Amazon and Anthropic have entered into a groundbreaking agreement, with Amazon committing to invest up to $4 billion in the AI startup. This move signals Amazon’s intention to intensify its competition with tech giants such as Microsoft, Meta, Google, and Nvidia in the rapidly expanding AI sector, widely considered to be the next frontier in technology.

Initially, Amazon will inject $1.25 billion into Anthropic, securing a minority stake in the company. Similar to Google’s Bard and Microsoft-backed OpenAI, Anthropic operates an AI-powered chatbot that analyzes text. As part of the arrangement, Amazon retains the option to increase its investment in Anthropic to a total of $4 billion.

Earlier this year, TechCrunch reported exclusively that Anthropic, which also boasts Google as an investor, intends to raise up to $5 billion over the next two years. Their ambitious plans include the development of a “frontier model” tentatively named “Claude-Next,” which aims to be ten times more powerful than the current leading AI models. However, achieving this goal will necessitate an investment of one billion dollars over the next 18 months. (For context, Microsoft has invested as much as $11 billion in OpenAI over the years.)

Amazon’s involvement brings not only substantial financial support but also access to computing power for Anthropic to build future AI models and market them to a wide array of cloud customers.

As part of the investment deal, Anthropic will rely on Amazon Web Services (AWS) as its primary cloud provider for critical tasks, including safety research and the development of future foundation models. Anthropic will also utilize AWS Trainium and Inferentia chips for building, training, and deploying future foundation models. (Anthropic has been an AWS customer since 2021.)

Andy Jassy, Amazon’s CEO, believes that this collaboration with Anthropic will enhance customer experiences, both in the short and long term, by leveraging AWS services such as Amazon Bedrock and AWS Trainium.

Anthropic, whose backers include Spark Capital, Salesforce, Sound Ventures, Menlo Ventures, and Zoom, has raised a total of $2.7 billion to date. The startup was valued at approximately $5 billion in May of this year when it secured $450 million in funding. The exact valuation of Anthropic in this new investment by Amazon has not been disclosed.

This deal with Anthropic allows Amazon, which is increasingly asserting its presence in the AI arena, to bolster its position in this rapidly growing industry.

Dario Amodei, CEO, and co-founder of Anthropic, expressed confidence in the limitless potential of his company’s core technology during a recent appearance at the TechCrunch Disrupt event: “The last 10 years have seen an incredible increase in the scale of neural net training, and as we keep scaling up, they continue to perform better and better. That’s why I believe that what we will witness in the next 2, 3, 4 years will far surpass what we see today.”

Anthropic has made a “long-term” commitment to provide AWS customers worldwide with access to future generations of its foundation models through Amazon Bedrock, AWS’s fully managed service that grants secure access to top-tier foundation models in the industry. Additionally, Anthropic will offer AWS customers early access to exclusive features for customizing and fine-tuning models.

In a statement, Anthropic emphasized the importance of Amazon’s investment and the supply of AWS Trainium and Inferentia technology in advancing AI safety and research. They look forward to working closely with Amazon to responsibly expand the adoption of Claude and deliver secure AI cloud technologies to organizations across the globe.