Amazon, OpenAI Strike $38 Billion Nvidia Chip Deal
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This is Bloomberg Tech. Coming up, Amazon's cloud unit signs a $38 billion deal to supply open AI with computing power. Plus how Xiaomi's pivot from smartphones to electric vehicles may have come at a human cost. And all eyes on Palantir posting its earnings results after the closing bell. This is defense tech spending is ramping up. But first, we check in on the markets also ramping up. Not quite at a record high for the Nasdaq 100, but we are up some four tenths of a percent for the big tech benchmark as we focus in once again on earnings and the never ending desire for AI compute. Let's go there because the key points drivers on this particular benchmark are two stocks we shine a light on. Amazon.
Pushing on 4.5% higher after significant gains on Friday after its earnings. This is a company that is, of course, shrinking its workforce, but focusing in on AWS growth. And it manages to sign OpenAI as that new client. $38 billion deal. We'll dig into it. NVIDIA, well, they're the GPUs that go inside all these data centers. It too climbs in terms of market capitalization up another 2.7%. I just want to go to the top story that is Amazon and OpenAI as they sign a $38 billion deal for further cloud compute. And it's Bloomberg's Seth Fiegeman that we turn to. Seth, in the grand scheme of things, it's not $300 billion of Oracle cloud that we saw before, but it is notable that OpenAI turns to more and more cloud providers at this moment.
I think that's right. It really is telling about this moment for both companies. OpenAI just is tapping every possible resource it can to meet its cloud computing needs. And Amazon, which had previously been invested in Anthropic, is also trying to have a piece of OpenAI and possibly other players down the road. So it contributes to that incestuous web we keep talking about. Everyone is backing everyone else.
And of course, we'd seen a deal to offer OpenAI's open large language models into the overall bedrock offering of AWS. But this is different. This is a seven-year deal. It goes out. But actually, by end of 2026, we're going to see the amount of compute already necessary for OpenAI to go on to AWS.
A bit more near-term than some other deals, we've seen OpenAI broker and OpenAI is leaving the door open to expanding with more investment down the road. I do think it's telling, though, that this is Amazon providing NVIDIA chips, not Trinium, not in-house. So on the one hand, it's a testament to Amazon's ability to build up cloud computing infrastructure at scale to meet OpenAI's needs, but you have to wonder what that means about the quality of Amazon's own chips and why it's not.
Go into that for us, because they talk about the tens of thousands of NVIDIA chips that are going to be used, but they then talk about the millions of potential CPUs that they might eventually help using. Is that where AWS's own vertical integration comes in?
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