OpenAI just signed a bumper $38bn cloud contract with AWS – is it finally preparing to cast aside Microsoft?

OpenAI will start using AWS to scale AI systems to answer queries and for training, as the company continues to expand its partnerships beyond Microsoft.

The $38 billion, multi-year deal will give OpenAI access to hundreds of thousands of Nvidia GPUs, with the ability to scale up as necessary, the companies noted.

OpenAI will begin using AWS immediately, with all the capacity targeted to be deployed before the end of this year, and further expansion planned for next year.

"Scaling frontier AI requires massive, reliable compute," said OpenAI CEO Sam Altman in a statement. "Our partnership with AWS strengthens the broad compute ecosystem that will power this next era and bring advanced AI to everyone."

OpenAI noted that the infrastructure that AWS is setting up for OpenAI is designed to boost processing efficiency and performance.

This will be organized into clusters of Nvidia GB200s and Nvidia GB300s via Amazon's EC2 UltraServers, all on the same network for low latency. Those clusters will be designed to support different workloads, from answering ChatGPT queries to training future models, adapting as needed by OpenAI.

"As OpenAI continues to push the boundaries of what's possible, AWS's best-in-class infrastructure will serve as a backbone for their AI ambitions," said AWS chief executive Matt Garman.

"The breadth and immediate availability of optimized compute demonstrates why AWS is uniquely positioned to support OpenAI's vast AI workloads."

Is OpenAI trading Azure for AWS?

OpenAI has had a close partnership with Microsoft since 2019, centered on billions in investment from the firm as well as Azure access. But that partnership lost exclusivity in January and reports of tensions around OpenAI's move to a new structure.

That said, OpenAI continues to use Azure, and last week signed a $250 billion agreement to continue the partnership, but is at the same time expanding its options to avoid overreliance on one hyperscaler.

In recent months, the AI company has signed massive deals with both Google Cloud and Oracle, with the latter worth around $300 billion alone.

AI spending spree

OpenAI's massive contract with AWS further fuels concerns that AI companies are spending too much on infrastructure without the revenue to support such deals, sparking the threat of another tech bubble.

OpenAI runs at a loss, and is expected to post $20 billion in revenue this year, while this time last year it was trying to scrounge up $6 billion in investment just to keep the lights on.

Despite that, Altman said last week that OpenAI had already committed to spending $1.4 trillion over multiple years, which includes deals with cloud providers as well as multibillion-dollar contracts with Nvidia, AMD, and Broadcom.

Altman justified the huge spending spree during an interview with BBC News last month, noting that while the “investment loans are unprecedented…it’s also unprecedented for companies to be growing revenue this fast”.

Earlier this month, ITPro reported that the company was lining up ways to fund its AI ambitions, including adding subscribers, creating a personal AI device, and adding a checkout for AI-powered shopping.

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