Martin Brenner

Amazon.com Inc is in advanced negotiations to invest more than $10 billion in OpenAI, the developer of ChatGPT, in a landmark deal that would value the artificial intelligence company at over $500 billion. The investment represents a major strategic move by the e-commerce and cloud computing giant to strengthen its position in the rapidly expanding generative AI market. The Deal Structure and Valuation If finalized, the investment would place OpenAI’s valuation beyond the $500 billion threshold, according to sources familiar with the discussions who requested anonymity due to the confidential nature of the talks. Some industry observers have speculated that OpenAI could be valued as high as $1 trillion in future fundraising rounds, as the company prepares for a potential initial public offering. The discussions between Amazon and OpenAI remain highly fluid, meaning terms and amounts could still change significantly before any formal agreement is reached. However, the scale of the potential investment underscores the intensity of competition among major technology corporations to establish dominance in artificial intelligence. The Circular Economics Game The structure of the proposed deal reveals the sophisticated financial mechanics now characterizing AI sector investments. Analysts describe the arrangement as “circular economics”: Amazon would invest $10 billion directly into OpenAI’s coffers, but OpenAI would then essentially return those funds to Amazon’s cloud division (AWS) by purchasing computing capacity and services. This arrangement provides significant benefits to both parties. For Amazon, the company books $10 billion in new AWS cloud revenue on its financial statements, effectively juicing its growth numbers for Wall Street. For OpenAI, the company receives $10 billion worth of free computing power without burning through its own cash reserves—a critical advantage as AI models require exponential increases in computational power for training and scaling. “There’s a lot of circular economics happening right now,” explained analyst Anshel Sag. “Companies want to potentially profit from the relationship beyond just a regular business engagement. By making those financial investments, it does inherently increase the risk.” Why OpenAI Needs Amazon’s Capital OpenAI’s appetite for capital is nearly insatiable. The company recently committed over $1.4 trillion in infrastructure spending, including partnerships with major chip manufacturers like Nvidia, Advanced Micro Devices, and Broadcom. Last month alone, OpenAI secured a contract to purchase $38 billion in computing capacity from AWS, marking its first major deal with the cloud infrastructure provider. The company is in a race against competitors to build sufficient computational capacity to train increasingly sophisticated AI models. Demand for AI chips still significantly exceeds global supply. While Nvidia remains the gold standard for training models, capacity is severely constrained. Microsoft, which owns a 27% stake in OpenAI and has contributed over $13 billion since 2019, has heavily committed its infrastructure to OpenAI and other AI ventures. By diversifying its infrastructure partnerships and pulling Amazon closer through direct investment, OpenAI gains access to additional pools of hardware. These include Amazon’s Trainium and Inferentia chips, which may not match Nvidia’s latest offerings on raw performance but offer critical supply relief and could prove preferable for “commercial contexts,” according to industry analysts. Strategic Implications for Amazon Amazon’s willingness to invest $10 billion in OpenAI, despite already having invested at least $8 billion in OpenAI’s rival Anthropic, reveals the company’s ambition to establish a hedge across the AI landscape. The company is effectively betting on multiple winning horses in the AI race rather than committing exclusively to one player. “If OpenAI wins the lottery, then they’d have the money to pay for this,” noted analyst Charles Fitzgerald, suggesting that the investment doubles as insurance for Amazon. By funding OpenAI directly, Amazon is essentially guaranteeing itself a customer for its massive infrastructure buildout, ensuring that its new data centers and cloud computing resources don’t sit idle. AWS is facing unprecedented demand from AI startups and enterprises requiring massive computational resources. By becoming OpenAI’s major infrastructure provider, Amazon locks in predictable, high-value revenue streams worth potentially tens of billions annually. The Chip Strategy A critical component of the deal involves OpenAI’s commitment to utilize Amazon’s AI chips for model development and inference workloads. While Nvidia’s GPUs have dominated the AI training market, Amazon’s custom silicon offers a differentiated approach to the company’s broader AWS strategy. Amazon Web Services has been developing proprietary AI chips since around 2015. The company introduced Inferentia chips in 2018 and recently unveiled the latest version of its Trainium chips earlier this month. These chips are designed specifically for AWS’s cloud computing environment, enabling customers to run AI workloads more cost-effectively than relying exclusively on expensive Nvidia hardware. If OpenAI significantly shifts workload patterns toward Amazon’s chips, it could catalyze broader ecosystem adoption, as other companies often follow the architectural choices of industry leaders like OpenAI. Microsoft’s Changing Role The Amazon investment demonstrates a fundamental shift in OpenAI’s relationship with its traditional backer, Microsoft. Prior to October 2025, Microsoft had first right of refusal to serve as OpenAI’s primary computing provider, and held what amounted to exclusive access to OpenAI’s models for commercial cloud applications. OpenAI’s restructuring in October eliminated these exclusive arrangements. While Microsoft maintains its 27% equity stake and continues to distribute OpenAI models through its Azure cloud platform, the company no longer enjoys exclusive infrastructure access. This change has created an opening for competitors like Amazon and Google to negotiate directly with OpenAI for computing services and equity investments. Microsoft has responded to this competitive pressure by announcing plans to invest up to $5 billion in Anthropic, OpenAI’s primary rival. Nvidia has also committed to invest as much as $10 billion in Anthropic. These competing investments reflect the emergence of a more competitive AI ecosystem where major corporations pursue diversified strategies rather than exclusive partnerships. Enterprise ChatGPT Discussions Beyond the infrastructure and investment components, Amazon and OpenAI are also exploring the possibility of OpenAI offering an enterprise version of ChatGPT integrated into Amazon’s e-commerce and fulfillment platforms. Details remain sparse, but discussions allegedly focus on potential AI-driven shopping features that Amazon is currently developing for its retail applications

