AWS signs $38 billion OpenAI deal

Amazon closed 4% higher yesterday after announcing a $38 billion deal with OpenAI. The ChatGPT maker has agreed to buy AWS computing power over the next seven years, adding to the flurry of deals signed recently which now total over $1 trillion. These include $300 billion from Oracle and $250 billion from Microsoft's Azure. OpenAI will need some serious growth and cash flow to pay for all that computing power.

In a recent podcast, OpenAI's CEO Sam Altman said that the market had missed the mark in assuming that their current revenue was 'only' $13 billion. Altman also hinted at OpenAI being on track to hit $100 billion in revenue by 2027, which is crazy growth. According to ChatGPT, Amazon was the quickest company to $100 billion in annual revenue, taking 21 years. If OpenAI can do it in 2027, they would have taken 12 years. It is even more impressive when considering that they only had $200 million in revenue in 2022.

Some market pundits are comparing the current market rally to the dot-com bubble, but that's not right. Back then, companies had massive values but almost zero revenue and no profits. This situation is completely different now, which OpenAI's revenue growth demonstrates.