Amazon (AMZN) said on Monday it will invest up to $4 billion in artificial intelligence startup Anthropic, marking the latest major investment in AI as tech giants race to stake a claim in the fast-growing market. The move sent Amazon shares soaring in Monday trading.
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Through the deal, Anthropic will use Amazon Web Services as its primary cloud-provider and Amazon’s custom chips for its AI software. Meanwhile, Amazon will incorporate Anthropic’s models and software into its business.
According to the Wall Street Journal, Amazon is committed to an initial $1.25 billion in the deal, which could rise to $4 billion depending on certain conditions. Also, Amazon will hold a minority stake in the startup through the deal.
Additionally, Amazon said the agreement will help advance generative artificial intelligence, the term for technology that can create content such as text and images from simple descriptive phrases.
Amazon Chief Executive Andy Jassy said in a news release, “We have great respect for Anthropic’s team and foundation model, and we believe that through our deeper collaboration, in the short and long term, we will help many customers. “Can help improve experiences.”
Amazon stock ended the session up 1.7% at 131.27 on the stock market today.
Amazon Stock: AI Arms Race
The deal marks the latest AI investment from a tech giant this year. Additionally, companies are rushing to adopt generic AI in their business after the tremendous success of OpenAI’s ChatGPT.
In January, Microsoft Invested $10 billion in OpenAI and announced partnerships with private startups.
San Francisco-based Anthropic was founded in 2021 by former OpenAI employees. The company’s cloud AI assistant provides human responses to signals, similar to ChatGPT.
Amazon is chasing Microsoft in the race to develop AI products. For example, the company launched its Amazon Bedrock offer in April. The service allows users of Amazon’s cloud-computing to create generative AI applications.
According to Wedbush analyst Scott DeWitt, the deal signals “new urgency” in Amazon’s strategy to further integrate generic AI into Amazon Web Services.
“The agreement has the potential to accelerate the adoption and deployment of additional generative AI capabilities for AWS customers and should ease investors’ concerns that Amazon has been less proactive than its peers in its approach to generative AI,” DeWitt wrote in a client note. Used to be.” Note Monday.
Additionally, Amazon said last week that it would rely on generic AI to make its Alexa smart-home devices more interactive.
After a down year in 2022, Amazon stock is up nearly 54% this year.
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