial intelligence company that could reach billions, CNBC and Reuters reported quoting people in the know about the matter.

According to the reports by the two outlets, Amazon's investment in OpenAI could exceed around $10 billion along with an agreement to use its AI chips.

The details of the deal are “very fluid”, the sources who spoke to CNBC and Reuters said, as the two companies are still in the initial talking stages.

The potential deal with Amazon could value OpenAI at over $500 billion.

The talks about the potential deal come at a time when OpenAI is planning an initial public offering soon that could increase its value to up to $1 trillion, as per a Reuters report in October.

OpenAI and Amazon have made no formal announcement regarding the report.

What's inside the OpenAI-Amazon deal?

The Information, which was the first media outlet to report about the talks with Amazon, said that OpenAI has plans to use Amazon’s Trainium chips, which compete with Nvidia and Google's chips.

The report further stated that the AI startup is additionally looking to sell an enterprise version of ChatGPT to Amazon. However, it remains unclear if the deal includes provisions for integrating ChatGPT features, including its much-hyped shopping experience, for which Amazon is developing its own apps.

The Amazon financing could pave the way for a broader fundraising round involving additional investors, the Information reported.

OpenAI's terms with Microsoft

The potential OpenAI Amazon deal has emerged months after the Sam Altman-run company completed a restructuring in October with formally detailing the terms of its partnership with Microsoft. This gave it more freedom and ability to partner widely across the AI ecosystem.

OpenAI has also moved on from its non-profit roots, which has propelled the Amazon talks.

The Microsoft deal refashioned OpenAI as a public benefit corporation that is controlled by a non-profit with a stake in OpenAI's financial success, removing major constraints on the firm's ability to raise capital and secure computing resources.

Since 2019, Microsoft has invested more than $13 billion in OpenAI and backed it. However, the October terms state that Microsoft will no longer have rights to refuse and be OpenAI's compute provider, allowing the AI startup to develop its own projects with third parties.

The company has a stake of 27% in OpenAI and has an exclusive right to sell the AI firm's models to its own cloud clients.