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The immense and escalating demand for computational power, a cornerstone of advanced artificial intelligence development, is fundamentally redrawing the strategic alliances within the technology sector. This reality was sharply illuminated by CNBC reporter MacKenzie Sigalos on ‘Squawk on the Street,’ as she unveiled the details of a groundbreaking $38 billion infrastructure deal between OpenAI and […]
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OpenAI signs a huge deal with Amazon to secure access to thousands of its Nvidia Blackwell-based EC2 UltraServers OpenAI has signed a new deal with Amazon Web Services (AWS) to provide them with “immediate and increasing” access to its Nvidia Blackwell-powered EC2 Ultraservers. This $38 billion deal grants OpenAI access to “hundreds of thousands” of […]
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OpenAI has once again entered into a partnership with a major player in Big Tech, and this time it is none other than Amazon, as AWS will now become one of the primary compute providers. OpenAI-Amazon Deal Will Span Over Seven Years With a Partnership Worth $38 Billion; No Mention of Trainium ASICs Well, Sam Altman's OpenAI has managed to secure several deals in the past few weeks, involving almost everyone in the AI frenzy, and these deals are targeted at gaining access to additional compute power. Now, in an announcement by Amazon, it is disclosed that AWS and OpenAI […]
Read full article at https://wccftech.com/amazon-enters-a-mega-deal-with-openai/
ChatGPT maker OpenAI, exercising newfound freedom under its renegotiated Microsoft partnership, will expand its cloud footprint for training and running AI models to Amazon’s infrastructure under a new seven-year, $38 billion agreement.
The deal, announced Monday, positions Amazon as a major infrastructure provider for Microsoft’s flagship AI partner, highlighting seemingly insatiable demand for computing power and increasingly complex alliances among big companies seeking to capitalize on AI.
It comes as Microsoft, Amazon, and big tech companies attempt to reassure investors who’ve grown concerned about a possible bubble in AI spending and infrastructure investment.
Under its new Amazon deal, OpenAI is slated to begin running AI workloads on Amazon Web Services’ new EC2 UltraServers, which use hundreds of thousands of Nvidia GPUs. Amazon says the infrastructure will help to run ChatGPT and train future OpenAI models.
Amazon shares rose nearly 5% in early trading after the announcement.
“Scaling frontier AI requires massive, reliable compute,” said OpenAI CEO Sam Altman in the press release announcing the deal. “Our partnership with AWS strengthens the broad compute ecosystem that will power this next era and bring advanced AI to everyone.”
Matt Garman, the AWS CEO, said in the release that Amazon’s cloud infrastructure will serve as “a backbone” for OpenAI’s ambitions.
In an interview with CNBC, Dave Brown, Amazon’s vice president of compute and machine learning services, said the new agreement represents “completely separate capacity” that AWS is building out for OpenAI. “Some of that capacity is already available, and OpenAI is making use of that,” Brown told CNBC.
Amazon has also been deepening its investment in AI infrastructure for Anthropic, the rival startup behind the Claude chatbot. Amazon has invested and committed a total of $8 billion in Anthropic and recently opened Project Rainier, an $11 billion data center complex for Anthropic’s workloads, running on hundreds of thousands of its custom Trainium 2 chips.
Microsoft has been expanding its own relationship with Anthropic, adding the startup’s Claude models to Microsoft 365 Copilot, GitHub Copilot, and its Azure AI Foundry platform
Up to this point, OpenAI has relied almost exclusively on Microsoft Azure for the computing infrastructure behind its large language models. The new deal announced by Microsoft and OpenAI last week revised that relationship, giving OpenAI more flexibility to use other cloud providers — removing Microsoft’s right of first refusal on new OpenAI workloads.
At the same time, OpenAI committed to purchase an additional $250 billion in Microsoft services. Microsoft still holds specific IP rights to OpenAI’s models and products through 2032, including the exclusive ability among major cloud platforms to offer OpenAI’s technology through its Azure OpenAI Service.
OpenAI’s new $38 billion deal with Amazon builds on a relationship that began earlier this year, when Amazon added OpenAI’s first open-weight models in five years to its Bedrock and SageMaker services. Released under an open-source license, those models weren’t bound by OpenAI’s exclusive API agreement with Microsoft, letting Amazon offer them on its platforms.
The latest announcement is part of a series of deals by OpenAI in recent months with companies including Oracle and Google — committing hundreds of billions of dollars overall for AI computing capacity, and raising questions about the long-term economics of the AI boom.
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gpt-oss-safeguard is an open-source AI that lets developers write their own safety rules instead of relying on a pre-trained black box.
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Generative AI has made its way onto the professional soccer field.
Laura Harvey, head coach of Seattle Reign FC, said this week that ChatGPT helped her come up with a new defensive strategy.
