A dramatic surge in demand for artificial intelligence capabilities is fueling record growth for Amazon’s cloud computing division, a trend punctuated by a landmark new partnership with AI leader OpenAI. This multi-billion-dollar alliance, coupled with strong quarterly earnings, signals an aggressive and expensive strategy by the technology giant to become the primary infrastructure provider for the generative AI boom, fundamentally reshaping the competitive landscape of the cloud industry.
Amazon Web Services, the company’s most profitable division, is experiencing its most rapid expansion since 2022, largely due to businesses moving beyond AI experimentation into developing and deploying large-scale applications. To meet this demand, Amazon is not only expanding its existing partnerships, such as its multi-billion-dollar collaboration with AI firm Anthropic, but is now also providing critical infrastructure for OpenAI, a company previously considered an exclusive partner of chief rival Microsoft. This dual-pronged strategy of supporting multiple leading AI developers demonstrates a massive commitment to infrastructure and a bid to create a more diversified AI ecosystem on its cloud platform.
Financials Reflect AI-Driven Expansion
Recent financial reports underscore the success of Amazon’s AI-centric strategy. The company’s cloud unit, Amazon Web Services (AWS), posted its most robust sales growth in over a year, with revenues jumping 20% to $33 billion in the third quarter. This performance significantly exceeded Wall Street expectations and contributed to a more than 10% surge in Amazon’s share price following the earnings announcement. Across the entire company, quarterly sales increased by 13% to $180.2 billion.
Company executives attribute this growth directly to enterprise customers signing longer and larger contracts, many with specific generative AI components. Officials have stated for the first time that generative AI now constitutes a “multi-billion dollar revenue run rate business” for Amazon, a clear indicator that corporate investment in AI technology is translating into substantial revenue for the cloud provider. This financial momentum is further bolstered by an optimistic forecast for the fourth quarter, with projected sales growth between 10% and 13%.
A Landmark Alliance with OpenAI
In a move that redefines the power map of the AI industry, AWS and OpenAI have announced a multi-year, $38 billion strategic partnership. Under the seven-year agreement, AWS will provide the large-scale cloud infrastructure necessary for OpenAI to run and scale its core AI workloads, including the training of its next-generation models. This arrangement grants OpenAI immediate access to massive and reliable compute resources, which its CEO, Sam Altman, described as essential for scaling frontier AI.
The partnership calls for AWS to supply hundreds of thousands of state-of-the-art NVIDIA GPUs, with the capacity to expand to tens of millions of CPUs for agentic workloads. AWS CEO Matt Garman stated that his company’s best-in-class infrastructure will serve as the backbone for OpenAI’s ambitions, highlighting the breadth and immediate availability of its optimized compute resources. This collaboration diversifies OpenAI’s infrastructure dependencies and marks a significant competitive victory for Amazon, cementing its relevance in a market where cloud performance and AI capabilities are increasingly intertwined.
Building a Multi-Partner AI Ecosystem
Broadening AI Model Access
The OpenAI deal is the latest and largest part of Amazon’s broader strategy to build a comprehensive and model-agnostic AI platform. Before this new alliance, Amazon had already committed up to $8 billion to the AI startup Anthropic, a key rival of OpenAI. This partnership established AWS as Anthropic’s primary cloud and training partner, with Anthropic using AWS’s custom Trainium and Inferentia chips to build and deploy its future foundation models.
Both the Anthropic and OpenAI models are made available to AWS customers through Amazon Bedrock, a service that provides access to a wide range of foundation models through a single platform. By supporting multiple leading AI developers, Amazon is positioning AWS as a neutral ground where enterprise customers can choose the best models for their specific needs, fostering a competitive and diverse ecosystem rather than tying its fortunes to a single AI partner.
Massive Investments in Global Infrastructure
To power the immense computational needs of partners like OpenAI and Anthropic, Amazon is undertaking one of the largest infrastructure expansions in corporate history. The company has announced plans to increase its capital expenditures to $125 billion for 2025 alone, with a long-term goal of spending more than $150 billion to build and operate data centers globally. This investment is primarily aimed at supporting AWS growth and the explosive demand for generative AI.
Custom Hardware and Energy
A key part of this expansion involves a focus on specialized hardware and the energy to run it. In the last year, Amazon added 3.8 gigawatts of power capacity to support its AI infrastructure, more than any other cloud provider. The company also launched a massive computing cluster featuring nearly 500,000 of its own custom AI chips. These proprietary chips, known as Trainium for training and Inferentia for inference, are designed to provide better cost efficiency compared to commercially available alternatives. This vertical integration of silicon, power, and data center capacity provides AWS with the technical foundation required to reliably serve the most demanding AI workloads.
