Amazon shares soared to a record high after it struck a £29billion cloud computing deal with OpenAI.
Shares in the US technology giant rose another 6 per cent to $259 in early trading in New York following a near-10 per cent jump on Friday.
The rally has added £300billion to Amazon’s value in the past two sessions – giving it a market capitalisation of £2.1 trillion.
The latest gains came as Amazon followed up bumper third quarter results on Friday with a ground-breaking partnership with ChatGPT owner OpenAI yesterday.
The seven-year deal gives OpenAI access to Amazon’s cloud computing infrastructure – underscoring the AI industry’s insatiable appetite for computing power as companies race to build the systems of the future.
The deal is a major vote of confidence in the e-commerce giant’s cloud unit, Amazon Web Services (AWS), which some investors feared had fallen behind rivals Microsoft and Google in the AI race.
Record high: Shares in US technology giant Amazon rose another 6% to $259 after it struck a £29bn cloud computing deal with OpenAI
‘This is a hugely significant deal, clearly a strong endorsement of AWS compute capabilities to deliver the scale needed to support OpenAI,’ said PP Foresight analyst Paolo Pescatore.
OpenAI has signed deals worth more than £750billion so far this year with the likes of Oracle, Broadcom and Nvidia to power its AI ambitions.
Hailing the Amazon tie-up, OpenAI chief executive Sam Altman said: ‘Scaling frontier AI requires massive, reliable compute. Our partnership with AWS strengthens the broad compute ecosystem that will power this next era and bring advanced AI to everyone.’
As part of the Amazon deal, OpenAI will gain access to Nvidia graphics processors to train AI models.
It follows a sweeping overhaul of OpenAI last week, which saw it ditch its non-profit status and gave it more operational and financial freedom.
The AI boom has seen Nvidia become the world’s first $5trillion company while Apple recently hit the $4 trillion mark.
But the rally has sparked fears of an AI bubble that may be about to burst.
Chris Beauchamp, chief market analyst at broker IG, said: ‘OpenAI continues to be the fairy godmother for tech companies worrying about how to monetise their large-scale investments, bestowing its largesse on Amazon this time.
Altman’s seemingly bottomless wallet provides fuel for more share price gains, though the concerns about a bubble won’t go away.
‘Whenever this market seems to be running out of positive catalysts, OpenAI rides to the rescue.’
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