OpenAI CEO Sam Altman & Amazon CEO Andy Jassy 2/27/26

Summary

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Squawk Pod – OpenAI CEO Sam Altman & Amazon CEO Andy Jassy

Date: February 27, 2026
Hosts: Joe Kernen, Andrew Ross Sorkin
Main Guests: Sam Altman (CEO, OpenAI), Andy Jassy (CEO, Amazon)

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Overview:

This episode centers on a historic $110 billion fundraising round for OpenAI, with Amazon investing a record $50 billion and establishing a strategic partnership that is reshaping the artificial intelligence landscape. The conversation investigates the ramifications of this investment: from market impacts, job automation, and company strategy, to the economic and social implications of rapid AI advancements. Interviews with Sam Altman and Andy Jassy guide the discussion, joined by Forbes’ Zack Felici and analysis from Gary Cohn (IBM Vice Chair).

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Key Discussion Points & Insights

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1. AI’s Transformative Impact on Employment & Business [01:16–06:42, 18:15–30:40]

Highlights:

• AI-driven layoffs: The episode opens with the stunning news that Block (formerly Square) is laying off 40% of its workforce—framed as emblematic of how AI is reshaping employment.
• Debate over productivity vs. unemployment: Hosts question if mass layoffs and “lean teams” driven by AI are harbingers of mass white-collar unemployment or part of a new work paradigm with potentially more leisure time or universal basic income.

Quotes:

• Andrew Ross Sorkin on AI-fueled staff cuts:
  “If you could cut 50%, 40% of your workforce, which is what these folks are going to be doing literally overnight, what does that mean for the rest of us?” [03:35]
• Joe Kernen, on the possible future:
  “Is it possible that it's so powerful and it increases productivity so much that we all only need to do three or four day work groups...there is some kind of UBI...maybe someday we don't have to work.” [05:49]

Gary Cohn’s analysis:

• Argues current layoff announcements are “the trend we are seeing and we have seen for the last year...” [19:24]
• Believes AI “productivity means that we produce more units of output per labor. When we do that, the economy gets bigger...we will need people. People will do different things.” [28:22]
• Skeptical that all worker displacement will be negative:
  “We've never proven that we can get something done without human intervention, without human logic and without human interface…” [29:38]

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2. OpenAI – $110 Billion Funding & Amazon Partnership [32:27–51:30]

News Headline:

• OpenAI’s mammoth $110B raise at a $730B valuation, with Amazon as the largest single investor ($50B, in two tranches).

Strategy Details:

• Amazon’s motives: Andy Jassy explains the rationale—OpenAI’s rapid growth fits into Amazon’s $200B CapEx plan for cloud and AI infrastructure, and leverages AWS’s new AI chips (Trainium) alongside OpenAI’s products in AWS Bedrock.
• Structure of the deal: $15B upfront, $35B upon milestones; exclusivity for certain “stateful runtime” AI workloads.
• Growing demand: Altman notes a capacity crunch as OpenAI’s enterprise business surges: “The more we see revenue growing, the more we see demand growing, the more we want to invest to be able to serve that...” [44:00]

Quotes:

• Andy Jassy, on the deal’s significance:
  “This is the most significant transformation in technology, maybe business in our lifetimes.” [01:32, 40:30]
• Sam Altman, on partnership synergies:
  “Air is going to happen everywhere. It's transforming the whole economy. And the world needs a lot of collective computing power to meet the demand.” [33:39]

Investor questions:

• On recurring costs, Jassy clarifies:
  “These assets...we can monetize over a long period of time...as the growth rates are really high, we'll spend more capital. But we like the operating income and the return on invested income over a long period of time.” [42:38]

• Regarding IPO possibility, Altman responds:
  “We are open to going public at the right time...there are clear advantages being public...we want all investors to have access to them. So, yes...and it is something that we are open to doing...” [38:24]

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3. AI Business Models, Circular Investments, and Future Projections [38:54–45:05]

Circularity Debate:

• Sorkin raises the common critique that cloud vendors’ investments in AI companies are “circular” (money sent to partners in exchange for them buying back services).
• Altman rebuts:
  “If people are not willing to pay for the services that we and others offer, if there's not new economic value being committed, then the whole thing doesn't work and it would just, it would be circular...But revenue...is growing extremely quickly.” [39:16]

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4. Competition and Ecosystem Dynamics [45:54–46:41]

• Amazon’s continuing work with Anthropic and other AI startups reaffirms that big tech players are hedging bets and forging multiple alliances.
• Jassy:
  “Anthropic has been early and very substantial customers and users of Trainium...that relationship will stay strong and we're really excited about the partnership we're building...with OpenAI.” [46:09]

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5. Regulatory & Security Concerns: Pentagon and AI Safety [46:41–47:50]

• Sorkin asks Altman about the Pentagon’s needs and the responsibilities of AI companies.
• Altman:
  “The government, the Pentagon needs AI models, they need AI partners. This is like clear...I don't personally think the Pentagon should be threatening DPA against these companies, but...companies that choose to work with the Pentagon as long as it is going to comply with legal protections...” [47:04]

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6. Long-term Funding and AGI Timelines [47:50–51:16]

• Altman acknowledges the raise provides “a very long runway,” but expects OpenAI will need more capital eventually, with various financing options possible: “I expect we will need more capital. I don't know what the form will be...but this is like a long runway from now.” [48:07]
• AGI questions: “I don't have a timeline to give you, but it does feel like we are making maybe faster progress than even I expected.” [50:52]
• Confirms that “AGI term” clauses (triggering restructuring if AGI is reached) remain with Microsoft, but are not included in the Amazon deal. [51:00]

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Additional Notable Segments

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Paramount and Hollywood M&A [07:16–13:53]

• Analysis of Netflix’s withdrawal from bidding on Warner Brothers Discovery’s assets, industry speculation, and regulatory headwinds.
• Joe Kernen:
  “It's either the end of Hollywood in theaters or it's the magnification of Hollywood.” [11:02]

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Economic & Market Backdrop [22:42–26:16]

• Gary Cohn expresses economic optimism, points to capex, the "re-industrialization" of the U.S., consumer strength from tax code changes, and more.
• Cohn:
  “There’s a lot of positive news as you see interest rates, mortgage rates falling, 10 year down below 4% and tax refunds and the capex will continue to stimulate economic growth, continue to stimulate jobs.” [26:16]

