OpenAI signs $38B deal with Amazon: Here's what to know

Core Insights - Amazon's shares reached a new record high following the announcement of a $38 billion compute deal with OpenAI, marking OpenAI's first partnership with Amazon [1] - The deal allows OpenAI immediate access to hundreds of thousands of NVIDIA GPUs on Amazon's network, with a dedicated infrastructure to be built by the end of next year [2][3] - This partnership signifies OpenAI's shift towards a multicloud strategy, diversifying its risk and reducing reliance on Microsoft, especially after Microsoft's right of first refusal expired [4][5] Company Developments - OpenAI's deal with Amazon nearly matches its current $40 billion financing round, highlighting its aggressive pursuit of compute resources [2] - Amazon is projected to achieve a record $210 billion in Q4, partly due to this new partnership [3] - OpenAI's CEO indicated that the company is motivated to go public to validate its capability to fulfill its compute commitments, which now exceed $1.4 trillion [8] Industry Context - The partnership comes at a time when demand for compute resources is accelerating, positioning OpenAI favorably in the competitive cloud landscape [5] - OpenAI's strategy includes expanding to other cloud providers like Oracle and Google, indicating a broader trend of multicloud adoption in the industry [7] - The evolving relationship between OpenAI and Microsoft reflects a significant shift in the cloud computing market dynamics, particularly with OpenAI's increasing independence [6][7]