Tech giant Alphabet’s (GOOGL) Google is committing another $1 billion to AI startup Anthropic in a larger AI (artificial intelligence) push. To date, Anthropic stands as one of the formidable competitors to ChatGPT maker OpenAI in producing large-scale generative AI models. The Financial Times was the first to report the news, citing sources familiar with the matter.
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Anthropic’s Fund Raising Aimed to Rival OpenAI
This is Google’s second investment in Anthropic, apart from the $2 billion already committed earlier. Anthropic is known for its Claude family of foundational AI models. The startup also launched AI agents that are capable of running complex tasks based on user inputs. Anthropic is steadily catching up with OpenAI in the AI race, with its annual revenues hitting $875 million in 2024. Anthropic’s models are available both directly and through third-party cloud service providers such as Amazon.com’s (AMZN) AWS (Amazon Web Services).
Interestingly, Anthropic already has another $2 billion investment on the cards from the latest funding round led by Lightspeed Venture Partners. Anthropic was valued at close to $60 billion in this round. E-commerce behemoth Amazon.com also has an $8 billion investment in Anthropic. Amazon intends to integrate Claude models into its Alexa devices to compete effectively with Apple’s (AAPL) Siri and Google Android’s Gemini.
In the meantime, rival OpenAI is also raising more funds to develop larger and more efficient AI models. The Sam Altman-led company recently closed a $6.6 billion funding round, which valued it at $157 billion. Alphabet continues to strengthen its position in the AI revolution as it competes with other tech biggies, including Microsoft (MSFT), Amazon, and Meta Platforms (META).
Is Alphabet a Long-Term Buy?
Wall Street is indeed highly optimistic about Alphabet’s long-term potential, backed by a robust business model and diverse range of offerings. On TipRanks, GOOGL stock commands a Strong Buy consensus rating based on 24 Buys versus seven Hold ratings. Also, the average Alphabet Class A stock price target of $216.75 implies 9.4% upside potential from current levels. In the past year, GOOGL shares have gained 36.2%.
