After securing deals worth hundreds of billions of dollars for computing power from chipmakers Nvidia and AMD, and cloud provider Oracle, OpenAI has now inked another massive multi-billion-dollar agreement with tech titan Amazon.
On Monday, OpenAI announced its commitment to purchase $38 billion in cloud computing services from Amazon over the next seven years. This substantial increase in computing capacity is crucial for OpenAI to further develop and implement its cutting-edge artificial intelligence technologies, such as the renowned chatbot ChatGPT.
Between 2019 and 2023, OpenAI exclusively sourced its computing power from Microsoft, a key aspect of their intricate partnership. Their original agreement mandated that OpenAI procure services solely from Microsoft, its principal investor, unless specific approval was granted for engaging with other computing providers.
In the last 18 months, following OpenAI’s concerns about insufficient computing power from Microsoft, the tech behemoth permitted the startup to enter into distinct agreements with two additional cloud service providers.
Just last week, Microsoft and OpenAI revised their contractual terms, granting OpenAI the freedom to procure cloud computing services from any provider without requiring Microsoft’s explicit consent.
This $38 billion deal with Amazon, finalized mere days later, underscores OpenAI’s aggressive strategy to rapidly expand its already vast computing resources crucial for its ambitious AI projects. Furthermore, OpenAI is actively developing new data centers in collaboration with Oracle, Japanese conglomerate SoftBank, the United Arab Emirates, and other partners.
To finance these extensive data center constructions, OpenAI has also entered into a series of intricate agreements with leading chip manufacturers Nvidia, AMD, and Broadcom.
With hundreds of billions of dollars now committed to securing vast computing power, OpenAI is aggressively striving to match the colossal investments made by major tech companies. In the past year alone, giants like Amazon, Google, Meta, and Microsoft collectively invested over $360 billion in capital expenditures.
This escalating spending by both OpenAI and established tech giants has prompted concerns among financial analysts and tech historians, who warn of a potential “AI bubble.” Artificial intelligence, despite its immense promise, remains a costly and largely unproven technology that may require years to fully mature. Even as OpenAI, a leading player, generates billions in annual revenue, it has yet to achieve profitability.
(Note: The Times has previously initiated legal action against OpenAI and Microsoft, alleging copyright infringement concerning news content utilized by A.I. systems. Both companies have refuted these allegations.)