Amazon.com Inc is in talks to invest in ChatGPT-maker OpenAI in a potential deal that could value the artificial intelligence firm at more than $500 billion, a source familiar with the matter said on Tuesday.

Amazon may invest about $10 billion in OpenAI, but the talks between the two firms are "very fluid", the source said on condition of anonymity because the matter is private.

The potential deal highlights the AI sector's relentless demand for computing power as companies race to build systems rivaling or surpassing human intelligence.

Firms such as Nvidia and Oracle have signed AI deals worth several billion dollars with OpenAI this year. OpenAI also signed a $38-billion-deal to buy cloud services from Amazon in November.

However, investors are on guard for signals that demand for AI is tailing off or that the massive spending is not paying off as anticipated.

The discussion between Amazon and OpenAI come at a time when the AI giant is laying the groundwork for an initial public offering that could value the company at up to $1 trillion, Reuters reported in October.

The approach underlines OpenAI's ability to partner widely after moving on from its non-profit roots and settling its deal with Microsoft, the source said.

The Microsoft deal makes OpenAI a public benefit corporation that is controlled by a non-profit with a stake in OpenAI's financial success, removing major constraints on the firm's ability to raise capital and secure computing resources.

Microsoft holds a 27% stake in OpenAI and has secured an exclusive right to sell OpenAI models to its cloud customers.

OpenAI, Amazon and Microsoft did not immediately respond to a Reuters request for comment.

The Information, which first reported the talks, said OpenAI plans to use Amazon's Trainium chips, which compete with Nvidia and Google's chips, and added that Amazon's financing could lead to a broader fundraising round with other investors.

OpenAI is also looking to sell an enterprise version of ChatGPT to Amazon, but it is unclear whether the deal includes provisions for integrating ChatGPT features such as shopping features that Amazon is developing for its own apps, the report said.