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Timestamps for Major Segments

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• Opening/AI Layoffs & Workforce Dynamics: 01:16–06:42, 18:15–30:40
• Hollywood M&A Analysis: 07:16–13:53
• Gary Cohn on Macro & Markets: 18:57–27:23
• OpenAI & Amazon Megadeal Interview Begins: 32:27
  • Details of Partnership & Funding: 33:39–41:33
  • CapEx, Revenue Models, Long-Term Costs: 41:33–45:05
  • Exclusivity and Ecosystem: 45:25–46:41
  • Pentagon, Anthropic, AI Safety: 46:41–47:50
  • Runway, IPO, AGI Timelines: 47:50–51:16
• Episode Wrap: 51:26

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Memorable Moments & Tone

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• Numerous playful, candid exchanges between Joe Kernen and Andrew Ross Sorkin inject energy and skepticism into deep tech and economic subjects.
• OpenAI’s Sam Altman and Amazon’s Andy Jassy exude collaborative optimism, emphasizing opportunity and mutual necessity in AI scaling.
• Sobering undercurrents—concern for employment, rapid tech acceleration, and preserving democratic access to economic upside.

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Notable Quotes by Timestamp

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• “This is the most significant transformation in technology, maybe business in our lifetimes.”
  – Andy Jassy [01:32; re: AI]

• “The more we see revenue growing, the more we see demand growing, the more we want to invest to be able to serve...”
  – Sam Altman [44:00]

• “We've never proven that we can get something done without human intervention, without human logic and without human interface...”
  – Gary Cohn [29:38]

• “I expect continued steep progress from here. I think we are all going to be surprised about the amount of AI progress the field sees this year, probably every year after that.”
  – Sam Altman [50:52]

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Conclusion

This special episode captures a pivotal moment as OpenAI and Amazon forge a partnership likely to define the next era of artificial intelligence. The discussion weaves together the optimism, uncertainty, and enormity of the AI transformation underway—across the C-suite, Wall Street, Silicon Valley, and the daily lives of working Americans. The future, according to the episode’s participants, is being built at breakneck speed—and the stakes, both technological and societal, could not be higher.

Transcript

[Schwab Announcer]

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[Gary Cohn]

business wireless coverage, our delivery GPS wasn't the most reliable. Once our driver had to do a 14 point turn to get back on route. A 14 point turn. An influencer even live streamed the whole thing.

[Joe Kernan]

Not good for business.

[Gary Cohn]

Now with AT&T business Wireless, routes are updating on the fly and deliveries are on time. And the influencer did get us 53 new followers though.

[Andrew Ross Sorkin]

AT&T business Wireless connecting changes everything.

[Gary Cohn]

Bring in show music please.

[Zack Felici]

Hi, I'm CNBC producer Zack Felici. Today on Squawk Pod, a massive fundraise for the massively valuable private company OpenAI. $110 billion including from Amazon. Leaders of both companies join us on this news. OpenAI's Sam Altman.

[Sam Altman]

The more we see revenue growing, the more we see demand growing, the more we want to invest to be able to serve.

[Zack Felici]

That and Amazon's Andy Jassy.

[Andy Jassy]

This is the most significant transformation in technology, maybe business in our lifetime.

[Zack Felici]

Plus Paramount one step closer to a long sought prize, the legacy assets of Warner Brothers Discovery.

[Joe Kernan]

It's either the end of Hollywood in theaters or it's the magafication of Hollywood.

[Zack Felici]

And we never thought artificial intelligence would come for us.

[Andrew Ross Sorkin]

Such a bonkers and backwards thing to think because here we have this great innovation, this great technology is supposed to move us forward, which it may, but could take our jobs in the meantime.

[Zack Felici]

It's Friday, February 27th. Squawk Pod begins right now.

[Andrew Ross Sorkin]

Stand Anderby in 3, 2, 1.

[Gary Cohn]

Q Ander

[Andrew Ross Sorkin]

good morning and welcome to Spark Box right here on CNBC. We're live the NASDAQ markets at Times Square. I'm into Ross Sorkin along with Joe Kern and Becky is off today but we got a lot going on on this Friday morning. Take a look though at shares of FinTech company Block they are soaring literally right now up about 20% here this after the company said it would lay off roughly half of its workers. Block CFO saying if the company sees an opportunity to, in her words, move faster with smaller, highly talented teams using AI to Automate more work blocks. Headcount is in this case going to go from more than 10,000 people to just less than 6,000 people. And this may be one of those moments about AI and what it does to employment. In a letter to shareholders, CEO Jack Dorsey saying that AI tools have changed what it means to run a company, he said, quote, I don't think we're early to this realization. I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion, make similar structural changes. I'd rather get there honestly and on our own terms than be forced into it reactively. And if you think about this, if you could cut 50%, 40% of your workforce, which is what these folks are going to be doing literally overnight, what does that mean for the rest of us?

[Joe Kernan]

I need a list of companies that are in a position like Block where they can do that. You must have some ideas.

[Andrew Ross Sorkin]

Well, I would imagine, first of all, you could look at a lot of the. By the way, the question is whether this is all white collar jobs that you could do this with, whether this is just, you know, in this case, transactional companies. Could stripe do this to itself, for example? Stripe. By the way, may want to buy PayPal. Okay, well, could PayPal do this to itself?

[Joe Kernan]

Give me individual names, then give me total percent, total of the S&P 500. That could do something similar. 20%.

[Andrew Ross Sorkin]

Oh, I wonder whether it's 50%.

[Joe Kernan]

50%?

[Andrew Ross Sorkin]

Yeah, why not?

[Joe Kernan]

That's a frightening. And that doesn't even include all the things that we've talked about with truck drivers. And you know, not just AI, but, you know, I think the truck drivers look at the future five years. Well, there's a lot of them.

[Andrew Ross Sorkin]

No, I know, but I'm saying I actually think truck drivers are better off than are safer. In this moment then in this moment. In this moment, before you get to robotics.

[Joe Kernan]

Well, that's what I mean. Well, I mean, just don't have five. I'm talking about the future, not just AI and the way AI will inform robotics too. So that's all part of it. This is. I saw it yesterday. I was like, is block in trouble? It's not necessarily in trouble. That's usually when you hear of a 40% work or whatever it is cut, that's usually what, what you're thinking of

[Andrew Ross Sorkin]

cost cutting or I'm often asked, how can you get, you know, could we ever have another 1929? Which ultimately.