Speaking on the Soccerish Podcast, Harvey said she was curious if ChatGPT could answer questions about soccer. So she started prompting OpenAI’s chatbot with questions about her team.
At first, she asked broad questions like, “what is Seattle Reign’s identity?” She didn’t really love the answer.
But then she asked: “What formation should you play to beat NWSL teams?”
It then listed every team in the women’s soccer professional league, with a suggested formation. And for two of the teams, it suggested “back-five,” a defensive setup using five players in the backline.
Harvey said she wasn’t super familiar with the strategy and had not used it as a coach.
She took the AI suggestion to her staff and did a deep dive on the potential change.
“We liked it,” Harvey said. “And it worked — we won the game.”
Harvey, a three-time NWSL Coach of the Year, didn’t reveal the opponent but said they were “really good.” Now the team uses the formation as an option during matches. The Reign have improved since last season and are ranked fourth in the NWSL heading into the playoffs.
It’s a fascinating example of using AI as a tactical consultant, combining human expertise and intuition with machine suggestions.
“It didn’t tell you how to play it, what to do in it or any of that stuff,” Harvey said on the podcast. “But it was like, ‘This is what we would say to do.’ And I was like, ‘Hmm, interesting.’ And that was what spurred me to look into it. So then I really looked into it.”
Across industries, professionals are treating tools such as ChatGPT as sounding boards — running ideas by them, exploring scenarios, or pressure-testing strategies before making decisions.
OpenAI’s own research this year found that people increasingly rely on ChatGPT “as an advisor rather than only for task completion.”
“ChatGPT likely improves worker output by providing decision support, which is especially important in knowledge-intensive jobs where productivity is increasing in the quality of decision-making,” according to the research.
For some time now, “artificial intelligence” and “AI” have been the buzzwords in the tech industry. OpenAI is the company that started this great revolution, positioning itself as the name everyone thinks of when talking about AI thanks to its ChatGPT platform. But what if it’s not all as rosy as it seems? What if OpenAI is actually far from profitable and is just “burning money” waiting for something that might never happen (financial sustainability)? The company’s finances seem to tell a story that points in that direction.
ChatGPT undoubtedly captured the world’s imagination. OpenAI’s CEO, Sam Altman, became the face of an artificially intelligent future, guiding humanity toward an era of unprecedented productivity and creativity. Large companies have also poured money into OpenAI, and the firm even changed its business model to allow for easier revenue streams. That said, all the accumulated revenue might not be enough.
According to a recent financial analysis by Will Lockett from Planet Earth and Beyond, OpenAI is in a catastrophic financial freefall. The company that powers a revolution is losing money at a rate that would make most established industries faint. Worse still, its solution to this cash-burning inferno appears to be dousing it with a trillion dollars’ worth of gasoline.
Let’s pull back the curtain on the finances. In the first six months of 2025, OpenAI reportedly generated $4.3 billion in revenue. That’s an impressive figure for a young company. The problem? During that same period, it posted $13.5 billion in net losses.
This isn’t just a rounding error. It means for every dollar OpenAI earns, it loses three.
This puts the company on track for a staggering $27 billion annual loss by 2025. For reference, we are talking about nearly double the $14 billion loss some reports had predicted for 2026. The math of its growth is even more alarming. For every single dollar of new revenue growth, OpenAI is spending an astonishing $7.77.
Lockett described the situation bluntly: “This is a money black hole. I cannot stress how unprecedentedly dreadful that is.” In any normal business, numbers like these would trigger emergency brakes, massive layoffs, and a desperate pivot to survival. But OpenAI is not a normal business. It’s as if its leadership is “fully aware they are driving headfirst into a wall at 100 mph, and instead of stepping on the brakes, they are mashing the throttle,” Lockett added.
Instead of pivoting, OpenAI is doubling down. The company has announced plans to invest about $1.4 trillion annually in data centers and AI infrastructure through 2030. The brand has forged deals with giants like TSMC, Samsung, and Intel.
This investment is a bet that “more is more”—that building bigger and more powerful models is the path to profitability and, eventually, Artificial General Intelligence (AGI). But if the current operational costs are unsustainable, the future costs are astronomical.
Calculations based on industry standards (data centers costing 26% of their build cost annually to operate) paint a grim picture. By 2029, that trillion-dollar infrastructure plan could saddle OpenAI with approximately $650 billion in annual operational costs.
The company’s own optimistic revenue target for that same year? Just $125 billion.
The math simply doesn’t work. “Even if OpenAI hits its $125 billion 2029 revenue target,” Lockett notes, “it will still be making an annual loss of half a trillion dollars.”
This spending spree would be reckless enough on its own. It becomes deeply irrational when you discover what OpenAI’s own researchers have admitted.
