On Wednesday, Amazon furthered its investment in growing AI power Anthropic by $2.75 billion, honoring an option left open last September. With a previous investment of $1.25 billion, it seems that Amazon’s initial results have been promising, or perhaps they have realized there are no other viable options available to back.
The September deal granted Amazon a minority stake in the company in exchange for $1.25 billion, as well as a mutually beneficial agreement for Anthropic to continue utilizing AWS for its extensive computational needs.
According to reports, Amazon had until the end of the first quarter to decide if they wanted to increase their investment up to a maximum of $4 billion. With the deadline just before us, the company has ultimately decided to invest the full amount.
Anthropic’s AI models are among the few that compete at the highest levels of capability, while also being available at scale for enterprises to deploy internally or in user-facing applications. OpenAI’s GPT series and Google’s Gemini are also prominent contenders, but smaller companies like Mistral may soon pose a threat to this delicate triumvirate.
Lacking the ability to develop adequate AI models on their own, companies like Amazon and Microsoft have had to rely on vicarious investments, primarily through partnerships with OpenAI and Anthropic. Thus far, these partnerships have yielded tremendous benefits, with little to no downsides noted.
It is challenging to decipher much from Amazon’s decision to invest the maximum amount after getting a deep dive into how Anthropic creates their AI. It is evident, however, that it makes strategic sense for these companies, with their vast reserves of resources, to outspend and out-innovate their rivals in the rapidly evolving AI sector.
Right now, the AI world is a bit like a roulette table, with OpenAI and Anthropic representing black and red. No one knows where the ball will land, especially the companies that could not predict or create this technology on their own. But if your bitter enemy puts their chips on red, it only makes sense for you to bet on black.
Moreover, Amazon was offered a discount on their investment, as they could invest at Anthropic’s September valuation, which is undoubtedly lower than it is now.
If there were any doubts about Anthropic’s potential, Amazon could have backed out or invested less than the full $2.75 billion. However, doing so would have sent a confusing signal to the market, which none of the existing investors want to see.
We are aware that Anthropic has a plan, and this year we will discover what Amazon, Apple, Microsoft, and other multinational corporations believe they can do to monetize this groundbreaking technology.