[Joe Kernan]

Why would they ask you?

[Andrew Ross Sorkin]

Which ultimately turns into unemployment of 25%. In 1932. I'm not even sure, by the way I'd even say that the crash is related to that. But there's, there's a couple of ways to get there. In 1932 of 25% unemployment. But oddly, the success of AI could be one of them, which is such a bonkers and backwards thing to think because here we have this great innovation, this great technology is supposed to move us forward, which it may, but could take our jobs in the meantime. And I don't even know if there's a. What I can't figure out is people talk about a transitionary period.

[Joe Kernan]

Right.

[Andrew Ross Sorkin]

Horse and buggies to this and that. The question is what is the transition in this case to.

[Joe Kernan]

I don't know whether it means a 1929 type thing. Is it possible that it's so powerful and it increases productivity so much that we all only need to do three or four day work groups? We all have all this leisure time that there is some kind of UBI that you know, that it's actually a boon for maybe someday we don't have to work.

[Andrew Ross Sorkin]

Well, tell me.

[Joe Kernan]

We can just. All we need to do is play

[Sam Altman]

golf, travel the world.

[Andrew Ross Sorkin]

Elon Musk would say, but that only works if some people, and I'm pointing to you, but people that you like and associate with decide that UBI and redistribution are the way to do it. Because otherwise all of the economics get concentrated in a very small number of hands and. And then I really don't know what happens.

[Joe Kernan]

Well, let's just hope the machines aren't deciding what to do with this.

[Zack Felici]

Sure.

[Andrew Ross Sorkin]

But what I'm suggesting, what I'm suggesting is you're not going to. This, this idea of this leisure society is a false choice. If you believe that there is a group of people in America that who don't believe in any form of redistribution.

[Joe Kernan]

That's. Then you're back to how many boats can you water ski behind? Elon Musk is never going to spend his trillion dollars. I mean.

[Andrew Ross Sorkin]

Yes, but what I'm saying is for a very, very long time there's been in particular on the right a view not to tax people, not, not, not provide benefits to people and services to people.

[Joe Kernan]

That's not what it is at all. The right thinks that the private sector can generate more prosperity than the government, which helps the people that you're talking about. And in fact, the policies of the left, 9 out of 10 times end up hurting the people they're intended to help through redistribution. No one that may be no One wants to be a liege of the state.

[Andrew Ross Sorkin]

Where all of a sudden what I'm suggesting to you, unfortunately is in the context of what you're saying, everybody may be a liege of the state, you may be a liege of the state.

[Joe Kernan]

I just think that is a really premise that Republicans don't want to do any redistribution because they want to keep it for themselves because they're greedy bastards. I think they think that this is the best way to grow the pie for everyone.

[Andrew Ross Sorkin]

But how would that work in this new world?

[Joe Kernan]

I don't know how. I don't know how it's going to work.

[Andrew Ross Sorkin]

I'm saying that approach may not work in this new world.

[Joe Kernan]

Let's talk Netflix. Netflix abandoning its pursuit of Warner Brothers Discoveries studio and streaming assets after Warner's a board labeled a revised bid by Paramount Skydance and thought as a superior offer. Shares of both Netflix and Paramount jumping this morning. And I'm not going to say that Netflix is up because it was. I mean there's arbitrage, there's all kinds of things right for why it's maybe people were short Netflix. Netflix has got bigger problems than just trying to, you know, than what we talked about whether there was a negative reaction to trying to, to buy Warner Brothers, which maybe it didn't even need. But in a statement, Netflix's co CEO said at the price required to match Paramount Skydance's latest offer, the deal is no longer financially attractive. They went on to say this transaction was always nice to have at the right price, not a must have at any price. In his own statement, Warner Brothers Discovery CEO David Zaslav wished Netflix well. He said once Warner's board approves the Paramount merger, it will create in his words, tremendous value for our shareholders. The deal will still have to pass regulatory muster with the Department of Justice, California's Attorney general also saying the state intends to carefully review the deal. Do you have any firm knowledge of what went on yesterday at the White House?

[Andrew Ross Sorkin]

I do not. I've been trying to get some firm knowledge.

[Joe Kernan]

You've seen the reports from different places that he, that Sarandos met with Pam

[Andrew Ross Sorkin]

Bondi, did not meet with the president,

[Joe Kernan]

did not meet with the president, but got the feeling that this is going to be tough.

[Andrew Ross Sorkin]

And so that's the big question to me was so I was surprised that they're walking away. I thought invariably for a buck a share, you know, can't be that much of a difference.

[Joe Kernan]

There's more to it than just if

[Andrew Ross Sorkin]

they really, if they really wanted this asset. I always Thought Paramount would raise.

[Joe Kernan]

Right. Well, that's not what they're saying.

[Andrew Ross Sorkin]

I. I thought Netflix.

[Joe Kernan]

You don't believe them? I don't know.

[Andrew Ross Sorkin]

I don't know.

[Joe Kernan]

Saying it was nice at this price.

[Andrew Ross Sorkin]

And I know that's what they're saying. And what I'm. I'm suggesting is it. Walking into yesterday, my expectation was that they would try to match. They were fighting it out, and then all of a sudden they stopped fighting it out. Now, I don't know how much that was about yesterday's meeting at the White House. I think there could have been some element to that, by the way. I think it could have even been some of the. Not noise, but indications and signals they got around the regulatory regime and what it would mean for them prior to ever showing up in the White House

[Joe Kernan]

yesterday and around the world, even. And it would create a pretty big streaming company. I don't know if it's too big. You know that people that work in the business. I've said this all along. It was a terrible choice according to them, like film, Twitter type people. It's either the.

[Andrew Ross Sorkin]

That was terrible.

[Joe Kernan]

It's either the end of Hollywood in theaters or it's the magnification of Hollywood.

[Andrew Ross Sorkin]

And now that is the.

[Joe Kernan]

It's almost. They went now they went from the frying pan into the fire. A lot of these people into the. And it set their hair on fire immediately about the Ellisons and Trump and what it means for Hollywood and Netflix. The more you heard about it, there are a lot of people not on. You know, that I know of.

[Andrew Ross Sorkin]

Yeah.