The most brutal criticism of OpenAI’s strategy comes from OpenAI itself. The core technical problem plaguing all large language models, including ChatGPT, is “hallucinations.” The term “hallucinations” refers to the AI’s tendency to confidently invent facts, sources, and answers. This one flaw makes them unreliable for the high-stakes business and enterprise tasks that OpenAI needs to sell to justify its valuation.
The company’s trillion-dollar bet assumes that this problem can be fixed by scaling up. That is, by adding more data and more computing power.
There’s just one problem. According to a research paper published by OpenAI, this assumption is false. Their own research reportedly found that “hallucinations are a core part of generative AI technology and can’t be fixed” with more data and compute.
The researchers did find a potential workaround called “active learning,” which essentially involves massive human oversight to correct the AI. But they concluded that “operating such models is so inherently expensive… it is almost always significantly cheaper to have a human do the task instead,” Lockett reports.
The company is betting a trillion dollars on a solution that its own scientists have proven will not work for a problem they admit is inherent to the technology.
This technical flaw is not just theoretical; it’s playing out in the real world. While headlines trumpet an AI takeover, the reality on the ground is one of widespread failure.
An MIT study found that 95% of AI pilots fail to generate any profit or productivity gains for the businesses implementing them. Other research, such as a report from METR, has even shown that AI coding tools can actually slow developers down due to the time spent finding and correcting the AI’s “helpful” errors.
This is the reality check against the hype. While some niche AI tools for data analysis are effective, the generative AI revolution that OpenAI champions is largely failing to launch. Even user engagement, the lifeblood of any tech platform, is showing signs of trouble. There are even reports of ChatGPT usage having peaked and now being in decline.
If the technology is fundamentally flawed and the finances are catastrophic, why is this happening? Why continue to burn billions on a failing strategy?
The answer, critics argue, lies in the incentive structure. “They aren’t developing AI,” Will Lockett states. “They are trying to make the bottom line go up at any cost.”
It’s interesting how in the world of Silicon Valley, AI companies are not valued on core aspects like profitability or product-market fit. They are valued on data center spending. More spending signals more ambition, which attracts more investment at a higher valuation.
This creates a perverse incentive for executives. CEOs like Sam Altman don’t take a traditional salary. Instead, their wealth is tied to the company’s stock valuation. Altman reportedly stands to earn a $10 billion payday from his 7% stake in OpenAI’s for-profit conversion. This incentive structure encourages executives to keep pushing things to enrich themselves before the inevitable bubble pops. Bankers and VCs who previously supported the “AI hype” are now quietly warning of a bubble.
So, is OpenAI’s goal of profitability in the next few years realistic?
The numbers suggest it’s nearly impossible. The company’s revenue growth is already collapsing, falling from 250% in 2024 to just 56% in 2025. To break even, OpenAI would need to triple its revenue annually through 2030. Meanwhile, its core products are failing in 95% of business pilots.
This sets the stage for a brutal reckoning. The $6 billion investor bailout OpenAI took at the end of 2024 merely delayed the inevitable. The company’s trajectory, without a quick and radical restructuring, points toward bankruptcy.
But this isn’t just about one company. OpenAI controls 61% of the US generative AI market and has absorbed over 20% of all AI venture capital. So, basically, there’s a high concentration of risk for an entire industry in a single entity.
When this bubble bursts, it won’t be a quiet failure. It threatens to take the entire AI industry down with it. It could wipe out a big chunk of the $192.7 billion in VC funding poured into the sector.
This is the paradox at the heart of OpenAI. It’s a company built on the promise of superhuman intelligence that is being run with what appears to be a stunning lack of human common sense. It is a story of “greed at the cost of everything,” and it is hurtling toward a conclusion that will impact all of us. Let’s wait and see how events develop.
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Amazon’s third-quarter profits rose 38% to $21.2 billion, but a big part of the jump had nothing to do with its core businesses of selling goods or cloud services.
The company reported a $9.5 billion pre-tax gain from its investment in the AI startup Anthropic, which was included in Amazon’s non-operating income for the quarter.
The windfall wasn’t the result of a sale or cash transaction, but rather accounting rules. After Anthropic raised new funding in September at a $183 billion valuation, Amazon was required to revalue its equity stake to reflect the higher market price, a process known as a “mark-to-market” adjustment.
To put the $9.5 billion paper gain in perspective, the Amazon Web Services cloud business — historically Amazon’s primary profit engine — generated $11.4 billion in quarterly operating profits.
At the same time, Amazon is spending big on its AI infrastructure buildout for Anthropic and others. The company just opened an $11 billion AI data center complex, dubbed Project Rainier, where Anthropic’s Claude models run on hundreds of thousands of Amazon’s Trainium 2 chips.
