OpenAI signs $38b cloud deal with Amazon to power AI models
AWS will power OpenAI’s next-generation models in a $38 billion deal as the AI firm moves beyond Microsoft.
- OpenAI signed a $38 billion deal with Amazon to get access to its computing
- AWS will use its UltraServers, powered by Nvidia GPUs, for OpenAI’s models
- Skeptics warn that similar deals show increasing signs of an AI bubble
As demand for powerful infrastructure explodes, tech giants are forging multibillion-dollar deals to power AI models. On Monday, November 3, OpenAI signed a seven-year, $38 billion agreement with Amazon Web Services. The deal gives OpenAI access to AWS’s massive compute capacity.
“Scaling frontier AI requires massive, reliable compute,” said OpenAI co-founder and CEO Sam Altman. “Our partnership with AWS strengthens the broad compute ecosystem that will power this next era and bring advanced AI to everyone.”
OpenAI will have access to thousands of Nvidia GPUs. These include the GB200 and GB300 series Amazon EC2 UltraServers, optimized for AI compute. According to Amazon, this infrastructure can scale to tens of millions of CPUs, both for training and running the models.
“As OpenAI continues to push the boundaries of what’s possible, AWS’s best-in-class infrastructure will serve as a backbone for their AI ambitions,” said Matt Garman, CEO of AWS. “The breadth and immediate availability of optimized compute demonstrates why AWS is uniquely positioned to support OpenAI’s vast AI workloads.”
OpenAI deals raise questions about an AI bubble
The deal is part of OpenAI’s $1.4 trillion investment to expand its infrastructure capacity. According to CEO Sam Altman, the firm plans to develop 30 gigawatts of power capacity. For comparison, a single nuclear power plant has about 1 gigawatt in capacity, while 30 gigawatts could power 26 million homes for a year.
OpenAI’s previous deals have raised questions about a potential AI bubble . Critics warned that increased AI firm valuations, as well as their capital expenditure, are not in line with AI demand and profitability.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
The AI boom may follow the path of the 19th-century railway bubble, and builders may not be the ultimate winners
Goldman Sachs analyst Bobby Molavi compared the current situation to the 19th-century British railway mania: 500 companies spent more than the nation's annual income building 8,000 miles of railway, with most early investors losing out, while the real beneficiaries were the later "passengers." He pointed out that the current AI craze is driven by both debt and momentum, and that the S&P 500’s forward P/E ratio of 18x is only "a bit cheaper." Whether the builders can retain value is uncertain, and history does not offer an optimistic answer.
If Anthropic's IPO goes smoothly and the stock price rises next week, then everything remains the same for AI. Otherwise, some companies will go bankrupt.
The shrinking valuations of two major giants have triggered a chain reaction—investors are adopting more conservative revenue multiples for AI startups and are directly halting high-valuation financing for companies with zero revenue. Multiple venture capital firms have advised their portfolio companies to lower valuation expectations and to quickly build up cash reserves. Market participants warn that the outcome of Anthropic’s IPO will be a barometer for the industry: if successful, the boom will continue; if it fails, some companies may face elimination.
After the Brazilian election, political discount deepens; Morgan Stanley remains bullish on Petrobras (PBR.US), focusing on fuel pricing and dividends
Morgan Stanley still maintains its most optimistic "Overweight" rating, but has lowered its year-end 2027 target price from $31 to $25.
Corning (GLW.US) receives initial "Buy" rating from Jefferies! AI factories driving a fiber optic rush, with a potential global supply gap of up to 30%
For Corning, the recent profit growth mainly comes from the expansion of AI clusters. As the number of optical links crossing cabinets and campuses increases, customers need to deploy more optical fibers within limited conduit and cabinet space, thus driving demand for high-density optical cables and connection systems.
Crypto prices
More
