Amazon (AMZN) – Get Free Report shares edged higher in early Monday trading after the cloud and retail giant unveiled plans to invest around $4 billion in AI start-up Anthropic.
San Francisco-based Anthropic will receive an initial $1.25 billion from Amazon, with the option of taking in a further $2.75 billion, as part of the investment deal, which will see it train its large-language models on chips purchased from Amazon.
Amazon, in turn, will get access to Anthropic’s AI technologies and build them into its cloud services offerings while taking what it called a ‘minority’ stake in the AI startup and ChatGPT rival.
Anthropic, which was founded by former OpenAI executives including its CEO, Dario Amodei, struck a similar deal with Google’s (GOOGL) – Get Free Report cloud division earlier this year.
“We have tremendous respect for Anthropic’s team and foundation models, and believe we can help improve many customer experiences, short and long-term, through our deeper collaboration,” said Amazon CEO Andy Jassy. “Customers are quite excited about Amazon Bedrock, AWS’s new managed service that enables companies to use various foundation models to build generative AI applications on top of, as well as AWS Trainium, AWS’s AI training chip, and our collaboration with Anthropic should help customers get even more value from these two capabilities.”
Amazon shares were marked 0.72% higher in pre-market trading to indicate an opening bell price of $130.05 each.
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Amazon, which has lagged behind rivals Google and Microsoft MSFT in this year’s rapid race to develop and deploy AI technologies, could use the Anthropic investment to springboard its efforts, particularly in the cloud space, heading into the final months of the year.
Jassy told investors in early August that while “most people are talking about the application layer, specifically what OpenAI has done with ChatGPT”, further layers and investment opportunities remain.
“We think AWS is poised to be customers’ long-term partner of choice in generative AI. We’re also continuing to make meaningful progress in building new customer experiences that can meaningfully change what’s possible for customers in our business long term,” he said. “Amazon Business is one of our fastest-growing offerings with a $35 billion annual gross sales run rate.”
