Amazon's stock hit a record high on Monday, November 3, after the company revealed a $38 billion cloud computing deal with OpenAI, the creator of ChatGPT.
Under the new seven-year deal, OpenAI will be able to use hundreds of thousands of Nvidia's high-performance computing chips through Amazon Web Services (AWS).
This is OpenAI's first cloud contract with Amazon which comes after the Amazon reported strong earnings for the third quarter which caused its shared to rise nearly 10%.
Its cloud business, AWS grew at its fastest pace since 2022, allowing it to compete with rivals Microsoft and Google in AI-related cloud services.
As part of the new change, Microsoft received a 27% ownership stake in OpenAI, reflecting its earlier investments in the company.
Meanwhile, OpenAI also agreed to buy additional $250 billion worth of Microsoft's Azure cloud services.
Earlier this year, Microsoft is no longer OpenAI's only cloud provider and OpenAI has also committed to buying more than $300 billion in cloud services from Oracle.
However, the new agreement clearly mentioned that Microsoft no longer has the exclusive rights to be offered OpenAI's future cloud computing contracts first.
In addition to this, OpenAI's CEO, Sam Altman said the company plans to spend $1.4 trillion to build 30 gigawatts of computing power which would be enough to supply electricity to roughly 25 million US homes.
