Amazon (AMZN) is reportedly in talks to invest around $10 billion in OpenAI (PC:OPAIQ), the company behind ChatGPT. The potential deal, initially reported by The Information, would deepen ties between the two tech giants, with OpenAI expected to use Amazon’s in-house AI chips to power its next phase of growth.
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Amazon’s Bet on OpenAI
According to sources, Amazon could invest $10 billion or more in OpenAI, though discussions remain flexible and no deal has been finalized yet. Amazon has already invested at least $8 billion in OpenAI rival Anthropic, but the tech giant appears eager to deepen its exposure to the fast-growing generative AI market.
Interestingly, the talks follow OpenAI’s restructuring in October, when the company clarified the terms of its partnership with Microsoft (MSFT). The move gave OpenAI greater flexibility to raise capital and work with other companies across the broader AI ecosystem.
The latest report also stated that OpenAI plans to use Amazon’s Trainium chips, which compete directly with AI chips from Nvidia (NVDA) and Google (GOOGL). Notably, Amazon Web Services (AWS) has been developing its own AI chips since around 2015, and this hardware has become increasingly important as AI companies race to train models and meet surging demand for computing power. AWS rolled out the latest generation of its Trainium chips earlier this month.
What This Could Mean for Amazon
If the deal moves forward, an investment in OpenAI could significantly strengthen Amazon’s position in the fast-growing AI arms race. Tying OpenAI to AWS would help drive more demand for Amazon’s cloud infrastructure, especially its in-house Trainium chips, reducing customer reliance on Nvidia and improving margins over time.
Additionally, backing OpenAI would give Amazon deeper exposure to generative AI and strengthen AWS’s role as a key provider of the computing power behind the next wave of AI innovation—potentially supporting long-term growth for AMZN stock.
What Is the Price Target for AMZN Stock?
According to TipRanks, AMZN stock has a Strong Buy consensus rating based on 44 Buys and one Hold assigned in the last three months. At $296.85, Amazon’s average share price target implies an upside of 33.4% from the current level.
