Amazon (AMZN) Backed Anthropic to Raise Funds at $60 Billion Valuation

Anthropic, the artificial intelligence(AI) start-up company that is heavily backed by Amazon (AMZN), is in talks to raise as much as $2 billion in new funding at a $60 billion valuation.

The new funding round is being led by Lightspeed Venture Partners. Anthropic was founded by former employees of rival AI start-up OpenAI and is the creator of the chatbot called “Claude,” which has gained in popularity as businesses incorporate generative AI across their sales, marketing, and customer service channels.

Anthropic is heavily backed by e-commerce giant Amazon. Last November, Amazon announced that it would invest an additional $4 billion in Anthropic, bringing its total investment in the start-up firm to $8 billion. Amazon remains a minority investor in Anthropic and does not have a board seat at the company.

Anthropic uses Amazon Web Services’ Trainium and Inferentia microchips to train and deploy its largest AI models.

AI Arms Race

Amazon isn’t the only technology giant that has allocated capital to Anthropic. Google parent company Alphabet (GOOGL) committed to invest $2 billion in Anthropic last year, after confirming it had taken a 10% stake in the start-up along with a large cloud contract.

Amazon and Alphabet are in an AI arms race along with Microsoft (MSFT) and Meta Platforms (META)
to ensure that they don’t fall behind in a market that’s predicted to exceed $1 trillion in revenue within a decade. Anthropic’s annualized revenue is about $875 million and comes mainly from enterprise sales.

AMZN stock has risen 49% in the last 12 months.

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The stock of Amazon has a consensus Strong Buy rating among 47 Wall Street analysts. That rating is based on 46 Buy and one Hold recommendations issued in the last three months. The average price target on AMZN stock of $249.62 implies 12.15% upside from current levels.

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