Amazon’s $38 Billion OpenAI Deal Signals Major Comeback in the AI Race

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Amazon has struck a $38 billion cloud deal with OpenAI, marking a significant win for the company’s Amazon Web Services (AWS) division and a major step toward reclaiming lost ground in the artificial intelligence boom. The agreement comes after Amazon had faced mounting criticism for lagging behind rivals Microsoft and Google in securing AI partnerships and deploying consumer-facing language models.

After years of dominance in the cloud industry, Amazon’s market share slipped to 29% by September — down from 34% before ChatGPT’s debut in 2022, according to Synergy Research Group. The new partnership with OpenAI, however, suggests AWS is regaining momentum. The deal will allow OpenAI to use Amazon’s infrastructure, including its custom-built Trainium chips, to train next-generation models.

Analysts said the collaboration, though smaller than OpenAI’s $250 billion commitment with Microsoft’s Azure or Oracle’s $300 billion deal, is strategically vital for Amazon. “It’s a key first step in Amazon’s effort to partner with a company that will spend over a trillion dollars on computing power in the coming years,” said Mamta Valechha of Quilter Cheviot.

The announcement sent Amazon’s shares up 5%, hitting a record high. The company has recently expanded its AI footprint, including the launch of Project Rainier, an $11 billion AI data center in Indiana where models from startups like Anthropic are being trained. CEO Andy Jassy is also pushing a leaner management structure to boost efficiency, as Amazon plans to spend around $125 billion in capital expenditures this year — outpacing Alphabet’s $93 billion.

Analysts expect the OpenAI partnership to increase AWS’s backlog by about 20% in the fourth quarter, potentially adding $40 billion in future revenue.

Amazon Shares Soar as AI Boom Drives AWS Cloud Growth and Record Investor Optimism

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Amazon shares surged more than 11% in early trading on Friday after its cloud computing arm, Amazon Web Services (AWS), reported strong growth and a bullish sales outlook that reassured investors of its position in the AI race.

AWS revenue rose 20% in the third quarter, reaching $33 billion — more than double Google Cloud’s $15.16 billion — cementing Amazon’s dominance in the cloud market. While Microsoft Azure’s 40% growth outpaced AWS in percentage terms, analysts said the scale of AWS’s business made its rebound even more significant.

“There were concerns about AWS losing market share to Microsoft and Google,” said Jed Ellerbroek of Argent Capital. “But now AWS is clearly back on track — investors expected this turnaround next year, and it’s arrived early.”

The strong quarter helped Amazon’s stock outperform rivals Apple and Tesla in year-to-date gains, lifting it out of the bottom spot among the “Magnificent Seven” tech giants. CEO Andy Jassy said AWS is “growing at a pace we haven’t seen since 2022,” driven by soaring demand for AI and infrastructure services.

Beyond cloud computing, Amazon’s retail and advertising segments also delivered impressive results. Retail sales grew 11% year-over-year, while ad revenue surged 24% to $17.7 billion, boosted by expanded placements across Echo devices and grocery stores. Following the results, at least 23 brokerages raised their price targets for Amazon, reflecting renewed confidence in the company’s long-term AI strategy.

Apple Shares Rise as Strong Holiday iPhone Sales Forecast Eases Supply Concerns

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Apple shares climbed about 2% in premarket trading on Friday after the company’s upbeat holiday quarter forecast reassured investors that strong demand for the iPhone 17 lineup is driving a sales rebound despite ongoing supply delays in China.

The company’s latest projections, announced earlier this week, helped ease concerns about production bottlenecks that had weighed on fourth-quarter performance. The optimism pushed Apple’s market capitalization back above $4 trillion, placing it alongside tech giants Nvidia and Microsoft in the exclusive multi-trillion-dollar club.

Investors also took comfort in Apple’s measured approach to integrating artificial intelligence, with analysts noting that the company’s strategy emphasizes precision over speed. “When you’re really big like Apple, you don’t have to move fast — sometimes you just have to get it right eventually,” said Eric Clark, Chief Investment Officer at Accuvest.

Despite its rally, Apple remains one of the weaker performers among the “Magnificent Seven” group of mega-cap tech stocks this year, trailing Nvidia and Microsoft but showing resilience amid global supply headwinds.

According to LSEG data, Apple’s stock trades at 33.4 times analysts’ earnings forecasts, above Microsoft’s 31.7 and Meta’s 22.3, reflecting investor confidence in the company’s long-term innovation and profitability.