Amazon just snagged OpenAI in a $38 billion cloud megadeal

Amazon just scored a massive win Monday, announcing a seven-year, $38 billion partnership with OpenAI, giving the ChatGPT maker immediate access to hundreds of thousands of powerful Nvidia chips housed in Amazon Web Services data centers.

Investors had worried AWS was falling behind Microsoft and Google in attracting artificial intelligence (AI) customers. Those concerns eased somewhat after the cloud division reported strong growth last quarter, but this deal delivers concrete proof that Amazon can compete for the industry’s most sought-after clients.

Amazon shares jumped nearly 5% on the news, adding roughly $140 billion to the company’s value.

The partnership was only possible because of OpenAI’s recent restructuring. The AI company completed its shift to a for-profit structure last week, ending Microsoft’s exclusive right to provide computing services. Less than a week later, OpenAI signed with Microsoft’s biggest cloud rival.

“Scaling frontier AI requires massive, reliable compute,” OpenAI CEO Sam Altman said. “Our partnership with AWS strengthens the broad compute ecosystem that will power this next era and bring advanced AI to everyone.”

AWS CEO Matt Garman called the company’s infrastructure “a backbone” for OpenAI’s ambitions. He noted the breadth and quick availability of computing power shows why AWS can handle OpenAI’s enormous needs.

The deal gives OpenAI access to Nvidia’s latest GB200 and GB300 processors. Amazon plans to deploy all the promised capacity by the end of 2026, with options to expand further in 2027 and beyond.

But questions remain about how OpenAI will pay for everything. The company expects to generate around $20 billion in revenue this year, yet it has now committed nearly $600 billion across multiple cloud providers. Besides the Amazon deal, OpenAI agreed to spend $250 billion with Microsoft and $300 billion with Oracle.

The situation adds fuel to concerns about an AI bubble. Companies are projected to spend upwards of $500 billion on AI infrastructure between 2026 and 2027 in the US alone, according to financial journalist Derek Thompson.

Adding another twist, Amazon is also a major backer of Anthropic, one of OpenAI’s key competitors. The company recently opened an $11 billion data center campus specifically for Anthropic. Amazon and Microsoft are both developing their own AI models to compete with startups like OpenAI.

The computing race shows no signs of slowing. As AI companies push toward more powerful systems, they’re pulling the entire cloud industry along with them.