[Joe Kernan]

Not one of them that think that Netflix is really selling a certain narrative in terms of the culture wars that they don't approve of. Right.

[Andrew Ross Sorkin]

So see, now. Now we're getting somewhere. Now we're getting to. No, we're getting to what I imagine has to. Underneath this been the problem for Ted Sarandez.

[Joe Kernan]

You see it as a problem. I've always said, I can't wait for Barry Weiss to be running cnn.

[Andrew Ross Sorkin]

I didn't say it was a problem. I said that it was a no. What I said the problem.

[Joe Kernan]

Neither one of us have any force in this.

[Andrew Ross Sorkin]

I said the problem. No, the problem is no. I'm talking in the context of Ted Sarandos. I'm saying the problem that he was going to confront trying to buy this asset was going to be the steady drumbeat of Susan Rice. The type of films that you think that they are trying to push or the political message. They're trying to push a role, push

[Joe Kernan]

you can see it in everything.

[Andrew Ross Sorkin]

I don't see it. I know you see it.

[Joe Kernan]

Oh, my God. You don't see.

[Gary Cohn]

How about.

[Joe Kernan]

Even Disney has got the same.

[Andrew Ross Sorkin]

I believe in a free market. So I think that everybody should be able to do whatever they want.

[Joe Kernan]

They certainly are able to at this point.

[Andrew Ross Sorkin]

And, well, there's able to do only certain things they're not allowed to buy other people.

[Joe Kernan]

Now the new. Now the new regime is going to be able to make whatever kind of movies it wants to make in the free market.

[Andrew Ross Sorkin]

Well, the question. The question in this case is how free is the market?

[Joe Kernan]

Well, how free was the market before when it was 99% slanted to the left?

[Andrew Ross Sorkin]

I don't understand where you're even going with it. The free market is the free market.

[Joe Kernan]

If Netflix, Disney, and this is still the free market.

[Andrew Ross Sorkin]

Right.

[Joe Kernan]

But if you think Trump's telling the Ellis what to do.

[Andrew Ross Sorkin]

No.

[Joe Kernan]

Well, then why. Well, then why isn't it the free market?

[Andrew Ross Sorkin]

There's two elements to it. One is if you believe that Ted. If you believe that Ted Sarandos couldn't acquire Warner Brothers because of its approach.

[Joe Kernan]

Right.

[Andrew Ross Sorkin]

Then guess what? It isn't a free market. Let's start there. That's just. That's just plain as day.

[Joe Kernan]

That's a lot. That's a lot of assumptions that you're

[Andrew Ross Sorkin]

making that you and I don't know.

[Joe Kernan]

I have no idea.

[Andrew Ross Sorkin]

I'm just. And then the flip side of that question is, do you believe that the Ellisons were bending over backwards to do things to placate this administration in certain ways? In which case around. Around either coverage or this or that. In which case that wouldn't be the free market.

[Joe Kernan]

Well, I guess Sarandos didn't go to the White House yesterday to try to sell Melania the sequel that probably that might have. Might have, huh? That was my idea. New York Mayor Zoran Mamdani says he had what he called a productive meeting with President Trump and suggested that the two had found common ground on building more housing in New York City. Mamdani posted a photo on X from the Oval Office of President Trump, held up a copy of the famous New York Daily News headline, Ford to City Drop dead, as well as a mock up of a Daily News front page that said, trump the city, let's build a small sub headline says Trump delivers 12,000 plus homes. Later on ex, Mamdani said he had spoken to President Trump on the phone, and the president told him a Columbia University student detained by Immigration and Customs Enforcement would be Released. Columbia's acting president said the student had been detained by agents who misrepresented themselves by saying they were looking for a missing child to get access to a residential building. You know, the mayor, Andrew, I thought that picture, I thought it was a delicate dance for the mayor and I thought the president's smile, he's beaming like he always does. I'm trying to read the mayor's expression.

[Andrew Ross Sorkin]

Well, the mayor's usually beaming.

[Joe Kernan]

That's what I mean.

[Andrew Ross Sorkin]

And he's not in this.

[Joe Kernan]

He's got a smile that.

[Andrew Ross Sorkin]

But what I don't know is, did they just. Is this like the one. The one shutter shot where he wasn't. Where he wasn't. Because usually he is pretty.

[Joe Kernan]

I mean, I'm not sure what that is. It's almost like.

[Andrew Ross Sorkin]

I hear you.

[Joe Kernan]

This is not something I want to do, but I'm doing it for you. I have to. You know, that's sort of what it looks like to me.

[Gary Cohn]

Like he's.

[Joe Kernan]

I don't know, but I don't want to read too much into that. But the president, that's his genuine big toothy grin, which is. Yeah, yeah, he's charismatic. They're both. And I think that's part of Trump's approach to Mamadani is he admires his political skills, don't you think?

[Andrew Ross Sorkin]

Charisma on charisma.

[Joe Kernan]

Right?

[Andrew Ross Sorkin]

Tease will be next.

[Zack Felici]

Coming up on squawk pod. They're coming to take us away. Mega shifts in mega technology. Former Wall Streeter and former White House staffer Gary Cohn on the changes AI is making to the job market.

[Gary Cohn]

This is a trend we're going to continue to see as people fight with higher interest rate costs, higher input costs, higher commodity costs and more trade tariffs.

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[Zack Felici]

you're listening to Squawk Pod.

[Andrew Ross Sorkin]

Stand by Joe in 3, 2, 1.

[Joe Kernan]

His mic Q shares of financial technology company Block shooting higher after CEO Jack Dorsey said he was laying off 40% of the team due to AI efficiencies. In a letter to shareholders, he said intelligence tools have changed what it means to run a company. That's just one of the things we're going to talk about with IBM vice chair and former NEC director Gary Cohn. Someone did write right into me, Gary, and welcome. It's good to see you. That Elon Musk bought Twitter and got rid of like 90% of their employees and no one, not one thing happened. So maybe Dorsey has some bloated employee ranks at companies that he owns or runs.

