Quick overview

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Amazon is strengthening its ties in the fiercely competitive artificial intelligence race by investing an additional $5 billion in Anthropic PBC and potentially contributing an additional $20 billion over time. According to Anthropic, the deal was reached at a valuation of $350 billion, excluding the additional funding.

This indicates that Amazon recently negotiated better terms than other investors. After securing a $30 billion funding round in February, which valued the San Francisco-based startup at $380 billion, Anthropic has since attracted investor offers at a valuation of over $800 billion.

According to a statement released on Monday, Anthropic, the company behind the Claude chatbot and coding tool, intends to invest $100 billion over the next ten years in chips and cloud technologies from Amazon.

The news caused Amazon shares to rise by roughly 3% during prolonged trading. Banks, tech companies, and governments are rushing to comprehend what Anthropic’s new AI might mean for cybersecurity and the future of the internet.

It is widely anticipated that Anthropic, which was founded in 2021 by former OpenAI employees, will launch an IPO as early as this year.

The deal is the most recent indication of Anthropic’s desire for the enormous processing power required to create new Claude versions.

The AI company has been rushing to convince more companies to purchase its software to help offset the enormous cost of developing the technology. Similar to OpenAI, Anthropic has signed agreements to obtain the required chips and rented processing power. Last week, Anthropic announced that it would recruit Broadcom Inc. to provide chips based on Google’s tensor processing units, which are a competitor of Trainium from Amazon.

Anthropic will have access to roughly 3.5 gigawatts of processing power thanks to the three companies’ cooperation. Anthropic announced in October that it would acquire up to a million of Alphabet Inc.’s specialized AI chips. unit, a partnership valued at tens of billions.