Amazon (AMZN) is among several top firms in talks to invest billions in the artificial intelligence giant OpenAI, but one key factor could determine whether the investment goes through. Per The Information, Amazon may only invest in OpenAI if the AI developer goes public or achieves an artificial general intelligence (AGI) milestone. Investing up to $50 billion could make Amazon the biggest contributor to the AI company’s ongoing fundraising round.
Under terms still being negotiated, Amazon would invest $15 billion upfront, with an additional $35 billion contingent on OpenAI hitting an AGI milestone or pursuing an IPO, according to the report. Late last year, OpenAI initiated the groundwork for an IPO that could value the company at up to $1 trillion. As a result, several top tech companies, including Nvidia and Amazon, are racing to get in on the investment opportunity.
Amazon stock dipped below the $200 level in mid-February but reclaimed the territory as investments in the AI sector surged, and is now looking at $300. The billions being invested into AI have brought mixed reactions from Wall Street analysts, as concerns over an “AI bubble” haven’t quite died out yet. Fortunately for AMZN, the majority of analysts remain confident in the AI prospects, touting it to be the next-generation of technology.
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Two leading Wall Street firms have praised Amazon’s AI efforts and forecast that AMZN stock could reach $300 by the end of 2026. Wells Fargo analyst Ken Gawrelski said that AMZN could end the year trading close to $300 at around $292 to $295 per share. Also, analysts at Oppenheimer reiterated their ‘outperform’ call and raised their price target from $290 to $305 and $315. Both share a similar perspective, claiming that AMZN’s valuation will increase this fiscal year. Evidence shows that several stakeholders are bullish on the technology’s prospects, and the board will approve spending for R&D. This fuels sector wide innovatio,n exposing all tech giants to the AI industry. Therefore, they consider the momentum to continue this year that could lead to a bounce back in prices.