[Gary Cohn]

Joe, look, it's great to be here. Look, I think we're in this reality where companies are being forced to run themselves much more efficiently. You know, we saw headcounts around the world bloat pretty dramatically after Covid. You know, people were hoarding labor. When people were working from home, they working two, three, four days a week. The productivity rate was down. So companies had to make sure they had excess capacity. Excess boys. We're now back to a much more normalized environment. People back in the office, we're getting productivity out of workers and we've got this whole new AI, you know, thing upon us, let's call it. And you know, it's hard for companies to actually explain how they're using API, how they're using AI. But the one KPI that they can tell you is we've cut heads. So today we've sort of made the world synonymous with I'm using AI, therefore I need less heads. I ultimately don't think that's the truth. But companies don't have a better way to explain to you how they're creating synergies, how they're creating productivity. They're saying, look, we're just being more efficient by cutting heads. And I think that's the trend we are seeing and we have seen for

[Joe Kernan]

the last year or so, because you have been on in past appearances. I remember you were explaining something that was very confounding about, I guess, the labor force or the jobs Fridays, what was going on. And you said people don't need. Oh, I remember what it was. The reason that one way to deal with tariffs is you look at the whole situation at your company and if your margins are going to be hurt by some increased costs, then you're not going to hire people. And that's the way they were dealing with it.

[Gary Cohn]

Yeah. So if you look, that's continuing. I agree. And if you look back on the last few years and you think what companies have had to live through, you know, a, we went from a zero interest rate environment in 22 to the Fed raising rates to 5 1/2, 5 1/4%. They did that to slow the economy down, or that's why you raise interest rates. So we went through that period of zero interest rates, the higher interest rates. We've gone through this period of what I would call trade, trade wars, trade imbalances, higher input costs. We've gone through this world where the dollar continues to go down in value, meaning that a lot of the commodity input costs continue to go up in value in dollar terms. So if you're going through this period of time where your input cost, whether it's cost of funding, cost of labor, cost of raw materials go up and you don't feel like you have pricing power to the consumer, the company is going to get squeezed somewhere. And where they've been trying to alleviate the earnings problem is they've been doing it through human capital. So human capital has been sort of the lever that companies have been pulling to make themselves profitable. And you saw it even in this last quarter's earnings announcements. We saw well over 100,000 announced layoffs in some of the bigger companies. And I think this is a trend we're going to continue to see as people fight with higher interest rate costs, higher input costs, higher commodity costs, and more trade tariffs.

[Joe Kernan]

One thing that President Trump tried to do the other night was highlight some of the things in the economy that the administration feels are underappreciated. And there are a lot of things that are underappreciated. Maybe we had Mike Wilson, I know you follow his work the other day, he said, look, the stock market anticipates future positive business activity. And then as it starts playing out, some of the money comes out of the stock market and goes to fund the increased corporate activity. He's expecting some blockbuster year inflation trending down or maybe at least flat. You have the same optimism. It's not reflected in polls.

[Gary Cohn]

Look, I am fairly optimistic right now. You know, we've got a lot of really strong tailwinds and I think the President tried to talk about some of these tailwinds during the State of the Union. You know, look, we've got the build back better bill. And what people are now starting to understand for the first time is when they put that legislation through, they changed things in the tax code retroactive to last year, but they didn't change the withholding tables, meaning that we could have withheld less money from workers every day. Instead what they did, and probably very smartly, is they kept the withholding rates at the same level. So as people are actually filing their taxes today, they're getting a much bigger refund that they might have expected. They're allowing to deduct higher salt deductions. So whether it's state and local taxes, real estate taxes, that's giving people more money. So the consumer is, is getting more money in their pocket. You look at what's going on in the capex boom and the re industrialization of the United States, is that happening? It's happening, but I've always sat here and said, look, this stuff is slow. As fast as the federal government wants to work and as fast as the federal government wants to get manufacturing built and they want to get data centers built, state and local regulation does not move at the speed that federal regulation moves. So these, these plans to build and these plans to develop factories, they're in state, they're in state courts, they're in state zoning committees, they're in city courts, they're in city zoning commission. We're starting to now see some of that money being put to work in real construction projects.

[Joe Kernan]

The Dow hit 50,000. We heard that the other night. The S and P hit 7,000. But Monday was a, Was it Monday Monday or scary day today? I think we're down 450 now. Nvidia unable, with a great report yesterday, unable to save the technology sector or the air or software or whatever. Is this just a normal backing and filling after a big gain or is there more to it?

[Gary Cohn]

So Joe, I think we're having a bit of a rotation. If you look at the S and P itself, you know, the market cap weighted index. So the biggest companies have the biggest influence, which are the companies we've just talked about the Nvidia's, the Googles, the

[Joe Kernan]

Microsoft naval's gone so up so much.

[Gary Cohn]

Well this year it's based today Right now with today's activity is about flat

[Joe Kernan]

flat prior to that if you look

[Gary Cohn]

at the equal weighted index where every company's equal that index as of last night was up about 6% so net net we're seeing the stock market as a whole hold its value. We're just seeing a rotation where people want to be people are starting to reevaluate the growth numbers that they had on a bunch of these I would say technology companies, software companies, technology companies and they're starting to re evaluate the growth of what I would say traditional companies in America and traditional companies like Walmart, like J and J like Exxon, like Verizon, companies like that are all trading basically at their 52 week high as people are saying look I still want to be invested in the market, I still want to be long the economy. I just want to be long in a more judicious fashion where I don't have as much exposure to the seven or the top five or seven names. I want to have exposure across the board.

[Joe Kernan]

We didn't talk about the sub 410 year in mortgage rates falling below 6% so some of those things takes time for all this stuff to happen but it does seem to be happening. Do you think that the mood of the country eventually improves if we believe the polls?

[Gary Cohn]

I do, I believe that the mood of the country does improve. Look, you know these PPI numbers today are not going to be helpful but a lot of this is when you see on the producer side a lot of this as you can see is input cost. When you're talking about producer price index the producer has to absorb the input cost. They have to absorb the higher commodity prices, the higher copper prices, aluminum prices, steel prices, nickel prices. They have to absorb the higher interest rate prices, they have to absorb the higher labor prices and so we're seeing and they have to absorb trade. The cost of trade has gone up and you saw that in the numbers the ex trade numbers were not near nearly as high as the numbers that included trade. So look, I think we still have to be realistic that there is some pressure in the system and that inflation still is lingering around. That said, I agree with her. There's a lot of positive news as you see interest rates, you know, mortgage rates falling 10 year down below 4% and tax refunds and the capex will continue to stimulate economic growth, continue to stimulate jobs.

