Key Points
Amazon announced plans to invest up to $25 billion in Anthropic.
The deal will give the AI start-up access to Amazon's custom AI chips to run its Claude models.
This gives Amazon investors a significant stake in one of the world's most promising AI specialists.
In a blog post published on Monday, Amazon(NASDAQ: AMZN) announced it would invest up to $25 billion in artificial intelligence (AI) start-up Anthropic. This comes on top of the $8 billion it previously invested in the company. Amazon said that $5 billion of that investment would be effective immediately, with the additional $20 billion tied to "certain commercial milestones," though it didn't provide specifics.
As part of the expanded collaboration, Anthropic agreed to spend more than $100 billion on Amazon Web Services (AWS) technologies over the coming decade. The multiyear, multigenerational deal includes Amazon's custom AI chips, including Trainium -- designed for training AI models -- and "tens of millions of Graviton cores" -- Amazon's custom-designed CPU.
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In all, Anthropic will have access to up to 5 gigawatts (GWs) of compute capacity to "train and power" its Claude AI models. This will include Amazon's Trainum3 chips, with additional capacity expected to come online later this year.
Anthropic noted that the full Claude Platform would be available directly within AWS, making it a breeze for cloud customers to access all the AI system has to offer, with the "same account, same controls, same bill, with no additional credentials or contracts necessary."
The company also pointed out that Claude is the only frontier model available on each of the world's largest cloud platforms -- AWS (Bedrock), Alphabet's Google Cloud (Vertex AI), and Microsoft Azure (Foundry).
Amazon CEO Andy Jassy heralded the deal, saying, "Our custom AI silicon offers high performance at significantly lower cost for customers, which is why it's in such hot demand."
Anthropic is a hot commodity in the tech world, with enthusiasm reaching a fever pitch thanks to the success of its industry-leading Claude models.
One example illustrates just how advanced these models have become. Anthropic's Claude Mythos Preview rocked the cybersecurity world by identifying thousands of zero-day vulnerabilities -- or previously unidentified ways to hack existing software and infrastructure. The company quickly formed an alliance with the biggest names in technology -- dubbed Project Glasswing -- to address these vulnerabilities before they could be exploited.
Some of Anthropic's biggest backers are also among its biggest customers. Amazon and Alphabet were both heavily invested in the start-up. However, multiple investments at different times make exact percentages difficult to estimate, so we won't know for sure until Anthropic goes public.
That said, estimates suggest Amazon owns a mid- to high double-digit stake of roughly 16% to 18% in Anthropic. If the start-up can fetch an $800 billion valuation -- as recent reports suggest -- the Anthropic stake could be worth as much as $144 billion to Amazon shareholders.
Investors can pick up Amazon at 35 times earnings. While that might sound pricey, it's considerably lower than its average multiple of 65 over the past three years. At that price, it's almost like getting Amazon's investment in Anthropic for free.
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Danny Vena, CPA has positions in Alphabet, Amazon, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool has a disclosure policy.
