By Arsheeya Bajwa and Krystal Hu
(Reuters) -Amazon.com is pumping another $4 billion into OpenAI rival Anthropic, as the e-commerce giant takes on Big Tech rivals in a race to capitalize on generative artificial intelligence technology.
This doubles Amazon’s (NASDAQ:) investment in the company known for its GenAI chatbot Claude, but it remains a minority investor, the startup said Friday. Like Amazon’s previous $4 billion investment, this will come in the form of convertible notes and will come in phases, first at $1.3 billion.
Anthropic is also in talks with additional investors to raise more capital thanks to Amazon’s backing, added sources, who requested anonymity to discuss private matters. Anthropic declined to comment.
Amazon, which has gradually established itself as Anthropic’s top cloud partner, is competing fiercely with Microsoft (NASDAQ:) and Alphabet’s Google (NASDAQ:) to offer AI-powered tools to its cloud customers. AWS brings significant revenue to Anthropic as a major distributor of its latest models.
“The investment in Anthropic is essential for Amazon to maintain a leadership position in AI,” said DA Davidson analyst Gil Luria.
The e-commerce company’s increased investments in Anthropic underscore the billions of dollars that have been funneled into AI startups over the past year as investors look to cash in on the boom in the technology, which became popular with the launch of OpenAI’s ChatGPT in late 2022.
Microsoft-backed OpenAI raised $6.6 billion from investors last month, which could value the company at $157 billion and cement its position as one of the most valuable private companies in the world.
Anthropic plans to train and deploy its base models on Amazon’s Trainium and Inferentia chips. The intensive process of training AI models requires powerful processors, making securing expensive AI chips a top priority for startups.
“It (partnership) also allows Amazon to promote its AI services, such as deploying its AI chips for training and inference, which Anthropic uses,” Luria said.
Nvidia (NASDAQ:) currently dominates the AI processor market and counts Amazon among its long list of so-called hyperscaler customers.
Still, Amazon has been working to develop its own chips through its Annapurna Labs division, with which Anthropic said it was “working closely” to help develop processors. Amazon has also tried to build its own AI model codenamed “Olympus” but has not yet released it.
Anthropic, co-founded by former OpenAI executives and siblings Dario and Daniela Amodei, said last year it had secured a $500 million investment from Alphabet, which pledged to invest another $1.5 billion over time.
The startup also uses Alphabet’s Google Cloud services as part of its operations.