[Joe Kernan]

The beginning of the show Today in relation to the block news, I didn't initially think about Twitter and how many extraneous, irrelevant employees they obviously had at the time. I don't know if the same situation, but we immediately wrote it off to AI and what the future looks like. And we even. Okay, so we jumped to conclusions. We even got to ubiquitous because no one's going to have a job, universal basic income. We actually got all the way there because, I don't know, we've seen past disruptions. And, you know, when people lose their job making buggy whips, they end up making transmissions. We understand how that works. But this time seems like it's harder to connect the dots to a positive future for everybody. With 300 million people in this country, what if there's all these agents and truck drivers are gone? What's everybody going to be doing?

[Sam Altman]

Gary?

[Gary Cohn]

You know, Joe, I look at it like this. If you look at the history of technology and technological advancements, we've always gone through these periods where it's been, oh my God, it's the end of work, it's the end of civilization, it's the end of life as we know it. Because what I do isn't going to exist tomorrow and a machine is going to do my job. And that has. We saw that. You're right. You go back to the internal combustion engine, you go back to the cotton gin, you go back to the Internet, you go back to the all, all of these technological advances that really changed the way we work. We all, we had all of these fears. What happened over history, and I believe it will happen again, is these are all productivity tools. Productivity means that we produce more units of output per labor. When we do that, the economy gets bigger. The economy gets dramatically bigger. It's what drives economic growth here. As we grow productivity, we will need people. People will do different things. As you said, you won't be cleaning barns, you'll be changing transmission fluids or you'll be building transmissions. We are going to need people to drive the economy. We're going to have to have people that know how to work in the economy. And look, there are things that AI can do. I'm afraid that we're not going to allow AI to do it. And it's probably the right thing because people are going to have to learn skills. So, you know, if you're working in an investment bank today and you need to put out a presentation, can an AI machine do the presentation fairly well, it probably can. But three years from now, when you're the banker sitting in front of the client trying to get a transaction closed. You have to understand the way the income statement works. You have to understand the balance sheet. You have to be able to play with the Excel spreadsheet in front of the client to make the deal work. So Even though the AI machine can do these things that, you know, 90% confidence interval, I still think we're going to need people there getting things done. We've never proven that we can get something done without human intervention, without human logic and without human interface, but we've

[Joe Kernan]

never had something that futurists were calling the singularity. And that's when the machines get so smart that they know a billion times all human knowledge. And this time could be different.

[Gary Cohn]

Look, this time could be different. And we said this time could be different.

[Joe Kernan]

Before, we'd probably be dead anyway. No, we're both young, and now we

[Gary Cohn]

might live forever with AI.

[Joe Kernan]

Anyway, thank you.

[Zack Felici]

Stay tuned. Up next, the interview of the day. OpenAI. Sam Altman on his company's huge $110 billion funding round. And Amazon CEO Andy Jassy, who chipped in 50 billion, a record raise on technology and what it means for. For the future of artificial intelligence. Right after this.

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[Andrew Ross Sorkin]

Yeah.

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[Gary Cohn]

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[Zack Felici]

This is squawk pod from CNBC.

[Andrew Ross Sorkin]

Up and Andrew Q a massive deal this morning. OpenAI now raising $110 billion in new funding. It values the company at $730 billion. Investors in the round include SoftBank, Nvidia and importantly the biggest one now, Amazon, committing $50 billion in funding for this round. And the pair now announcing a new multi year strategic partnership which may reshuffle the landscape of AI all over again. Joining us now for a first on CNBC interview is Amazon CEO Andy Jassy and OpenAI CEO Sam Altman. Good morning to both of you on what appears to be a watershed transaction. Sam, I'll start with you. $110 billion, $730 billion valuation, but explain, if you could, how you think this deal shifts the balance. I was suggesting it shifts the balance in large part because the relationship you've had for so very long was with Microsoft and now you have Amazon as well and in certain cases on an exclusive basis for a big part of the sort of the next, the next push. Good morning.

[Sam Altman]

Thanks for having us. We're super excited about this deal. We will continue to have a great relationship with Microsoft. We're excited to have a great relationship with Amazon. Air is going to happen everywhere. It's transforming the whole economy. And the world needs a lot of collective, collective computing power to meet the demand. The world also needs a lot of new kinds of products. And we'll continue to do our work with Microsoft, but we're very excited about the new product work we'll do together with Amazon. And I think, as you said, it will be a great, very long term partnership.

[Andrew Ross Sorkin]

We're going to get into all of it, Andy, $50 billion, a huge investment from Amazon. As part of that investment, there's a whole bunch of component parts around the partnership that you're going to have with this company. But interestingly, in the press release you talk about $15 billion upfront, $35 billion that will come after if certain conditions are met. And I think there's going to be a lot of people are going to read that and say, what does that mean?

[Andy Jassy]

Well, you know, thanks for having me, I appreciate it. And we're excited about what we announced. And yeah, we have a significant investment that we're making. It's in two tranches as we mentioned. And you know, the first tranche will be in the next month here and $15 billion and the second tranche will come when certain milestones are met. And we're excited about the, the investment we're making. If you think about it so early right now in the AI space and OpenAI is off to an amazing start. They're going to be one of the very big winners, we believe long term, I think we can help them quite a bit as part of this partnership. I think just having their offerings available in Bedrock, you know, being able to leverage training which gives them 30 to 40% better price. Performance matters a lot in AI and I think it's going to be a very strong long term partnership where we're going to also be happy about the investment. It'll yield a good return for Amazon over a long period of time.

[Andrew Ross Sorkin]

So, Andy, one of the things that's interesting about this is OpenAI, it says, will consume 2 gigawatts of training of capacity through AWS infrastructure to support the demand for what's called stateful runtime environment, Frontier and other advanced workloads, some of which is going to be exclusive to Amazon. My question to you is twofold. One is, how long is that exclusivity period for? And two, how much revenue do you imagine you will ultimately get paid by OpenAI?

[Andy Jassy]

Well, you know, the, there are multiple components of this if you think about the, you know, we've collaborated and invented together on a stateful runtime environment powered by OpenAI's GPT models that will be available in Bedrock. And if you, if you think about, if you're an AI application developer, you don't want to start from scratch every time you're actually using models. And so being able to access so state, whether it's memory or identity or being able to call tools or call out to compute, being able to do that in a stateful way where we're together training those that stateful runtime environment on AWS infrastructure, there's nothing else like that today. It's really the next generation of how AI developers are going to build their AI applications and then, you know, the training. Today we now have the two largest AI labs who are both significantly betting on Trainium, which is exciting and you know, and the relationship we're building is very unique and it's long term and we'll have this partnership for a long time.