Volkswagen’s PowerCo Battery Unit Seeks External Funding as Parent Cuts Investment by 80 Percent Volkswagen’s struggling battery division is now actively exploring external financing options as the German automotive giant dramatically reduces investment in its in-house battery production ambitions. PowerCo Chief Executive Officer Frank Blome stated that the company is examining external investors, bank loans, and potential public offerings more rigorously than before. The Funding Crisis: From 15 Billion to Under 10 Billion Euros The scope of Volkswagen’s retreat from its battery ambitions is staggering. The company originally committed 15 billion euros to PowerCo when it was established in 2022 as a strategic response to compete with Tesla and Chinese battery makers like BYD. That commitment has been slashed repeatedly: first to 12 billion euros, then to 10 billion euros, and now to a figure significantly below 10 billion in the current five-year planning cycle. This represents a cumulative funding reduction of approximately 80 percent from initial plans. The battery subsidiary has already accumulated losses of more than 2.5 billion euros since its inception, with 2025 losses exceeding previous years. The pattern of escalating losses coupled with shrinking budgets has created a untenable situation for the division. “We understand that if the parent company earns less revenue, we must manage with a reduced budget,” Blome told reporters. “That’s the reality, or we will need to explore additional funding sources.” Why the Dramatic Reversal? The root cause of Volkswagen’s funding crisis stems from fundamental miscalculations about electric vehicle adoption rates across Europe and North America. PowerCo was originally planned to construct six battery cell manufacturing plants by 2030, with a target capacity of 240 gigawatt-hours. This reflected Volkswagen’s assumption that EVs would rapidly dominate the automotive market. The reality has proven far different. EV adoption in Europe and North America has decelerated significantly, driven by: High Energy Costs: Elevated electricity prices in Europe make battery manufacturing economically challenging compared to Asian competitors benefiting from cheaper power sources. Tariff Uncertainty: U.S. tariffs on imported vehicles and battery components have destabilized demand forecasts. Insufficient Charging Infrastructure: The lack of adequate public charging networks has dampened EV adoption rates. EV Price Resistance: Premium pricing for electric vehicles, relative to internal combustion alternatives, has limited market expansion. Chinese Competition: Chinese battery makers like CATL and BYD have achieved massive scale advantages and cost leadership that European manufacturers struggle to match. Scaled-Back Ambitions Volkswagen has now abandoned its original six-plant strategy, committing only to three manufacturing facilities: Salzgitter in Germany, Valencia in Spain, and St. Thomas in Canada. Critically, even these three plants will operate at only about half their originally planned capacity by decade’s end. The company has postponed ramp-up timelines across all locations. Salzgitter began production of the first unified battery cells on December 18, 2025, but only at limited capacity. The facility will operate at approximately 20 gigawatt-hours annually initially, with potential expansion to 40 GWh if market conditions improve. This compares to far more ambitious projections just three years ago. The Unified Cell Problem PowerCo’s centerpiece product is the “Unified Cell,” a standardized battery architecture designed to reduce complexity and costs across VW, Skoda, and Cupra vehicle lineups. The cell was originally envisioned to power 80 percent of all Volkswagen Group vehicles by 2030. The unified cell launch is technically significant but commercially underwhelming. The cell represents years of development and billions in investment, yet it arrives at a moment when demand for the vehicles it powers has substantially cooled. IPO Remains Years Away Blome acknowledged that a potential initial public offering for PowerCo remains theoretically possible but is likely years away. “An IPO could be feasible, but that is ultimately a decision for Volkswagen,” he stated, effectively ruling out near-term public market access. Previously, Volkswagen had suggested an IPO could occur once production facilities were operational and the unified cell was deployed. Both conditions are now being met, yet the company is not pursuing equity markets, indicating investor reception would likely be poor given PowerCo’s mounting losses and capacity utilization concerns. The Desperate Search for Partners Blome indicated that PowerCo has already approached potential external investors, though he provided no specifics or timeline. Volkswagen is considering several options: External equity investors willing to fund ongoing operations in exchange for equity stakes or preferred returns. Strategic joint ventures on specific plants or production lines, potentially with other manufacturers or tier-one suppliers. Government funding programs designed to support battery manufacturing in Europe or North America. Context: Industry-Wide EV Retreat Volkswagen’s struggles are not isolated. The broader automotive industry is scaling back electric vehicle ambitions after years of aggressive electrification commitments: Renault has halted plans to list its Ampere EV division and software subsidiary, citing insufficient investor interest and slowing EV adoption. General Motors and Ford have both announced significant pullbacks in EV manufacturing capacity and timelines. Legacy automakers worldwide face the uncomfortable reality that pure EV adoption is advancing slower than anticipated, while government subsidies that drove early adoption are being curtailed. The European Commission’s Green Deal Reversal Adding to Volkswagen’s woes, the European Commission proposed lifting the EU’s effective ban on combustion engine vehicles after 2035, a major retreat from the bloc’s green commitments. This signals regulatory uncertainty and undermines the urgency of Volkswagen’s battery transition strategy. Outlook: Restructuring Ahead Volkswagen faces years of restructuring if PowerCo is to become a viable standalone business. The company may need to: Consolidate production to fewer facilities with higher utilization rates. Reduce headcount significantly to match scaled-back production volumes. Seek partnerships with competitors or non-traditional investors to share financial burden. Potentially divest PowerCo entirely if losses continue mounting. The once-strategic battery unit, intended as a crown jewel of Volkswagen’s EV ambitions, has become a financial millstone. The dramatic funding cuts, external financing searches, and admission that even three plants will operate well below capacity signals that Volkswagen badly misjudged the EV transition and is now paying the price for overcommitment.