"Amazon is in talks to invest at least $10 billion in OpenAI, according to a report from The Information, in a deal that could push the value of the startup past $500 billion. Analysts say the deal looks like a marriage of necessity: OpenAI needs help funding its enormous burn rate while Amazon needs proof that its custom Trainium chips matter in a world still dominated by Nvidia."
"To understand the deal, follow the money-or, more precisely, the absence of it. 'This is a fake deal,' Fitzgerald told Fortune, plainly. 'Or, more politely, it's a framework.' That is where the new $10 billion comes in. In Fitzgerald's view, the investment functions less like traditional venture capital and more like a financing scheme designed to paper over that gap. 'If OpenAI wins the lottery, then they'd have the money to pay for this,' he said. 'In practice, the deal will be much, much smaller.'"
Amazon is negotiating a minimum $10 billion investment in OpenAI that could value the company above $500 billion. OpenAI faces an enormous cash burn and large cloud-spending commitments it currently cannot fully fund. Amazon seeks validation for its Trainium chips against Nvidia dominance. Industry watchers characterize the arrangement more as a financing framework than a traditional partnership, with the investment intended to cover funding shortfalls rather than act as standard venture capital. Observers warn the announced figures may be nominal and that the actual funding will likely be substantially smaller, while OpenAI leverages vendor financing and its urgency in negotiations.
Read at Fortune
Unable to calculate read time
Collection
[
|
...
]