Amazon Completes Its Planned $4 Billion Investment in Anthropic

Calvin D

On Wednesday, Amazon invested an extra $2.75 billion in the AI company Anthropic, following up on a previous option from last September. This comes after their first $1.25 billion investment, which seems to be fruitful, or perhaps Amazon doesn't see a better alternative.

Last September, Amazon put $1.25 billion into Anthropic for a small stake and made a deal for Anthropic to use Amazon's AWS for its intensive computing needs.

Amazon had the right to up its investment to $4 billion by the end of the first quarter. Just before this deadline, Amazon chose to invest the maximum amount.

Anthropic is a leading AI technology firm whose offerings are used by companies either for internal purposes or in their products. Competitors include OpenAI's GPT series and Google's Gemini, with new names like Mistral possibly entering the scene soon.

Companies unable to create their leading AI technology, like Amazon and Microsoft, have formed partnerships with firms like OpenAI and Anthropic, which benefits both parties with minimal risk so far.

The decision by Amazon to invest fully after reviewing Anthropic's work doesn't tell us much.

For giants in the industry, investing heavily in AI is a strategic move when they cannot out-innovate their rivals. The AI sector is full of guesses on which technology will come out on top. If one giant backs one company, it seems wise for another to back a different one.

Amazon struck a good deal by investing in Anthropic at an earlier and likely lower valuation.

Had Amazon been worried about Anthropic's future, they could have invested less or not at all, to avoid signaling doubt, especially to significant investors.

Anthropic has big ambitions, and soon we'll see how giants like Amazon, Apple, and Microsoft plan to profit from this cutting-edge technology.