OpenAI has signed a $38 billion deal with Amazon Web Services and will immediately start accessing Nvidia’s graphics processing units. CNBC's MacKenzie Sigalos joins 'Money Movers' with the latest details.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

OpenAI has signed a $38 billion compute deal with Amazon Web Services, marking its first cloud partnership with the company. The agreement provides OpenAI with immediate access to hundreds of thousands of NVIDIA GPUs on Amazon's network, with custom infrastructure to be developed for future needs.

This partnership follows the expiration of Microsoft's right of first refusal, allowing OpenAI to diversify its cloud providers. The deal is expected to be fully operational by the end of next year and is part of OpenAI's broader strategy to secure more computing power amid rising demand.

OpenAI signs $38 billion deal with Amazon

Shares of Amazon jumping today to a new record high after announcing a $38 billion compute deal with OpenAI, its first partnership actually with the AI company. Mackenzie Sagalos has more in today's Tech Check. These headlines are just so regular that they don't pack as much of a punch. And this one, Sarah, could be read as OpenAI flexing on Microsoft after finally freeing itself from its biggest shareholder's grip on cloud deals. CEO Sam Altman announcing a major partnership with Amazon this morning. It's OpenAI's first ever cloud deal with AWS, and the scale of it nearly matches OpenAI's current $40 billion SoftBank-led financing round, underscoring just how aggressively it is chasing more compute. Now, under the deal, OpenAI gets immediate access to hundreds of thousands of NVIDIA GPUs on Amazon's network with custom infrastructure to follow. The deployment is already live and will be fully online by the end of next year. Amazon will start by using existing capacity and then build out a dedicated footprint for OpenAI, similar to what it is already doing with Anthropic. AWS's head of machine learning services and compute tells me they've already identified parcels of land for OpenAI, where they'll build infrastructure specifically to support OpenAI's next-gen models. Now, this also helps explain why Amazon is projecting a record $210 billion Q4. CEO Andy Jassy teased several big October deals for AWS on the call last week, and this appears to be one of them. Yes, OpenAI was already expanding to other clouds, Oracle, Google, but this is different. Microsoft's right of first refusal expired last week as part of its commercial restructuring, and that cleared the path for OpenAI to sign directly with Microsoft's biggest rival in the cloud wars. No permission needed. And with demand for compute only accelerating, OpenAI finally forging ties with the most dominant player in the cloud wars is a game changer for them going forward. Guys? Mackenzie, pretty interesting. We played sound from that interview that Nadella and Altman gave to Brad Gerstner over the weekend, and I think Nadella in there talks about how that initial billion-dollar investment kind of had some detractors internally. Right, and so what we've seen here is this evolution in OpenAI's relationship with Microsoft. They did agree to $250 billion in Azure commitments last week as part of this restructure, but you really see OpenAI going toward this multi-cloud strategy to try to diversify their risk, but also they're just so hungry for compute. And what I will say, it's interesting. Bernstein did some back-of-the-envelope math. Last quarter, OpenAI apparently lost $12 billion kind of backing out of that Microsoft quarterly report. They were able to get that math. But Sam Altman in that same interview you mentioned, Carl, said that this is part of why he feels more of an impetus to go public so that people stop doubting that they're capable of honoring all these compute deals, which are now north of $1.4 trillion. Yes, believe me, the markets would love to see it happen. Watch the progress if they get there. Mack, thank you. Mackenzie Segalos.

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OpenAI signs $38 billion deal with Amazon

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