Amazon (AMZN-US) shares surged to a record high on Monday (Nov. 3) after its cloud division, AWS, announced a blockbuster $38 billion computing power agreement with OpenAI. The deal, one of the largest of its kind, underscores both the scale of the AI boom and the intensifying competition among cloud providers.
Amazon stock jumped as much as 5% in pre-market trading before closing up 4% at $254 per share. Combined with Friday’s rally, the company has gained 14% over two sessions, its best two-day performance so far this year.
The Deal in Detail
Under the agreement, OpenAI will immediately deploy massive AI workloads on AWS infrastructure, tapping into hundreds of thousands of NVIDIA (NVDA-US) GPUs. Future phases will require Amazon to expand its data center footprint to meet OpenAI’s growing demand.
AWS executive Dave Brown added that while the current setup relies heavily on NVIDIA chips, Amazon’s in-house Trainium processors could be integrated later, giving AWS more control over costs and performance.
Strategic Significance
The deal is notable not just for its size, but also for its strategic positioning. Amazon has already invested billions in Anthropic, another leading AI startup, and is building an $11 billion data center campus in Indiana dedicated to Anthropic’s needs.
By securing OpenAI as a client, AWS strengthens its role as a central player in the AI infrastructure race, even as OpenAI continues to work closely with Microsoft Azure and Google Cloud.
AWS CEO Matt Garman said the agreement highlights Amazon’s ability to deliver "optimized computing resources at scale," reinforcing its competitive edge in supporting next-generation AI workloads.
Market Context
AWS remains Amazon’s profit engine, with Q3 revenue up 20% year-over-year, beating analyst expectations. Still, its growth trails rivals: Microsoft Azure grew 40% last quarter, while Google Cloud expanded 34%.
The OpenAI deal could help AWS close that gap, though it also raises questions about whether the AI spending spree is sustainable.
Bubble Concerns
OpenAI has signed nearly $1.4 trillion worth of agreements with partners including Nvidia, Broadcom (AVGO-US), Oracle (ORCL-US), and Google. The sheer scale has sparked debate about whether the U.S. has the energy capacity and resources to support such ambitions.
Some analysts warn that if AI infrastructure investments outpace real-world returns, the sector could face a correction. For now, however, investor enthusiasm remains strong.
Microsoft’s Role
The deal also signals a shift in OpenAI’s cloud strategy. Since 2019, Microsoft (MSFT-US) had been its exclusive cloud provider, investing $13 billion in the company. But that exclusivity expired last week, opening the door for partnerships with AWS and others.
Even so, OpenAI hasn’t abandoned Microsoft—it recently committed to buying an additional $250 billion in Azure services, underscoring its multi-cloud approach.
The Bottom Line
Amazon’s record-setting rally shows how much weight investors place on AI infrastructure deals. The $38 billion OpenAI agreement cements AWS’s role in the AI arms race, even as questions linger about sustainability and resource constraints.
For now, Wall Street is betting that Amazon’s cloud dominance—and its ability to win marquee clients—will keep fueling growth.