OpenAI, Signs $38 Billion Cloud Contract With Amazon [Stocks+]

OpenAI Signs Cloud Infrastructure Contract With Amazon Web Services (AWS)

Analysis: Seen as Part of IPO Preparations

Amazon Stock Rises 4%

OpenAI announced that it signed a $38 billion cloud infrastructure contract with Amazon Web Services (AWS) on the 3rd (local time). This is the first time OpenAI has partnered with Amazon after moving away from Microsoft's (MS) cloud.

Under the deal, OpenAI will immediately perform large-scale AI computations using NVIDIA graphics processing units (GPUs) on AWS infrastructure within the United States. AWS plans to build dedicated infrastructure for OpenAI.

On the news, Amazon's stock surged 4% and closed at an all-time high. Over the past two days, Amazon's stock rose 14%, marking the largest gain since November 2022.

A New Phase in Cloud Competition

OpenAI has been using Microsoft's cloud services since 2019 as Microsoft invested in the company. Microsoft's cumulative investment amounts to $13 billion. However, earlier this year, Microsoft's exclusivity clause ended, leaving Microsoft with only a 'right of first negotiation' for new requests to OpenAI.

Last week, that right expired, allowing OpenAI to freely collaborate with other hyperscalers. OpenAI has already signed cloud contracts with Oracle and Google as well. The AWS deal is considered the largest and most strategically significant of these partnerships.

OpenAI CEO Sam Altman said in a statement, "Massive, reliable computing is essential to scale the next generation of AI," adding, "Collaboration with AWS is an important turning point that will lay the foundation for this new era."

AWS to Build Dedicated AI Infrastructure for OpenAI

AWS said it will first utilize existing data center capacity under the deal and later build additional dedicated AI infrastructure for OpenAI.

Dave Brown, Vice President of Compute and Machine Learning at AWS, told CNBC, "This agreement is composed of entirely separate capacity," adding, "Some resources are already being used by OpenAI."

AWS CEO Matt Garman emphasized, "AWS is the only provider that can deliver broad, immediately available, optimized compute infrastructure," and added, "We are ready to support OpenAI's massive AI workloads."

Amazon's cloud revenue recently exceeded market expectations by growing more than 20% year-on-year. However, it lagged behind Microsoft (40%) and Google (34%) in growth rate. With this deal, AWS aims to regain leadership in the AI race by securing OpenAI as a mega customer.

The deal centers on two of NVIDIA's latest Blackwell GPUs, with the possibility of including additional chips in the future. AWS's own AI chip, Trainium, is currently being used by OpenAI competitor Anthropic. Amazon has invested billions in Anthropic and is building an $11 billion AI-dedicated data center complex in New Carlisle, Indiana.

IPO Preparations Accelerate

The deal is also interpreted as part of OpenAI's preparations for an initial public offering (IPO). It can be seen as an effort to organize OpenAI's financial and management structure for listing. OpenAI is strengthening a cloud partner diversification strategy by signing long-term contracts with AWS, Google, Oracle, and others, aiming to secure both independence from any single company and stable infrastructure.

CEO Altman recently said on a live broadcast, "Considering capital needs, going public is the most likely option." CFO Sarah Friar also stated, "Recent organizational changes are necessary steps for an IPO."

New York=Shin-young Park, correspondent nyusos@hankyung.com