Amazon reportedly in talks to invest $10B in OpenAI as circular deals stay popular

Amazon is reportedly exploring a substantial investment of up to $10 billion in OpenAI, a move that could see the AI research lab leveraging the e-commerce titan's AI chip technology, according to a report by CNBC. Should the negotiations succeed, OpenAI's valuation could soar beyond $500 billion, as indicated by Bloomberg, citing an anonymous source. In its quest to enhance its position in the competitive AI landscape, Amazon has previously invested $8 billion in Anthropic, a notable competitor to OpenAI. Earlier this month, Amazon also introduced the latest version of its Trainium chip series and announced plans for future developments aimed at bolstering its cloud computing services through Amazon Web Services. This potential deal follows OpenAI's recent shift to a for-profit model, which allows the organization greater flexibility in securing investment from sources beyond its primary backer, Microsoft, which holds a 27% stake. The prospective partnership between Amazon and OpenAI reflects a growing trend of reciprocal arrangements within the AI sector, where major hardware suppliers and cloud service providers collaborate with emerging AI firms. A notable example of this trend occurred in March when OpenAI invested $350 million in CoreWeave, which subsequently utilized these funds to procure NVIDIA chips. This arrangement not only supports OpenAI's operational needs but also enhances CoreWeave's revenue, ultimately benefitting OpenAI's investment value. Further, in October, OpenAI acquired a 10% stake in AMD and established partnerships with Broadcom to utilize their AI GPUs. In November, OpenAI solidified its relationship with Amazon through a groundbreaking $38 billion cloud computing agreement. As of now, neither OpenAI nor Amazon has provided an official comment regarding the ongoing investment discussions.