Amazon Set to Waste $10 Billion on OpenAI

"What these tech investors are getting is a stake in a company that has had its spot at the top of the industry challenged by Gemini 3. That is an Alphabet Inc. ( NASDAQ: GOOGL) offering. It is also one that the company says will not make money until 2030, one that will need hundreds of billions of dollars to hit its ambiguous goals, and one that has a growing number of direct competitors. These competitors include divisions of public companies, well-funded xAI and Anthropic, and a legion of smaller companies."

"Bloomberg reports, "OpenAI is in initial discussions to raise at least $10 billion from Amazon.com Inc. and use its chips, a potential win for the online retailer's effort to broaden its AI industry presence and compete with Nvidia Corp." Amazon is a tiny player in the AI chip business. Nvidia Corp. ( NASDAQ: NVDA) dominates, with a market cap of $4.33 trillion, which makes it the most valuable company in the world."

Amazon plans to invest $10 billion into OpenAI and to supply chips for OpenAI workloads, aiming to broaden Amazon's AI presence and challenge Nvidia's dominance. OpenAI has received capital and strategic deals from investors including Microsoft, Oracle, SoftBank, Nvidia, and Disney, while facing competition from Alphabet's Gemini 3, xAI, Anthropic, public-company divisions, and numerous smaller firms. OpenAI projects no profit until 2030 and anticipates needing hundreds of billions of dollars to reach its goals. Industry arrangements reportedly include long-term chip commitments totaling $1.5 trillion from Nvidia, Oracle, AMD, and Broadcom; the investment raises concerns about commercial "round tripping."

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