Amazon (AmznAnthropic announced Monday that it will invest up to $4 billion in artificial intelligence startup Anthropic, marking the latest major investment in artificial intelligence as tech giants rush to stake their claim in the fast-growing market. The move prompted Amazon shares to rise in trading on Monday.
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Through the deal, Anthropic will use Amazon Web Services as its primary cloud provider and custom Amazon chips for its AI software. Meanwhile, Amazon will integrate Anthropic’s models and software throughout its business.
Amazon is committing an initial amount of $1.25 billion in the deal, which could grow to $4 billion depending on certain conditions, according to Wall Street Journal. Amazon will also own a minority stake in the startup through the deal.
Furthermore, Amazon said the agreement will help develop generative AI, a term that refers to technology that can create content such as text and images from simple descriptive phrases.
“We have great respect for the Anthropic team and enterprise models, and believe we can help improve many customer experiences, both in the short and long term, through our deeper collaboration,” Amazon CEO Andy Jassy said in a press release.
On the stock market today, Amazon shares ended the session up 1.7%, reaching 131.27.
Amazon Stock: The AI Arms Race
The deal marks the latest investment in artificial intelligence from the tech giant this year. Moreover, companies are racing to adopt generative AI in their businesses following the huge success of OpenAI’s ChatGPT.
In January, Microsoft It invested $10 billion in OpenAI and announced a partnership with the private startup.
San Francisco-based Anthropic was founded in 2021 by former OpenAI employees. The company’s Claude AI assistant provides human responses to prompts, similar to ChatGPT.
Amazon is catching up with Microsoft in the race to develop artificial intelligence products. For example, the company launched its Amazon Bedrock offering in April. The service allows Amazon cloud computing users to create generative AI applications.
The deal signals “new urgency” in Amazon’s strategy to further integrate generative AI into Amazon Web Services, according to Wedbush analyst Scott Devitt.
“The agreement has the potential to accelerate the adoption and deployment of additional generative AI capabilities for AWS customers and should alleviate investor concerns that Amazon has been less proactive than peers in its approach to generative AI, in our view,” Devitt wrote in a client. Note on Monday.
Furthermore, Amazon said last week that it will rely on artificial intelligence to make its Alexa smart home devices more interactive.
After a down year in 2022, Amazon stock is up about 54% this year.
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