Amazon.com Inc. is reshaping its artificial intelligence (AI) operations at a pivotal moment, appointing a new leader to oversee its AI development just as reports surface that the company is in talks to invest more than $10 billion in OpenAI. The strategic overhaul comes as Amazon seeks to strengthen its position in the intensifying AI competition against Microsoft Corp. and Alphabet Inc.'s Google.

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Amazon CEO Andy Jassy announced Wednesday that Peter DeSantis, a 27-year Amazon veteran and senior vice president in its cloud division, will lead a newly expanded AI organization combining the company's artificial general intelligence unit, custom chip development and quantum computing research. DeSantis will report directly to Jassy, who described the company as reaching an "inflection point" with technologies that will shape its future.

Separately, Bloomberg and The Information reported that Amazon is in early-stage discussions to invest at least $10 billion in OpenAI in a deal that could value the ChatGPT maker above $500 billion. The reported agreement under discussion would see OpenAI adopt Amazon's Trainium AI chip, potentially providing a major customer for the company's semiconductor business as it competes with Nvidia Corp.'s market-leading graphics processing units (GPUs).

The negotiations, which began around October following OpenAI's corporate restructuring, highlight the circular nature of AI industry investments, where cloud providers and hardware manufacturers invest in AI companies that commit to using their chips and data centers. The deal could help OpenAI meet its $38 billion cloud computing commitment to Amazon Web Services (AWS) announced last month.

Leadership Overhaul Targets AI Expansion

Amazon's organizational restructuring consolidates previously separate divisions under unified leadership. DeSantis, who has overseen AWS's utility computing services including compute, storage and database operations, brings deep technical expertise and a track record managing systems at massive scale.

The new structure places DeSantis in charge of Amazon's AGI team, which develops the company's Nova-branded AI models and powers the Alexa voice assistant, alongside Annapurna Labs, the chip development unit Amazon acquired in 2015. Pieter Abbeel, who joined Amazon in 2024 when it licensed robotics startup Covariant's technology, will lead the frontier model research team developing base AI models.

Rohit Prasad, who led the AGI unit for two years and previously headed Alexa's speech science teams since joining in 2013, will depart at year-end. Jassy credited Prasad with building "twelve state-of-the-art foundation models" that are now used by tens of thousands of companies.

OpenAI Deal Could Boost Chip Strategy

The reported investment discussions would mark a strategic win for Amazon's semiconductor ambitions. According to The Information, as part of the deal being negotiated, OpenAI plans to use Trainium chips, which Amazon positions as more cost-effective alternatives to Nvidia's dominant AI processors. The cloud agreement announced last month mentioned only servers powered by Nvidia chips.

Bloomberg reported that negotiations are at a preliminary stage and terms could change. Amazon would gain OpenAI as a Trainium customer at a time when AI developers including Meta Platforms Inc. are exploring alternatives to Nvidia hardware from rivals like Google.

However, Amazon will not be able to resell OpenAI models to its cloud customers, as Microsoft—which owns about 27% of OpenAI equity—has secured exclusive rights to do so, according to The Information. The publication also reported that Amazon and OpenAI have discussed commerce partnership opportunities, as OpenAI seeks to transform ChatGPT into a shopping hub.

Investment Follows Pattern of AI Industry Circular Deals

The potential Amazon-OpenAI agreement reflects a broader trend of major technology companies making investments tied to commitments to use their products. OpenAI has struck similar arrangements across the industry as it pursues aggressive expansion requiring more than $100 billion over four years, according to The Information.

OpenAI invested $350million in CoreWeave in March, which used the funds to buy Nvidia chips that provide computing power back to OpenAI. The company signed deals in October to invest up to $100 billion in OpenAI, though the deal has not been finalized.

For Amazon, the deal would mirror Microsoft's strategy of investing in multiple AI developers. After Microsoft's large investments in OpenAI, it recently announced an investment in rival Anthropic. Amazon previously invested $8 billion in Anthropic and helps sell its AI to cloud customers, though Anthropic has expanded business with Microsoft and Google, whose servers also power its technology.