Amazon announced on Monday a seven-year deal to supply cloud computing capacity to the maker of ChatGPT. ・Retail investors and analysts say the deal is a major win for Amazon Cloud Services, which was previously seen as lagging behind its competitors.

Amazon gains a marquee client for AWS, its profit engine, validating billions invested in AI-ready infrastructure. The deal bolsters AWS against rivals Microsoft Azure and Google Cloud, while tying OpenAI closer to Amazon's ecosystem—building on prior integration of OpenAI's open-weight models into AWS services like Bedrock.

Shares of Amazon ( AMZN +3.99%) jumped on Monday, finishing the day up 5%. The move higher came as the S&P 500 gained 0.1% and the Nasdaq Composite rose 0.4%. The tech behemoth inked a major deal to provide OpenAI with $38 billion worth of artificial intelligence (AI) computing capacity.

“AWS is growing at a pace we haven’t seen since 2022, re-accelerating to 20.2% YoY,” Andy Jassy, the president and CEO of Amazon, said in the company’s earnings announcement. “We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity — adding more than 3.8 gigawatts in the past 12 months.”

Amazon's cloud revenue rose at the fastest clip in nearly three years, helping the company forecast quarterly sales above estimates and driving its shares up 14% in after-market trading.

Experts say the incident revealed what can happen when a such a broad spectrum of companies rely on singular cloud provider.

In a statement, Amazon Chief Executive Andy Jassy (pictured) said AWS is now growing at a pace that hasn’t been seen since 2022, primarily due to demand for AI resources. “We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity – adding more than 3.8 gigawatts in the past 12 months,” he said.