[Andrew Ross Sorkin]

Sam, can you speak to that in terms of just what you think the business ultimately looks like with Amazon? Obviously they just made a big $200 billion infrastructure investment. A lot of people had asked questions about it and now this may very well be part of that answer.

[Sam Altman]

Yeah, we continue to see just rapidly growing demand. The codex in particular, I think it grew like 30 something percent in the last week and that is an indication of what's happening with enterprise and what people are ready to do now. As we started to look at the growth that is coming. We realized we did not have enough compute to support that. We're excited, thrilled to get this additional training and capacity. I think it'll go to great use with customers. We also think, as Andy was saying, that Amazon can deliver so much more to us in terms of new demand and new opportunities in the market, that there will be huge incremental revenue here into the whole ecosystem. And we're thrilled to get to do that.

[Andrew Ross Sorkin]

One question, which I imagine investors will ask, which relates to maybe the question I asked Andy about the conditions on the 50 billion. It sounds like it comes in tranches. Sam. 15 now, 35 later with some kind of condition. And I just wonder whether that is similar in terms of the terms for every other investor in this round. There's been lots of speculation that one of the things that every investor in these new rounds wants, of course, is an eventual ipo.

[Sam Altman]

We are open to going public at the, at the right time. There are advantages being private, there are clear advantages of being public. In addition to all of the reasons that, you know, we get more access to capital. I also think that if these companies are as important as we think they may end up being, we want all investors to have access to them. So, yes, there is definitely some excitement from various investors of ours to go public, and it is something that we are open to doing, but we need to figure out the right time to do it.

[Andrew Ross Sorkin]

Sam, help me with this though, because you know that people oftentimes look at some of these transactions as what they call circular. They look and say a vendor effectively is going to make an investment in your company and on the other end you are going to be making effectively an investment or buy services from that company. How do you think we should think about that?

[Sam Altman]

I get where the concern comes from, but I don't think it matches my understanding of how this all works. This only makes sense if new revenue flows into the whole AI ecosystem. If people are not willing to pay for the services that we and others offer, if there's not new economic value being committed, then the whole thing doesn't work and it would just, it would be circular. But revenue for us, for other companies in the industry, is growing extremely quickly. And that's how the whole thing works. Now, given the huge amounts of money that have to go into building out this infrastructure ahead of the revenue. There are various things where people, you know, finance chips, invest in each other's companies and all of that, but that is like a financial engineering part of this. And the whole thing relies on us going off or other people going off and selling these products and services. So as long as the revenue keeps growing, which looks like it is, I mean, demand is just a huge part of my day is figuring out how we're going to get more capacity and how we're allocating the capacity we have have, then I don't think it looks circular. Even though the need to finance this, given the huge amounts of money involved, does require a lot of parties to do deals together.

[Andrew Ross Sorkin]

Andy, how do you think about that?

[Andy Jassy]

I see them as different. You know, I think that, you know, OpenAI wouldn't use training if it wasn't compelling for them. You know, the fact being able to save 30 to 40% in price performance, that's a big deal when you do AI at the scale that opens. He does. And I would also say that for us, the investment is because of what I said earlier, which is, you know, it's. This is. This is the most significant transformation in technology, maybe business in our lifetimes. And we're incredibly. Even though it's growing really quickly, we're incredibly early in this. And OpenAI is going to be one of the really big winners here. And I think we can help them be more successful, as I mentioned earlier. And we're going to like that investment over a long period of time.

[Andrew Ross Sorkin]

Andy, you know, you had announced earlier this year that you're going to be spending $200 billion. There were a lot of folks in the investment community that said, oh my goodness, that's a lot of money. And I suggested just now that maybe this was part of the answer. Did you have line of sight, if you will, that this was a deal like this was possible at that point?

[Andy Jassy]

Yes. Sam and I have been talking in our teams for a while, and that was very much in our projections at that time. And, you know, as I said during the call, when we said that we were going to spend about $200 billion in CapEx this year, we have very strong demand signals, very clear line of sight to those. This is a good example of that. Remember, the capital we spend in 26 is for infrastructure that will be put in place, you know, 18 to 24 months later. And so we have very high confidence that we're going to be able to monetize what we're spending and we're going to like the economics a lot in that business.

[Andrew Ross Sorkin]

And when you think about that investment, and maybe both of you can speak to this, do you think there's genuinely a. Just a massive upfront cost and at some point that the cost really does tail off or from where you sit today, I mean, this is what I think some people are concerned about, is that it's just an exponential cost, that it's just going to be year after year after year and there's not going to be a moment where the investment stops, if you will.

[Andy Jassy]

I'll start, you know, the, the way the AWS business works in such a way where the faster we grow, the more capital we put out there. And because the model works, you know, we're, we're investing in capital in data centers, power land chips, hardware, networking gear. So all this infrastructure 18 to 24 months in advance of when we can monetize it and then we spend the money in the first year. But a lot of these assets that we're Investing in are 30 to 40 year useful life assets like data center. And so what happens is you spend the money in year one, but then you actually monetize over a long, long period of time. And you really like the return on invested capital over time. You saw that in the early days of aws. You know, as we are growing like crazy just on the CPU side where we're investing a lot of capital and, and the free cash flow looks different than it does once the growth rates start to level off. And so as the growth rates are really high, we'll spend more capital. But we like the operating income and the return on invested income income over a long period of time, because those assets we can monetize over a long period of time.

[Andrew Ross Sorkin]

Sam, how do you think about that? And both on the capex side for some of the folks providing these data centers, but also for your own business.

[Sam Altman]

Yeah, I very much agree with what Andy said. The investment needs to happen early. But the revenue growth and the ability to monetize that investment looks like it will continue to be steep over a long period of time and the like, Andy, the more we see revenue growing, the more we see demand growing, the more we want to invest to be able to serve that on this 18 to 24 month lead time. So the fraction of revenue that goes into training will, that will come down. But the total amount of capital that goes into training, I expect that to continue to increase. But I expect what Andy said to really hold true now as the industry matures. Like, you know, when Andy says 30 to 40% less expensive training, that's a big deal. Everyone's very focused on how we're going to bring costs of delivering these services down. You know, people joke in our industry about intelligence too cheap to meter, but we want to get as close to that dream as possible and getting very capital efficient on delivering these services at huge scale is how we see this working.

