Amazon is in talks with Sam Altman’s OpenAI, which hosts the world’s top AI platform ChatGPT, for a potential investment of $10 billion. The talks also indicate that OpenAI could use Amazon’s in-house Trainium chips as part of the offer. If the deal goes through, it would be a significant breakthrough for Amazon’s relatively young semiconductor business. It would challenge Nvidia in its own game, which currently dominates the AI chip sector.

If the talks with Amazon progress through, OpenAI could reach a valuation of nearly $500 billion. The leading AI company is also planning to launch an IPO next that can set its valuation to $1 trillion. It could reach the likes of Apple, Nvidia, Microsoft, Tesla, Alphabet, and Meta, among others.

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Amazon & OpenAI Partnership: The Race For AI Heats Up

It would be a win-win situation for both OpenAI and Amazon in terms of valuation, funding, and chip sales. Amazon’s Trainium chip is marketed as a cheaper and more energy-efficient alternative to Nvidia’s graphics processing units. This comes at a time when corporations are grappling to secure high watts of energy to power their data centers.

The discussions also highlight the tight competition brewing in the AI sector. Billions have already been poured into the industry, and the money flow is yet to end. In addition, Amazon’s deal with OpenAI comes after the e-commerce giant recently pledged to invest $8 billion in another AI firm, Anthropic. Therefore, the Jeff Bezos-owned company is putting all its eggs in different baskets for protection.

However, Nvidia remains undisputable despite competition, as Amazon and OpenAI announced a $38 billion cloud agreement in November, and it is centered around Nvidia chips. This shows that Nvidia remains dominant despite several alternatives being explored.