Key Stats for Amazon Stock
- 1-day Price Change for Amazon stock: 4%
- $AMZN Share Price as of Nov. 3: $254
- 52-Week High: $258
- $AMZN Stock Price Target: $289
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What Happened?
Amazon (AMZN) stock surged to a record closing high on Monday after OpenAI announced a massive $38 billion deal to purchase cloud computing capacity from Amazon Web Services.
The e-commerce and cloud computing giant closed up 4%, marking its best two-day performance since November 2022 with gains totaling 14%.
The agreement represents a significant win for AWS, which will provide OpenAI with hundreds of thousands of Nvidia graphics processing units to power the AI startup’s infrastructure needs.
OpenAI will immediately begin running workloads on AWS systems, with plans to expand capacity over the next seven years through 2032.
This marks a significant shift for OpenAI, which had been exclusively tied to Microsoft’s Azure cloud platform since 2019.
Microsoft has invested $13 billion in the ChatGPT creator over that time. However, Microsoft’s preferential cloud provider status recently expired, allowing OpenAI to diversify its infrastructure partnerships.
While OpenAI is still committed to spending $250 billion with Azure, the AWS deal signals the AI company’s push for independence ahead of a potential IPO.
For Amazon, the deal validates AWS’s position as the market leader in cloud infrastructure. It reported over 20% year-over-year revenue growth at AWS in its recent earnings report, though this trailed Microsoft’s 40% cloud growth and Google’s 34% expansion.
The initial phase will utilize existing AWS data centers, with Amazon planning to build additional dedicated infrastructure for OpenAI as demand increases.
Dave Brown, AWS’s vice president of compute and machine learning services, emphasized that this represents “completely separate capacity” being deployed specifically for OpenAI’s needs.
Beyond the immediate revenue impact, the deal strengthens AWS’s competitive positioning in the rapidly growing AI infrastructure market.
Amazon has already invested billions in rival AI company Anthropic and is building an $11 billion data center campus in Indiana exclusively for Anthropic workloads.
Now with OpenAI on board, AWS has partnerships with two of the leading foundation model developers.
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What the Market Is Telling Us About Amazon Stock
The market’s enthusiastic response to the OpenAI-AWS partnership reflects growing confidence in Amazon’s cloud business at a critical inflection point for AI infrastructure spending.
AMZN stock hitting an all-time high suggests investors believe the company is well-positioned to capture a substantial share of the estimated $1.4 trillion in AI buildout investments being announced across the industry.
The timing of the deal is particularly notable given recent concerns about whether AWS was falling behind Microsoft and Google in the AI cloud race.
While AWS still maintains the largest market share in cloud infrastructure overall, its slower recent growth relative to rivals has raised questions about competitive dynamics.
This massive OpenAI commitment helps address those concerns.
However, investors should recognize that the $38 billion figure represents a multi-year commitment rather than immediate revenue.
Amazon will need to invest heavily in building out the additional data center capacity and securing the necessary power and chip supply to fulfill the contract.
These capital expenditures could pressure near-term margins, even as they set the stage for strong long-term growth.
The deal also highlights the increasingly fragmented nature of AI infrastructure, with major players like OpenAI choosing to distribute workloads across multiple cloud providers rather than betting entirely on one platform.
This reduces concentration risk but also means AMZN stock faces continued intense competition from Microsoft and Google for future AI deals.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
