Amazon (AMZN) has signed a massive $38 billion, seven-year deal with OpenAI (PC:OPAIQ), the company behind ChatGPT. Under the agreement, Amazon Web Services (AWS) will provide the computing power needed to train and run OpenAI’s next-generation AI models. The news sent AMZN stock up nearly 6% on Monday.
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As part of the deal, OpenAI will gain immediate access to hundreds of thousands of Nvidia (NVDA) GPUs hosted on AWS, including the latest GB200 and GB300 AI chips. These GPUs will power both the training and real-time use of OpenAI’s models, with full capacity expected by the end of 2026. Nvidia stock also rose about 3% following the announcement.
Importantly, Amazon plans to expand its data center footprint over time to support OpenAI’s growing AI workloads, particularly those involving advanced “agentic” AI systems.
Shift in OpenAI’s Cloud Strategy
This partnership marks a major shift in OpenAI’s cloud strategy, coming just days after it ended Microsoft’s (MSFT) exclusive status as its cloud provider. In the past few months, OpenAI has rapidly diversified its infrastructure partners, signing deals worth about $1.4 trillion with companies like Nvidia, Broadcom (AVGO), Oracle (ORCL), and Google (GOOGL).
The AWS deal ensures OpenAI has a steady pipeline of compute resources as it pushes the boundaries of generative AI. CEO Sam Altman said the partnership will help scale “frontier AI” and make advanced capabilities more widely accessible.
Why This Deal Matters for Amazon
For Amazon, the deal is a big win for AWS, which has been working to catch up with Microsoft and Google in the AI cloud race. It shows that AWS can handle the most demanding AI workloads and is a serious player in the next wave of AI infrastructure.
“This partnership is a turning point,” said AWS CEO Matt Garman. “As OpenAI continues to push the boundaries of what’s possible, AWS’s best-in-class infrastructure will serve as the backbone for their AI ambitions.”
Beyond the revenue, the deal gives Amazon a strong foothold in the AI race, solidifying its position as a key AI infrastructure provider.
What Is the Price Target for Amazon Stock?
Currently, Wall Street has a Strong Buy consensus rating on Amazon stock based on 42 unanimous Buys. The average AMZN stock price target of $291.24 indicates a 14.15% upside potential from current levels.
