"Amazon is in discussions with OpenAI to invest $10 billion in the company while supplying more of its AI chips and cloud computing services, according to The Financial Times. The deal would push OpenAI's valuation over $500 billion but is likely to raise more questions about the company's circular investment agreements involving chips and data centers. The two companies are also in talks about the possibility of OpenAI helping Amazon with its online marketplace, similar to deals it has made with Etsy, Shopify and Instacart."
"These deals have sounded alarms among investors considering their circular nature. In many of those, including this latest Amazon deal, OpenAI is taking investment money and then sending that cash back to the same company for infrastructure or chips. And the amounts are staggering, with just two companies, Softbank and Oracle, spending a combined $400 billion on new data centers for OpenAI's compute needs. And so far, OpenAI has lost more money than it makes."
Amazon is negotiating a $10 billion investment in OpenAI while planning to supply additional AI chips and cloud services, a move that would value OpenAI above $500 billion. The deal would require OpenAI to use Amazon's Trainium chips and rent more AWS data center capacity, adding to a prior $38 billion server rental commitment over seven years. OpenAI restructured its Microsoft agreement to permit other suppliers and has secured deals with NVIDIA, Oracle, AMD and others to expand compute capacity. Investors worry about circular finances as investment capital is often spent back on investors' infrastructure, totaling roughly $400 billion from two firms.
Read at Engadget
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