Seven years, $38 billion! Amazon.com, Inc. (AMZN.US) officially joins the ranks of OpenAI to provide hundreds of thousands of NVIDIA Corporation GPUs.

After completing a restructuring last week and gaining greater operational and financial autonomy, OpenAI took its first major step: signing a seven-year, $38 billion cloud service procurement agreement with Amazon.com, Inc. AWS. The collaboration, announced on Monday, will give OpenAI access to hundreds of thousands of NVIDIA Corporation GPUs for training and running its artificial intelligence (AI) models. This agreement highlights the AI industry's insatiable demand for computing power. As companies compete to develop systems that rival or even surpass human intelligence, OpenAI CEO Sam Altman previously stated that the company will invest $1.4 trillion to build 30 gigawatts of computing resources - enough to meet the electricity needs of around 25 million households in the United States. This collaboration also demonstrates a significant vote of confidence in the cloud computing division of e-commerce giant Amazon.com, Inc. Previously, investors were concerned about AWS lagging behind Microsoft Corporation and Alphabet Inc. Class C in the AI race, but the strong growth of this business in the third quarter partially eased those concerns. Following the announcement of the news, Amazon.com, Inc.'s stock price hit an all-time high on Monday, increasing its market value by nearly $140 billion, closing up 4%; while Microsoft Corporation's stock price temporarily declined. "This milestone agreement is undoubtedly a strong endorsement of AWS's computing power scale supporting OpenAI's development," commented Paolo Pescatore, analyst at PP Foresight. Reliable Computing Support The collaboration with Amazon.com, Inc. further demonstrates that OpenAI is actively diversifying its computing needs across multiple cloud platforms. Previously, Microsoft Corporation had been OpenAI's exclusive cloud service provider and major investor. Microsoft Corporation has supported the company since 2019 and has invested a total of $13 billion. In January of this year, Microsoft Corporation announced that it would no longer be the exclusive cloud service provider for OpenAI and would instead have the right of first refusal for new demand. With the recent renegotiation of business terms between Microsoft Corporation and OpenAI, the preferential treatment from Microsoft Corporation has officially expired, allowing OpenAI to collaborate more widely with other cloud giants. Prior to this, OpenAI had signed a $300 billion data center supply agreement with Oracle Corporation. Earlier this year, OpenAI also revealed that its ChatGPT service would be hosted on the Alphabet Inc. Class C cloud platform. Additionally, the startup has reached a $22.4 billion agreement with the emerging cloud service provider CoreWeave, which is dedicated to promoting its "Neo Clouds" service to AI developers. "Expanding cutting-edge AI requires vast and reliable computing power support," Altman said. "The collaboration with AWS strengthens the broad computing ecosystem, which will drive the development of a new era, enabling advanced AI to reach everyone." According to the agreement, OpenAI will immediately begin using AWS services, with all planned capacity expected to be online by the end of 2026, and room for expansion in 2027 and beyond. The two parties announced that Amazon.com, Inc. will deploy hundreds of thousands of chips, including NVIDIA Corporation GB200 and GB300 AI accelerators, in the data cluster built for ChatGPT response and OpenAI's next-generation model training. Currently, Amazon.com, Inc. already offers OpenAI open-source models to enterprise customers through its cloud platform Amazon Bedrock. Altman revealed that the ultimate goal is to achieve an additional gigawatt of computing power per week - a astronomical number, as the current capital investment for each gigawatt of computing power exceeds $40 billion. It is worth noting that OpenAI will still maintain a close collaboration with Microsoft Corporation, as the two parties have reached a new agreement where OpenAI will invest around $250 billion in its Azure cloud platform. Amazon.com, Inc.'s "Breakthrough" and Proof through AWS As the world's largest cloud computing service provider, Amazon.com, Inc. has been conspicuously absent from OpenAI's list of partners. While almost all major cloud service providers in the United States have been building or transforming data centers to support OpenAI, AWS has never made it to the list. Therefore, for Amazon.com, Inc., which has always been unable to break through in the competition of the AI era, this deal is an important endorsement of its ability to build and operate super-large-scale data center networks. AWS CEO Matt Garman stated in a statement, "As OpenAI continues to push the technological boundaries, AWS's top-notch infrastructure will be the cornerstone of its AI vision." Analysts Anurag Rana and Andrew Girard pointed out in their latest report, "Including AWS in the core cloud service provider list can alleviate operational pressure for OpenAI, especially when it continues to allocate more contracts to emerging cloud service providers like CoreWeave, which are much smaller in scale than AWS." The analysts also emphasized that with a global data center network, AWS will help OpenAI expand into international markets. It is worth noting that Amazon.com, Inc. is also a significant supporter of Anthropic PBC - an AI developer founded by former members of OpenAI. Last week, Amazon.com, Inc. announced that a data center park specifically built for Anthropic had officially begun operations, equipped with hundreds of thousands of Trainium 2 AI chips developed by AWS. While the agreement between Amazon.com, Inc. and OpenAI explicitly states the use of NVIDIA Corporation chips, there is still the possibility of integrating more chip solutions in the future. Dave Brown, Vice President of Computing and Machine Learning Services at AWS, did not disclose specific details of the collaboration with OpenAI, but emphasized that Trainium "provides customers with a cost-effective choice." Path to OpenAI's IPO For OpenAI, the privately held AI company with the highest valuation, this collaboration is an important step towards its IPO. Analysts believe that through diversified cloud partnerships and long-term computing power locks, OpenAI not only demonstrates its operational independence but also shows mature corporate characteristics. Following a comprehensive restructuring last week, OpenAI moved further away from its non-profit origins, paving the way for its future IPO, with reports suggesting that the company's valuation could surpass $1 trillion. Altman recently acknowledged in a livestream that considering the funding needs, an IPO is the "most likely path." Chief Financial Officer Sarah Friar also pointed out that the structural adjustments in the company are necessary preparations for going public. However, the soaring valuations of AI companies and the commitment to huge expenditures have raised concerns in the market - with OpenAI alone planning to invest over $1 trillion, there are concerns that an AI bubble may be forming. Although OpenAI's annualized revenue is expected to reach $20 billion by the end of the year, its losses are also continuing to expand.