Amazon Closes 38B OpenAI Deal After Years on Sidelines

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•  03 Nov 2025
 

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After watching from the wings while competitors carved up the AI infrastructure market, $AMZN just made its entrance with a $38 billion statement. The seven-year agreement between Amazon Web Services and OpenAI isn't just another cloud partnership. It's Amazon acknowledgment that sitting out the AI race wasn't an option anymore, and it's willing to pay top dollar to catch up.

The deal gives OpenAI access to hundreds of thousands of Nvidia chips through AWS data centers, with full capacity promised by the end of 2026. For anyone tracking the cloud wars between $MSFT, $GOOGL, and $ORCL, this changes the competitive landscape overnight. Microsoft had been OpenAI exclusive cloud partner for years with roughly $250 billion in Azure commitments. Oracle locked down a separate $300 billion agreement for dedicated computing infrastructure. Google Cloud already handles portions of ChatGPT workload. Amazon was conspicuously absent from this list until now.

That absence wasn't by choice. OpenAI couldn't sign with Amazon because of its exclusive arrangement with Microsoft. That exclusivity ended last month as part of renegotiations, and OpenAI immediately went shopping for additional capacity. The timing tells you everything about the demand pressure they're facing. Sam Altman has been vocal about severe computing shortages limiting growth, and with $13 billion in revenue expected this year against nearly $600 billion in new cloud commitments, the math only works if they scale exponentially.

For AWS, this deal arrives at a critical juncture. Cloud revenue grew 20% last quarter, the fastest pace since 2022, but investors have been pushing management to accelerate growth while Microsoft and Google report faster expansion thanks to new AI customers. The $38 billion figure might seem modest compared to OpenAI other partnerships, but it's the strategic foothold that matters. AWS CEO Matt Garman called it recognition of the ability to deploy massive data center networks, and he's right to frame it that way. This isn't just about revenue. It's about proving AWS can compete for the most demanding AI workloads when the entire industry is rushing to secure compute capacity.

The irony shouldn't be lost on anyone paying attention. Amazon has already invested $8 billion in Anthropic, the AI company founded by former OpenAI employees and considered a direct competitor. That investment included building a new data center powered by hundreds of thousands of AWS proprietary Trainium2 chips, which just went live this week. Now Amazon is simultaneously supporting both Anthropic and OpenAI, hedging its bets while extracting maximum value from its infrastructure advantage. It's the kind of move that makes sense when you're the world largest cloud provider trying to stay relevant in an industry being reshaped by a technology you don't control.

Bloomberg analysts noted that adding AWS as a major cloud provider could ease the intense pressure on OpenAI, especially since the company has been signing contracts with smaller neo-cloud providers like CoreWeave that can't match AWS scale. Amazon global data center network also positions OpenAI for faster international expansion, which matters when you're trying to justify a $1.4 trillion spending commitment on chips and infrastructure over the coming years. That number has analysts worried about an investment bubble forming in the sector, but for now, the demand appears real enough to support these valuations.

The deployment starts immediately. Amazon will roll out hundreds of thousands of chips including Nvidia new GB200 and GB300 AI accelerators to help ChatGPT generate responses and train next-generation models. The scale is staggering, and it reflects how quickly compute requirements are growing for frontier AI development. Altman said developing advanced AI requires massive and reliable computing power, and that AWS strengthens the infrastructure driving the next era while making sophisticated AI accessible to broader audiences. It's the kind of statement that sounds visionary until you remember his company is burning through billions trying to deliver on that promise.

What this really represents is Amazon refusing to be left behind in the defining technology shift of the decade. The company watched competitors build deeper relationships with the most valuable AI company in the world while AWS sat on the sidelines. Now it's back in the game, late but armed with the resources and infrastructure to make up ground. Whether $38 billion is enough to meaningfully change AWS competitive position remains to be seen, but the signal is clear. Amazon isn't conceding the AI infrastructure market to anyone.

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