[Andrew Ross Sorkin]

And back to this exclusive exclusivity idea in terms of this statefulness effort, how long will this be with with Amazon? Is it possible you're going to want to do this? I imagine other people are going to want to do this with you. I mean, this is sort of the next frontier of what, what a gentic AI looks like.

[Sam Altman]

Sam yeah, we, Andy can talk about timelines and stuff if he, if he'd like to, but we want to have a long, deep relationship here. We've done this in the past and still have a long stateless API exclusivity with Microsoft. And there's a nice thing about aligning with a partner on a piece of technology. And this is a place where I think an approach where we're really going to go together and do this together will be great for both companies.

[Andrew Ross Sorkin]

Andy, one of the things I imagine people are going to be asking this morning is you've had a long relationship with Anthropic and Claude and you had an early investment with them. How does this change that dynamic, if it does at all?

[Andy Jassy]

We still have a very strong relationship with Anthropic. Remember, we have, we have lots of customers who run CLAUDE models in Bedrock. Anthropic has been early and very substantial customers and users of Trainium. They're training their next version of COD as we speak, on top of training. And we have a significant investment in Anthropic as well. And they've always had multiple partners and we do too. And so that relationship will stay strong and we're really excited about the partnership we're building over a long period of time with OpenAI.

[Andrew Ross Sorkin]

Hey Sam, while I have you here, just because I know everybody's fascinated by it, it's sort of the story in the news this morning. Beyond this big news that you've just announced, which is this debate between the Pentagon and Anthropic about how to use these large language models and whether they can be used improperly and what kind of rules should be placed around them, what do you think?

[Sam Altman]

Look, the first of all, the government, the Pentagon needs AI models, they need AI partners. This is like clear. And you know, I think Anthropic and others have said they understand that as well. I don't personally think the Pentagon should be threatening DPA against these companies, but I also think that companies that choose to work with the Pentagon as long as it is going to comply with legal protections. And the sort of the few red lines that the field that we have, I think we share with Anthropic and that other companies also independently agree with. I think it is important to do that. I've been, for all the differences I have was Anthropic. I mostly trust them as a company, and I think they really do care about safety. And I've been happy that they've been supporting our war fighters. I'm not sure where this is going

[Andrew Ross Sorkin]

to go in terms of open air and where you go. $730 billion, a huge valuation, and $110 billion provides you what Runway in terms of when you think about the timing of what that capital gives you. And then to the extent that you may think you need more capital in the future.

[Sam Altman]

I don't know the exact date, but it's a very long Runway. I expect we will need more capital. I don't know what the form will be. It may not. You know, there's like a lot of ways we could continue to finance growth, but this is. This is like a long Runway from

[Andrew Ross Sorkin]

now related to that. And maybe Andy can speak to this. The other big story of the morning, which relates very much to AI and I think we're all trying to understand it. You know, Andy, you and I have talked about jobs for a long time, and I. Jack Dorsey just announced a plan that effectively cuts 40% of his staff because he believes that AI is going to allow him to be just as productive, if not more so. And I wonder what your reaction is to that and what you think it portends for the rest of the rest of us, if you will.

[Andy Jassy]

Well, you know, I haven't really digested that news very much, and I think every company is going to make their own decisions on these things. And, you know, my view of it is what we've talked about in the past, Andrew, which is just, you know, I. I think that this is the most transformational technology shift that we've seen in our lifetime. I think it's going to impact the way we all do our work. And I do believe that a lot of the jobs that we've thrown human beings at the last 20 or 30 years, you won't need as many human beings doing those same jobs. But I also think there are going to be other jobs created, and that has always happened in every technology shift. And. And, you know, I mean, 15 years ago, there was no such thing as a cloud solutions architect, and today there are tens of thousands, maybe 100,000 plus of these types of jobs. So we will have lots of new jobs and, you know, and there'll be some sort of transition and we'll all work through it together.

[Andrew Ross Sorkin]

Sam, before we let you go, you know, one of the things that people have always talked about is AGI. You and I have talked about AGI for a long time. One of the deals that you, or terms you had in one of your earlier deals with Microsoft had to do with, you know, what happens once you get to AGI. So I was going to ask you whether any of those terms exist either in this, in this fundraising round and sort of how far you think we are to that.

[Sam Altman]

Now, I don't have, I can't tell you the exact date that AGI arrives. And also, you know, it's gotten to the point where people define it in different ways. The field is clearly making rapid progress. So I don't want to like, give a ton of timeline, but if you look at what the current models are capable of, you know, you hear people say, man, it feels, it feels like something I didn't expect to see this fast or I didn't expect to see this in my lifetime. The, I expect continued steep progress from here. I think we are all going to be surprised about the amount of AI progress the field sees this year, probably every year after that. So I don't have a timeline to give you, but it does feel like we are making maybe faster progress than even I expected.

[Andrew Ross Sorkin]

Does that change any of the deals, though? Is there, are there these, these AGI term limits, if you will, in any of these transactions you're, you're doing the

[Sam Altman]

Microsoft one has one, as you mentioned. But, but even towards AGI will have like a very strong, long relationship with Microsoft. We're not, given that we think it's like a nearer term thing now. It's, we're not doing new deals that like, you know, stop when AGI gets reached.

[Andrew Ross Sorkin]

Fair enough. Sam and Andy, congratulations on the deal. It is a big one, a big tectonic shift in the AI business and we appreciate you joining us first after the deal.

[Sam Altman]

We are delighted to get to work together. Thank you.

[Andrew Ross Sorkin]

Great to see you both.

[Andy Jassy]

Looking forward to it. Thanks for having me.

[Andrew Ross Sorkin]

You bet. Thanks.

[Zack Felici]

Thank you for listening to Squawk Pod today and whenever you do, that wraps up the week for us here Year Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. You can tune in on TV weekday mornings on CNBC at 6 Eastern or get the best interviews, conversations, even jokes from our TV show right into your ears when you follow Squawk Pod. Wherever you get your podcasts, we'll meet you back here on Monday. Have a great week.

[Gary Cohn]

All right, Clear.

[Andrew Ross Sorkin]

Thanks guys.

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