Amazon Spends Up To $4B On AI Startup Anthropic, Analysts Explore Deal Prospects

Amazon.com, Inc. AMZN announced a strategic investment of as much as $4 billion in artificial intelligence (AI) startup Anthropic. The deal underscores how the tech behemoth seeks to unlock the potential of AI across its business.

As part of the deal, Anthropic has agreed to use AWS as its primary cloud partner. Anthropic's AI assistant, Claude, is a rival of ChatGPT, which boasted 100 million monthly active users in January — just two months after its launch — and attracted a $10 billion multi-year investment from Microsoft Corp MSFT.

• DA Davidson analyst Tom Forte maintained a Buy rating and price target of $150.
• RBC Capital Markets analyst Brad Erickson said the deal “should be good for faster test/learn around AWS infrastructure.” and Amazon’s open-source platform Bedrock.
• Wedbush analyst Matt Bryson reiterated an Outperform rating and price target of $180.

Check out other analyst stock ratings.

DA Davidson: Amazon and Anthropic plan to collaborate on advancing generative AI, Forte said in a note. Amazon can potentially “exploit” AI to grow its sales and reduce expenses, he added.

Anthropic will select AWS as its primary cloud provider and the deal highlights “Amazon's strong commitment to AI, improves its ability to compete with its tech rivals (such as Google and Microsoft), and increases our conviction in its ability to generate incremental revenue growth and expense management by exploiting AI,” the analyst further wrote.

RBC Capital Markets: The partnership is different from the one between Microsoft and OpenAI, as Anthropic already has a partnership and investment from Google GOOGL and will be “only one of likely many LLM providers which AWS customers can work with through AMZN's middleware platform called Bedrock,” Erickson said.

“Given AMZN's equity investment and the associated lock-in of using AMZN chips & AWS, we'd wonder if this makes Bedrock viewed as any less provider-agnostic or if AMZN intends to lock up other future LLM partnerships to hedge this investment,” he added.

Wedbush: “We see Amazon's investment as a generally positive data point for continued AI spending on training,” Bryson said in a note. Nvidia Corp NVDA could still be the primary beneficiary of this trend, “even if Anthropic realizes success in training models.”

“Assuming Anthropic models gain traction, resulting investment in inference could benefit a number of Taiwan names with exposure to AWS Inferentia,” the analyst added.

AMZN Price Action: Shares of Amazon had declined by 2.83% to $127.56 at the time of publication Tuesday.

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