icon
icon
icon
icon
Upgrade
icon

Amazon Eyes Multi-Billion-Dollar Bet on Anthropic Amid Chip and Cloud Negotiations

AInvestFriday, Nov 8, 2024 5:00 am ET
1min read

Amazon is reportedly in discussions to significantly increase its investment in Anthropic, a prominent competitor to OpenAI, with a potential infusion of several billion dollars. This follows Amazon’s substantial $40 billion financial commitment in September of the previous year. The ongoing negotiations include a stipulation that Anthropic employ Amazon’s proprietary chips to power their AI training models, a condition that could add complexity to the discussions.

Founded by former OpenAI executives Dario and Daniela Amodei, Anthropic is recognized as one of OpenAI's major rivals. The company has already secured $9.7 billion in funding, trailing behind OpenAI's total capital raise of $21.9 billion. Earlier this year, Anthropic projected that it would require over $2.7 billion by 2024 to scale and train its AI offerings. Reports suggest that Anthropic is seeking new funding at a valuation of around $40 billion.

A central issue in the negotiations with Amazon is the extent to which Anthropic will integrate Amazon’s Trainium chips. Adopting these chips could present technical challenges, given that Amazon’s support software is less established compared to the familiar CUDA software used with NVIDIA chips. This shift could also limit Anthropic's flexibility in choosing future cloud providers or establishing its own data centers. However, Amazon remains keen on reducing its reliance on NVIDIA chips by encouraging Anthropic to use its proprietary technology.

The details of the potential investment may comprise convertible notes, which will convert into equity once Anthropic secures additional funding from other investors. Furthermore, both companies are discussing a cloud services arrangement, allowing joint revenue sharing from Anthropic’s model sales to Amazon cloud customers. As part of the agreement, Anthropic is expected to lease dedicated servers from Amazon for its technology development.

Beyond Amazon, Anthropic also has agreements with other tech giants, including a smaller cloud collaboration with Google, which pledged a $2 billion investment last year. However, this partnership drew regulatory scrutiny, with the UK's Competition and Markets Authority launching an investigation in October to ensure that such large-scale investments do not unfairly skew the competitive landscape in the AI sector.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.