OpenAI, the creator of ChatGPT, and Amazon have finalized a substantial $38 billion agreement that will enable the artificial intelligence powerhouse to operate its advanced AI systems within Amazon’s state-of-the-art data centers located across the U.S. This landmark deal, announced on a Monday, stipulates that OpenAI will leverage “hundreds of thousands” of Nvidia’s specialized AI chips, provided through Amazon Web Services (AWS), to power its sophisticated AI tools and platforms. Following the announcement, Amazon’s shares experienced a notable increase of over 4%, reflecting investor confidence in the partnership.

This strategic alliance with Amazon comes less than a week after OpenAI adjusted its longstanding partnership with Microsoft. Microsoft had previously served as the startup’s exclusive cloud computing provider until earlier this year. The timing also coincides with recent approvals from California and Delaware regulators, which have allowed San Francisco-based OpenAI—originally founded as a nonprofit—to proceed with its plan to establish a new business structure. This restructuring is designed to facilitate easier capital raising and profit generation, positioning the company for substantial growth.

Amazon emphasized the critical nature of this collaboration, stating that “The rapid advancement of AI technology has created unprecedented demand for computing power.” The company further elaborated that OpenAI “will immediately start utilizing AWS compute as part of this partnership, with all capacity targeted to be deployed before the end of 2026, and the ability to expand further into 2027 and beyond.” This highlights the urgency and scale of computational resources required for modern AI development.

The intensive requirements of artificial intelligence, particularly the massive amounts of energy and computing power it consumes, have been a consistent theme for OpenAI. The company has frequently indicated its need for increased capacity, essential not only for the continuous development of new AI systems but also for sustaining existing products like ChatGPT, which serves hundreds of millions of users daily. OpenAI has recently committed over $1 trillion in financial obligations for AI infrastructure, a figure that includes significant data center projects with Oracle and SoftBank, as well as crucial semiconductor supply deals with leading chipmakers such as Nvidia, AMD, and Broadcom.

However, some of these substantial deals have raised concerns among investors due, in part, to their “circular” nature. Critics point out that OpenAI, which does not yet operate at a profit, cannot currently afford to fully pay for the extensive infrastructure being provided by its cloud backers. These arrangements are often predicated on the expectation of future returns on investment. OpenAI CEO Sam Altman, however, has dismissed these concerns, characterizing them as “breathless concern.” Appearing on a podcast with Microsoft CEO Satya Nadella, Altman asserted, “Revenue is growing steeply. We are taking a forward bet that it’s going to continue to grow,” underscoring his confidence in the company’s financial trajectory. It is also notable that Amazon is already the primary cloud provider for Anthropic, a direct rival to OpenAI and the developer of the Claude chatbot, demonstrating Amazon’s significant role across the competitive AI landscape.