Amazon-OpenAI $10B Talks Gain Momentum
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What is Amazon's $10 billion investment in OpenAI about?
Amazon is reportedly in talks with OpenAI to invest $10 billion into the startup. These are these kind of circular deals that we see being very popular today where essentially Amazon will invest $10 billion into OpenAI with kind of the understanding that OpenAI is going to turn around and spend those $10 billion on AWS for compute. This is good for both companies because OpenAI gets the $10 billion investment, which is amazing for them. And Amazon gets a chunk of the company, plus they get to mark up, you know, $10 billion in revenue to AWS when that money gets spent back. So it's kind of the money goes both ways. And with companies that are, you know, really heavily reliant on investors and the stock market, it's great for Amazon's stock price to say, look, we got another $10 billion.
How does this investment benefit both Amazon and OpenAI?
And it's great for OpenAI to say, look, someone invested another $10 billion into our company. It's interesting that the people investing money, though, are chip makers and anyone making hardware that OpenAI needs to buy, or data centers, people like Oracle. And then, of course, we have companies like Amazon with AWS and all of their web servers. So this is an interesting deal that seems to be more and more popular. We're going to break down the deal, who broke it, and what the sources are saying about all of this. Before we get into it, I wanted to mention, if you want to build... an AI tool or an app using AI, I'd love for you to try out my startup, which is called AIbox.ai.
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There's all sorts of really cool ideas that you can create over there. Go check out AIbox.ai. I'll leave a link in the description if you want to try out our new AI app workflow builder. All right, let's get into the story right now. So this was reported by CNBC and Bloomberg, who were both discussing this. The investment in OpenAI, this $10 billion investment from Amazon, would give it a valuation of $500 billion, almost half a trillion dollars as a private company This is absolutely phenomenal. And this is according to some quote-unquote anonymous sources who were familiar with the matter. The information first broke news about this talk, and then Bloomberg dug in and got some interesting info on that final valuation.
Right now, I think this potential deal shows that Amazon's really trying to broaden its exposure to AI and to the AI race. They've invested heavily into Anthropic, and now it seems like they're going straight for OpenAI. And they've also already committed about $8 billion to Anthropic. So, you know, putting $10 billion into OpenAI, I'm not sure what Anthropic thinks about this because, you know, their $8 billion, it was kind of tranched out over many years. And then OpenAI is about to get a big, huge slab of $10 billion. But maybe Anthropic's got a tranche of money earmarked for it as well. Because, of course, these two are direct competitors. And earlier this month, Amazon also introduced the latest version of their Tranium AI chips, and they also previewed the next generation, which I think is really making the point that Amazon and AWS is really focusing on their cloud ecosystem.
They really want to be the place where AI companies train their models. It's, it's interesting, too, because when we say AI companies, like a lot of people are like, well, you know, they're investing heavily in Anthropic and OpenAI, because they want to show everyone else that look, if we put all of this, you know, if the big companies like Anthropic and OpenAI are training on our, you know, with our training AI chips, and they're training on AWS, and they're using like our infrastructure, then everyone else is going to want to come over.
What are the implications of Amazon's investment for the AI landscape?
What I think is also interesting to note here is there's only five or six players in this race that are is like that are these gigantic companies and Google is going to use all of their own stuff.
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