Amazon's first official linkup with ChatGPT creator OpenAI is garnering positive Wall Street analyst buzz — even if it's a small move in the battle for AI cloud business with Microsoft. Amazon stock pushed higher Wednesday.
The tech giant announced Tuesday that OpenAI's open weight models are available for customers of its Amazon Web Services cloud platform. Amazon will offer the tools through its Bedrock and SageMaker offerings. The software platforms help enterprises create AI applications using their data.
Analysts cheered the move for AWS. The announcement comes less than a week after so-so cloud revenue results for Amazon caused investors to questions whether it was falling behind Microsoft and Google Cloud.
"We see the addition of OpenAI to the AWS platform, while far from a comprehensive deal, as a positive initial step in the relationship, suggesting the companies are interested in working together," wrote BofA Securities analyst Justin Post in a client note Wednesday. "AWS still does not benefit from OpenAI infrastructure spend like its peers — and may not be that focused on it given capacity constraints — but can now generate revenue from services around OpenAI's models leveraging its vertically integrated AI-stack."
On the stock market today, Amazon is up 3.7% at 221.66. Shares pushed back above Amazon's 50-day moving average after tumbling below the key level last week.
Amazon-OpenAI 'Powerhouse Combo'
Amazon Web Services Chief Executive Matt Garman wrote on LinkedIn Tuesday that OpenAI and AWS were forming a "powerhouse combination."
"This brings together OpenAI's leading technology with AWS's scale, security, and deployment capabilities," he wrote.
OpenAI is partnered with Microsoft, which is also one of the startup's largest investors. Microsoft gained a big AI advantage as OpenAI's exclusive cloud provider. Parts of that deal were adjusted in January, however, to allow OpenAI to train its models on infrastructure from other cloud providers, such as Oracle and CoreWeave.
Different from its more powerful "closed" AI models, OpenAI released the new open weight models freely for developers and through a range of partners. The list includes Hugging Face, AWS, Microsoft Azure and Databricks, OpenAI said in a blog post.
The arrangement "represents a nice first step in the OpenAI + AWS relationship and we continue to believe that if it expands further, it could be a catalyst for Amazon's stock," New Street Research analyst Dan Salmon wrote to clients late Tuesday.
AWS already offers access to open source models from Meta Platforms and Alphabet, he noted.
"So the addition is not ground-breaking, and still a long way — and one important contractual clause — from offering OpenAI's closed models, including the upcoming GPT-5," Salmon wrote.
Amazon Stock: Q2 Earnings Slide
Amazon stock is trading nearly flat so far this year, even with Wednesday's gain. Shares slid 8% following Amazon's Q2 earnings report, which showed cloud growth just in-line with estimates.
While Amazon's e-commerce business is its main source of revenue, AWS drives the majority of profits. Growth for AWS has come back into focus as concerns about tariffs have (mostly) faded. That had allowed Amazon to bounce back from lows in April before the earnings setback.
Amazon's slower growth compared to Microsoft and Google raised concerns that its two smaller cloud competitors were more successful in winning AI business. But BofA's Post said Wednesday that he remains "constructive" on Amazon's AI potential and could see the OpenAI arrangement growing further.
"While any future Open AI deal may be subject to contractual limitations (with Microsoft), we think AWS would be very interested in adding more OpenAI capabilities, and AWS has a lot of customer reach to offer OpenAI as the company focuses on building out enterprise business," Post wrote.
