Artificial intelligence has prompted numerous industry leaders to reassess their priorities and shift their investments into this sector. Amazon (NASDAQ: AMZN) appears eager to establish a significant presence, evidenced by its decision to inject an additional $2.75 billion into an Antrophic startup, marking its largest investment in three decades.
This move follows an initial investment of $1.25 billion announced in September, with Amazon originally committing to invest up to $4 billion. The recent news on March 27 signifies Amazon’s second installment of funding toward this initiative.
Why did Amazon pick Antrophic for its investment?
The announcement of Amazon’s investment comes shortly after Anthropic unveiled Claude 3, its latest suite of AI models touted as its fastest and most powerful to date. According to the company, its most advanced model surpassed industry benchmarks, outperforming competitors like OpenAI’s GPT-4 and Google’s Gemini Ultra in areas such as undergraduate-level knowledge, graduate-level reasoning, and basic mathematics.
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Amazon’s investment in Anthropic will result in the e-commerce giant holding a minority stake in the company without securing a seat on Anthropic’s board. The agreement was finalized based on Anthropic’s most recent valuation, which stood at $18.4 billion.
The partnership is mutually beneficial. Anthropic has agreed to utilize AWS as its primary cloud provider as part of the deal. Additionally, it will leverage Amazon chips for training, development, and deployment of its foundational models. Amazon has been investing in its chip designs, potentially positioning itself for competition with Nvidia (NASDAQ: NVDA) in the future.
Amazon stock price chart
The announcement of the investment didn’t appear to significantly impact Amazon’s stock price, with a mere 0.13% loss in pre-market trading. This left its closing price of $179.83 largely unaffected, despite having experienced daily gains of 0.86% in the past five trading sessions, which were marred by a slight decrease of -0.07%.
Year-to-date, AMZN stock has increased by 19.94% in value.
The news of the investment hasn’t been well received by regulatory bodies, which are intensifying their antitrust efforts. These efforts have already targeted Apple (NASDAQ: AAPL) and may extend to other industry giants suspected of engaging in ’round tripping’—an illegal activity used to channel funds back into their departments, thus bolstering their finances.
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