Amazon’s $38 Billion Deal with OpenAI Signals It’s No Longer an AI Laggard

04 November 2025

Attendees walk through an expo hall at AWS re:Invent 2023, a conference hosted by Amazon Web Services (AWS), in Las Vegas, Nevada, U.S., November 29, 2023. Noah Berger/AWS/Handout via REUTERS

Amazon’s announcement that it will supply OpenAI with up to $38 billion of cloud-services capacity over the next seven years marks a decisive shift in the e-commerce giant’s artificial-intelligence ambitions and presents a turning point for its cloud-computing arm. In an industry race defined by scale, speed and compute power, the agreement gives OpenAI access to “hundreds of thousands” of Nvidia GPUs and the ability to expand into tens of millions of CPUs using Amazon Web Services infrastructure.

For years Amazon’s cloud business, AWS, was a market leader, but as the generative-AI era surged, rivals such as Microsoft and Google pulled ahead. According to data from Synergy Research Group, AWS’s share of the global cloud market slipped from about 34 % to 29 %. That slide helped fuel investor concern that Amazon was becoming a laggard in the AI transformation. The OpenAI deal signals Amazon is moving to plug that gap. Analysts see it as a strong endorsement of AWS’s capacity to handle frontier-scale workloads and an indication that Amazon is ready to compete again.

The timing of the agreement is especially strategic. OpenAI recently underwent a major restructuring that removed Microsoft’s right of first refusal to provide compute services and repositioned the company to raise capital and partner more broadly. With that shift, Amazon is now in a strategic position with a marquee AI customer whose ambitions align with massive scale.

From Amazon’s perspective, the deal gives more than just headline value. The company is reportedly set to roll out customised infrastructure featuring Nvidia’s GB200 and GB300 accelerators, and the full capacity is expected to be deployed by the end of 2026, with expansion continuing into 2027 and beyond. The financial implications are meaningful: analysts estimate this could increase AWS’s backlog by roughly 20 % in the fourth quarter, helping to power growth while Amazon continues its large capital-spend cycle estimated at about $125 billion this year.

Of course there are qualifiers. While $38 billion is significant it still falls behind the massive commitments other cloud providers have secured: for example, Microsoft’s commitment to OpenAI is reportedly around $250 billion and Oracle’s at about $300 billion. So while Amazon’s deal may indicate a turnaround, it does not automatically make it the clear front-runner. The challenge will be execution: building, deploying and maintaining the ultra-high-scale infrastructure, keeping up with competitors, and turning compute advantage into differentiated products and services.

For OpenAI the partnership with AWS offers diversification and resilience in its infrastructure strategy. It signals a move away from exclusive dependence on any single cloud provider, giving it greater flexibility to expand its training capacity as the AI-model arms race escalates.

What this means for the broader AI and cloud-computing landscape is that the “AI laggard” label attached to Amazon may need to be retired or at least updated. The company’s stake in the startup ecosystem, its infrastructure investments (including an $11 billion AI data-centre project in Indiana) and now this headline-grabbing deal all reflect an ambition to regain momentum.

Still, a few questions remain. Will Amazon’s culture, execution and cloud architecture enable it to match the pace of smaller, more agile AI vendors? Will the compute edge translate into new AI services and integration for AWS customers rather than just infrastructure? And will the broader financial model of generative AI hold up amid questions about profitability, compute costs and what many warn could be an AI “bubble”? The deal brings those questions into sharper focus.

In sum the Amazon-OpenAI accord is more than just a contract; it is a statement. It signals that Amazon is intent on re-asserting itself in the AI race, that it is willing to commit serious capital and infrastructure, and that it recognises the scale of the challenge ahead. For observers, it marks the moment Amazon shifted from follower to contender in the world of generative AI and cloud compute. Whether it can sustain that momentum and deliver ground-breaking products is the next act to watch.