Amazon Eyes Deeper Ties with Anthropic in Multi-Billion AI Investment Move

Amazon is reportedly in discussions to make additional multi-billion dollar investments in Anthropic, an AI startup and a major competitor to OpenAI. Having already invested $4 billion, Amazon appears keen on enhancing its involvement with Anthropic, though a final agreement has yet to be reached. Earlier reports in September suggested that Anthropic was in talks for a new funding round, potentially valuing the company at $40 billion.

An interesting aspect of these negotiations is Anthropic's potential shift to using Amazon's Trainium chips in their servers. Traditionally, Anthropic has favored NVIDIA-designed chips for AI operations. The transition to Trainium could pose technical challenges, potentially limiting Anthropic's options to use other cloud services or their own data centers, as Amazon does not provide hardware to facilities operated by other companies. Nonetheless, an initial agreement indicates that Anthropic may integrate some Trainium-powered servers, while primarily continuing with NVIDIA-based solutions through Amazon's infrastructure.

The ongoing discussions underpin the symbiotic relationships forming between cloud service giants and AI developers, reminiscent of Microsoft’s collaboration with OpenAI. These alliances are driven by the high costs and complexities involved in AI product development. For Amazon, achieving agreement on Trainium usage aligns with its strategy to reduce dependency on purchasing NVIDIA chips, offering a competitive edge in the fast-evolving AI landscape.

A prospective investment by Amazon might be structured as convertible debt, potentially transforming into equity contingent upon Anthropic securing further financing from other investors. In parallel, the two companies are negotiating a cloud service agreement, enabling Amazon to promote Anthropic’s models to clients such as Doordash and Goldman Sachs, thereby sharing in the profits, while Anthropic would lease dedicated servers from Amazon for technological development.

The partnership between Amazon and Anthropic could tighten, as Anthropic seeks to scale its operations using expansive AI data centers, akin to those planned by competitors like OpenAI and xAI. Yet, it's unclear if Amazon will commit to building supercomputing clusters for Anthropic. While Amazon's self-developed large AI models are still under development, supporting Anthropic remains a strategic effort to stay ahead in the AI race, where stakes are increasingly high.