Amazon to invest $10bn in OpenAI amid concerns of “circular” nature of such deals

Tech giant Amazon is reportedly about to invest over $10 billion in OpenAI, which could push the artificial intelligence (AI) startup’s valuation to more than $500 billion.

Everyone wants a piece of OpenAI, arguably still the hottest AI company in the world, and the proposed new deal is evidence of that.

In addition to investing in OpenAI, Amazon also wants to sell the firm more of its chips and computing power, according to The Information, which first reported on the deal.

People familiar with the matter told the publication that any deal is expected to include OpenAI using Amazon’s Trainium series of AI chips. The ChatGPT-maker would also have to rent more of Amazon’s data center capacity to run its models and tools.

The talks are still in the early stages, according to the sources. If concluded, it would push OpenAI’s valuation to over half a billion dollars, they said.

The deal comes after OpenAI agreed with its early backer Microsoft on a deal that allows it to pursue data center agreements with rival cloud providers.

Shortly afterwards, OpenAI announced a computing agreement with Amazon, committing to spend $38 billion over seven years on renting servers from the tech giant. Any new deal would come on top of that.

Both arrangements will tie OpenAI more closely to Amazon, while lessening the firm’s dependence on Microsoft, its biggest investor.

This year, the AI startup also signed massive deals with companies including Nvidia, AMD, Oracle, Broadcom, Google, and Samsung. Meanwhile, Amazon has invested $8 billion in Anthropic, making it the biggest backer of OpenAI’s rival.

Anthropic has also reached deals with many of the same firms that invested in OpenAI, including Microsoft, Nvidia, and Google.

Such deals, including the latest between Amazon and OpenAI, have raised concerns among some investors, who worry about their “circular structure,” according to the Financial Times.

There are also concerns that AI is a bubble, but experts note that it’s still too early to say whether it’s about to burst – or take a different turn.

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