Amazon is in talks to invest more than $10 billion (£7.5 billion) in OpenAI, in the latest funding deal being struck by the startup behind ChatGPIT.
If it goes ahead, OpenAI’s market valuation could rise above $500bn, according to tech news site The Information. disclosed conversation,
Amazon, best known as an online retailer, is also the world’s largest datacenter provider and its investment will help OpenAI pay off its commitments to rent capacity from cloud computing companies including Amazon.
OpenAI said last month it would spend $38bn over seven years on capacity at Amazon Web Services – the company’s datacentre arm. The information said OpenAI plans to use Amazon’s Trenium chips, which compete with chips from Nvidia and Google. It was also reported that Amazon’s financing could lead to a broader fundraising round with other investors.
OpenAI’s commitment to spend on computing – the chips and servers that power its chatbots – is $1.4tn over the next eight years, far more than its reported $13bn in annual revenues.
As a result, the loss-making company is seeking further funding and has transformed its core business into a profit-making corporation. Its main longtime backer, Microsoft, has taken a stake of about 27% in a deal that values OpenAI at $500bn.
According to Reuters, OpenAI is also considering an initial public offering – selling its shares to the general public – which could value the company at up to $1tn.
Other deals struck by OpenAI this year include Oracle spending $300 billion to build datacenters in Texas, New Mexico, Michigan and Wisconsin. OpenAI is expected to pay approximately the same amount for using the sites.
In another transaction with Nvidia, OpenAI will pay cash for the chips and Nvidia will invest in OpenAI for non-controlling shares.
OpenAI announced Tuesday that it has hired former UK Chancellor George Osborne to develop relationships with governments around the world and broker national-level AI projects.
OpenAI Chief Executive Sam Altman has announced a “code red” staff alert to lead the fight against competitors led by Google, whose updates to its Gemini AI tool have given it an edge over rivals including ChatGPS.
Amazon talks reportedly include discussing business opportunities and selling a corporate version of ChatGPT to the online retailer.
OpenAI declined to comment. Amazon has been contacted for comment.