Amazon is going head-to-head against Microsoft, which just re-upped its partnership with ChatGPT maker OpenAI; and Google, which reported record cloud revenue for its recent quarter, driven by AI. The AI infrastructure race is fueling a big surge in capital spending for all three cloud giants.
Amazon spent $35.1 billion on property and equipment in the third quarter, up 55% from a year earlier.
Andy Jassy, the Amazon CEO, sought to reassure Wall Street that the big outlay will be worth it.
“You’re going to see us continue to be very aggressive investing in capacity, because we see the demand,” Jassy said on the company’s conference call. “As fast as we’re adding capacity right now, we’re monetizing it. It’s still quite early, and represents an unusual opportunity for customers and AWS.”
The cash for new data centers doesn’t hit the bottom line immediately, but it comes into play as depreciation and amortization costs are recorded on the income statement over time.
And in that way, the spending is starting to impact on AWS results: sales rose 20% to $33 billion in the quarter, yet operating income increased only 9.6% to $11.4 billion. The gap indicates that Amazon’s heavy AI investments are compressing profit margins in the near term, even as the company bets on the infrastructure build-out to expand its business significantly over time.
Those investments are also weighing on cash generation: Amazon’s free cash flow dropped 69% over the past year to $14.8 billion, reflecting the massive outlays for data centers and infrastructure.
Amazon has invested and committed a total of $8 billion in Anthropic, initially structured as convertible notes. A portion of that investment converted to equity with Anthropic’s prior funding round in March.
With a new OpenAI partnership in hand, Microsoft is going into its earnings report Wednesday afternoon with a resolution to one of the biggest questions about its business.
The company’s market value reached $4 trillion again as Wall Street reacted to the details of the new Microsoft-OpenAI agreement, which gives Microsoft a 27% equity stake in OpenAI’s new for-profit entity, and a commitment for $250 billion in cloud purchasing by the ChatGPT maker.
Analysts expect the tech giant to report another strong quarter, fueled primarily by continued momentum in its Azure cloud business and growing adoption of its Copilot AI tools.
Quarterly revenue is expected to be about $75.4 billion for the first quarter of Microsoft’s 2026 fiscal year, which ended Sept. 30, according to numbers tracked by Yahoo Finance. That would represent a 15% jump compared to the $65.6 billion reported in the same period last year.
Analysts expect earnings per share of $3.66, up about 11% year-over-year from $3.30.
Investors will be paying close attention to the growth rate in Microsoft’s Azure cloud business, with some analysts expecting as much as 39% growth (in constant currency, excluding the impact of exchange rates). Hitting this mark would exceed the company’s prior guidance and maintain the 39% growth pace set in the previous quarter.
Yet the potential for an AI bubble will no doubt be the focus of questions on company’s earnings conference call. Amid surging investment and growing valuations in the AI sector, some analysts and tech leaders are warning that the enthusiasm could outpace the business realities
Microsoft and Google parent Alphabet will both report numbers on Wednesday afternoon, and Amazon the following day, making for quick comparisons across the major cloud platforms.
As of the most recent quarter, ended in June, Microsoft reported more than $75 billion in annual Azure revenue for its just-ended fiscal year, compared to an annual run rate that had surpassed $50 billion for Google Cloud and a run rate of nearly $124 billion for Amazon Web Services (based on its $30.9 billion revenue in the June quarter).
Check back with GeekWire on Wednesday afternoon for full coverage.
Microsoft and OpenAI announced the long-awaited details of their new partnership agreement Tuesday morning — with concessions on both sides that keep the companies aligned but not in lockstep as they move into their next phases of AI development.
Under the arrangement, Microsoft gets a 27% equity stake in OpenAI’s new for-profit entity, the OpenAI Group PBC (Public Benefit Corporation), a stake valued at approximately $135 billion. That’s a decrease from 32.5% equity but not a bad return on an investment of $13.8 billion.
At the same time, OpenAI has contracted to purchase an incremental $250 billion in Microsoft Azure cloud services. However, in a significant concession in return for that certainty, Microsoft will no longer have a “right of first refusal” on new OpenAI cloud workloads.
Microsoft, meanwhile, will retain its intellectual property rights to OpenAI models and products through 2032, an extension of the timeframe that existed previously.
A key provision of the new agreement centers on Artificial General Intelligence (AGI), with any declaration of AGI by OpenAI now subject to verification by an independent expert panel. This was a sticking point in the earlier partnership agreement, with an ambiguous definition of AI potentially triggering new provisions of the prior arrangement.
Microsoft and OpenAI had previously announced a tentative agreement without providing details. More aspects of the deal are disclosed in a joint blog post from the companies.
Shares of Microsoft are up 2% in early trading after the announcement. The company reports earnings Wednesday afternoon, and some analysts have said the uncertainty over the OpenAI arrangement has been impacting Microsoft’s stock.
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