As the e-commerce behemoth competes with Big Tech rivals to profit from generative artificial intelligence technology, Amazon.com (AMZN.O.) opened a new tab and invested an additional $4 billion in OpenAI opponent Anthropic.
Amazon’s stake in the company famed for its GenAI chatbot Claude has doubled, but it is still a minority investor, the business announced on Friday. Like Amazon’s prior $4 billion investment, it is made in installments, starting at $1.3 billion and taking the form of convertible notes.
According to sources who asked not to be named in order to discuss private topics, Anthropic is also in discussions with other investors in order to raise more money with Amazon’s support.
Amazon, which has steadily become Anthropic’s main cloud partner, is in intense competition with Alphabet’s Google (GOOGL.O) and Microsoft (MSFT.O) to provide AI-powered tools for its cloud clients. As a major distributor of its most recent models, AWS is generating a substantial amount of revenue for Anthropic.
“The investment in Anthropic is essential for Amazon to stay in a leadership position in AI,” Gil Luria, an analyst at D.A. Davidson, stated.
The increased investment by the e-commerce giant in Anthropic highlights the billions of dollars that have been invested in AI startups in the past year as investors seek to profit from the technology’s surge in popularity following the release of OpenAI’s ChatGPT in late 2022.
Last month, Microsoft-backed OpenAI collected $6.6 billion from investors, potentially valuing the company at $157 billion and solidifying its place among the world’s most valuable private enterprises.
Anthropic intends to use Amazon’s Trainium and Inferentia chips to train and implement its core models. Securing expensive AI chips is a big concern for startups since the rigorous process of training AI models demands powerful processors.
“It (partnership) also allows Amazon to promote its AI services such as leveraging its AI chips for training and inferencing, which Anthropic is using,” Luria stated.
Amazon is one of the many so-called hyperscaler clients of Nvidia (NVDA.O), which opens a new tab and presently controls the market for AI chips.
However, through its Annapurna Labs branch, which Anthropic stated it was “working closely with” to help create CPUs, Amazon has been striving to develop its own chips. Additionally, Amazon has been working on developing its own AI model, code-named “Olympus,” which it has not yet made public.
Anthropic, which was co-founded by brothers Dario and Daniela Amodei, former executives at OpenAI, said last year that it had obtained a $500 million investment from Alphabet, which pledged to contribute an additional $1.5 billion over time.
The startup’s operations also make advantage of Alphabet’s Google Cloud capabilities.