Amazon bets on OpenAI even as Wall Street cools to the ChatGPT maker
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Amazon.com is in talks to invest as much as $50 billion into OpenAI, per reports late Thursday, in a sign that the funding frenzy for AI shows no signs of stopping.
Why it matters: The potential deal comes as Wall Street has been shunning the stocks of companies that have already partnered with OpenAI (see Microsoft's decline on Thursday) as investors worry whether the AI upstart behind ChatGPT will ultimately be able to pay off all its backers.
Zoom out: OpenAI has been seeking to raise up to $100 billion in new capital, per the Wall Street Journal, which was the first to report the Amazon talks.
- An investment could include a deal for OpenAI to buy Amazon's AI chips, CNBC said.
- That kind of circular dealmaking—funneling money into companies you hope will give you business—has also raised eyebrows among investors.
Between the lines: And then there is a larger question of exactly where all that money is going.
- Will OpenAI be able to cover the bill? Its annualized revenue surpassed $20 billion in 2025, up from $6 billion in 2024.
- But it has $1.4 trillion in spending commitments.
- That vast mismatch is what investors are worried about.
What they're saying: OpenAI "was the halo around the heads of all these companies" whose stocks have taken a hit and now it "will become the noose around their neck," Daniel Newman, tech analyst and CEO of the Futurum Group, tells Axios.
- Take Microsoft: The company recently reported a $620 billion backlog in upcoming revenue, but nearly half of that is expected to come from OpenAI.
- The stock tanked 10% on Thursday, even though that's almost two years of revenue, because investors don't buy it.
Yes, but: OpenAI is still seen as a winner in the AI race.
- A new funding round could leave OpenAI valued at over $750 billion, according to The Information, which also reports that Nvidia, Amazon and Microsoft are all lining up to write checks.
- In other words, OpenAI has no trouble raising cash.
State of play: Amazon's potential investment comes as the company is retrenching in other areas.
- The company plans to lay off 30,000 people.
- It closed AmazonFresh and AmazonGo, sunsetting its physical retail presence.
- Amazon declined to comment.
The bottom line: Amazon is casting out fishing lines to future-proof its business.
