E-commerce giant Amazon (AMZN) has announced plans to invest an additional $4 billion in Anthropic, the artificial intelligence (AI) start-up company that competes directly against OpenAI.
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The new money doubles Amazon’s total investment in Anthropic to $8 billion. However, despite the big allocation of funds, Amazon remains a minority investor in Anthropic, the start-up company behind the Claude chatbot that competes against OpenAI’s ChatGPT. Amazon’s investment in Anthropic is its largest outside investment ever.
As part of the deal, Amazon Web Services (AWS) will become Anthropic’s main cloud computing partner. Going forward, Anthropic will use AWS Trainium and Inferentia microchips to train its AI models. The partnership also allows AWS customers to fine tune their data using Anthropic’s Claude chatbot.
Race to Adopt AI Models
Amazon is investing heavily in Anthropic as technology giants race to adopt AI models that are exploding in popularity and projected to be a $1 trillion market within a decade. Amazon is competing against other mega-cap tech companies such as Alphabet (GOOGL), Microsoft (MSFT), and Meta Platforms (META) in what’s being described as an AI arms race.
While some companies such as Alphabet and Meta are developing their own AI models and applications, others like Microsoft and Amazon are pouring billions of dollars into AI start-ups such as Anthropic and ChatGPT. Anthropic recently announced a milestone: AI agents that can use a computer to complete complex tasks just as a human would.
Amazon’s stock is up 30% this year.
Is AMZN Stock a Buy?
Amazon stock has a consensus Strong Buy rating among 45 Wall Street analysts. That rating is based on 44 Buy and one Sell recommendations issued in the last three months. The average AMZN price target of $239.10 implies 21.24% upside from current levels.
