Amazon mulls $50 billion investment in OpenAI, report says. What’s in it for both.

Amazon is in talks to invest up to $50 billion in OpenAI as part of an overall fundraising round to reach $100 billion, The Wall Street Journal reported late Thursday. Amazon and OpenAI did not immediately respond to Barron’s requests for comment early Friday.

Such a big investment would be a huge vote of confidence in OpenAI and would likely boost a number of stocks tied to its spending, including cloud computing providers Oracle and CoreWeave. OpenAI is expected to spend about $500 billion over the next four years to strengthen its artificial intelligence technology, according to the WSJ, and is considering an IPO in the fourth quarter of this year.

However, the real question will be what conditions Amazon will seek in return for its investment. The partnership between the two could mean OpenAI will make greater use of Amazon’s cloud computing unit, Amazon Web Services, in the future.

Previous reports had suggested that a deal between the two parties would depend on OpenAI using Amazon’s in-house Trainium chips, according to tech-focused The Information.

This could be a concern for chipmakers Nvidia and Broadcom, which currently provide processors for OpenAI. This could also raise questions about OpenAI’s future reliance on Microsoft, the company’s largest financial backer and a major provider of cloud computing capacity.

OpenAI and Amazon are already partners. In November, they reached a $38 billion deal for Amazon Web Services to provide infrastructure for AI workloads. This deal calls for Nvidia chips rather than Amazon’s Trainium processors.

According to The Information, Nvidia and Microsoft are also in talks to invest in OpenAI’s funding round; Nvidia is considering investing up to $30 billion, and Microsoft is considering investing under $10 billion.

Barron’s owner News Corp has a content licensing partnership with OpenAI.

Write to Adam Clark at adam.clark@barrons.com