Amazon's $4 Billion Anthropic Deal Supercharges AI Race Against Microsoft and Google

Amazon has supercharged the AI race by investing $4 billion in Anthropic, doubling its investment to challenge Microsoft and Google in the competitive generative AI landscape. The partnership leverages Amazon's cloud infrastructure and AI chips to advance Anthropic's AI models and secure a leadership position.

Amazon Invests $4 Billion in Anthropic to Strengthen AI Leadership

E-commerce behemoth Amazon.com is racing Big Tech competitors to cash in on generative AI technology, so it poured an extra $4 billion into AI company Anthropic, Reuters reports.

The startup said on Friday that Amazon's investment in its GenAI chatbot Claude had doubled. However, Amazon will still be considered a minority investor. Additionally, Anthropic will rely on Amazon as its primary training partner for AI models.

One of Anthropic's main cloud partners, Amazon, is in a cutthroat race with Microsoft and Alphabet's Google to provide cloud clients with AI-powered capabilities.

"The investment in Anthropic is essential for Amazon to stay in a leadership position in AI," said Gil Luria, an analyst at D.A. Davidson.

Billions Flow Into AI as Investors Target Generative Tech

According to Yahoo Finance, investors are hoping to profit from the AI boom that began with the release of OpenAI's ChatGPT in late 2022, and the e-commerce giant's increased investment in Anthropic is just one example of the billions of dollars that have poured into AI firms in the last year.

Last month, investors gave OpenAI $6.6 billion, putting its valuation at $157 billion and solidifying its status as one of the world's most valuable private corporations. Microsoft was a backer of the company.

The Trainium and Inferentia chips from Amazon will be used by Anthropic to train and deploy its basic models. Startups prioritize acquiring expensive AI chips due to the arduous process of training AI models, which requires strong processors.

Amazon's AI Strategy Taps Into Custom Chip Development

"It (partnership) also allows Amazon to promote its AI services such as leveraging its AI chips for training and inferencing, which Anthropic is using," added Luria.

Among Nvidia's many so-called hyperscaler clients is Amazon, which helps explain why the company now controls the majority of the artificial intelligence processor market.

Nonetheless, Anthropic claimed to be "working closely with" Amazon's Annapurna Labs to assist in the development of CPUs, suggesting that Amazon has been engaged in chip development internally.

Last year, Anthropic announced that it had received a $500 million investment from Alphabet, with a further commitment to invest $1.5 billion in the future. Dario and Daniela Amodei, who were co-founders of OpenAI, are brothers.

Anthropic Balances Partnerships with Alphabet and Amazon

The startup's operations also make advantage of Alphabet's Google Cloud capabilities.