Amazon discussing $10B investment in OpenAI at $500B valuation
What's the story
Amazon is reportedly in talks to invest around $10 billion in OpenAI, the company behind ChatGPT. The potential deal could value OpenAI at over $500 billion, a source familiar with the matter told Reuters. The discussions are said to be at an early stage and the terms are still fluid.
Strategic moves
OpenAI's growth and Amazon's AI strategy
The talks come as OpenAI prepares for an IPO that could value the company at up to $1 trillion. The potential investment from Amazon also highlights OpenAI's ability to form partnerships after transitioning from a non-profit model and finalizing its deal with Microsoft. The Windows-maker owns a 27% stake in OpenAI and has exclusive rights to sell its models to cloud customers.
Tech transition
OpenAI's potential adoption of Amazon's Trainium chips
According to The Information, OpenAI is considering using Amazon's Trainium chips in its operations. The move could help Amazon compete with NVIDIA and Google in the AI hardware space. However, it's still unclear if the deal would include provisions for integrating ChatGPT capabilities into products like AI-enhanced shopping features that are already being developed by Amazon for its own apps.
Market impact
OpenAI's valuation and market position
OpenAI was last valued at $500 billion during an employee share sale, briefly overtaking Elon Musk's SpaceX as the world's largest start-up. The company's rapid growth has led some Wall Street analysts to warn of a potential bubble, given the interconnected nature of some investment deals where companies heavily invest in potential customers to maintain their own product spending.