Amazon's AWS and Anthropic Join Forces: A Billion-Dollar Partnership Challenging Nvidia and Microsoft in the AI Arena

Anthropic taps Amazon.Com, Inc AMZN AWS as its primary cloud provider and will train and deploy its future foundation models on Amazon Web Services Trainium and Inferentia chips.

Anthropic made a long-term commitment to provide AWS customers worldwide with access to future generations of its foundation models via Amazon Bedrock, AWS's fully managed service. Anthropic will also provide AWS customers with early access to unique features for model customization and fine-tuning capabilities.

Also Read: Google, Nvidia Collaborate On AI Expansion In Strategic Play Against Microsoft

The deal will see Amazon invest an initial $1.25 billion for a minority stake in Anthropic. Both companies will later have the option to increase the total to $4 billion, Financial Times cites the companies.

AWS continues to expand its unique offering at all three layers of the generative AI stack. At the bottom layer, AWS continues to offer compute instances from Nvidia Corp NVDA and AWS's custom silicon chips, AWS Trainium for AI training and AWS Inferentia for AI inference. /

At the middle layer, AWS provides customers with the broadest selection of foundation models from multiple leading providers through AWS's new service, Amazon Bedrock. 

Now, customers will have early access to features for customizing Anthropic models, using their proprietary data to create their private models. 

They can utilize fine-tuning capabilities via a self-service feature within Amazon Bedrock. 

At the top layer, AWS offers generative AI applications and services for customers like Amazon CodeWhisperer, a powerful AI-powered coding companion that recommends code snippets directly in the code editor, accelerating developer productivity as they code.

Anthropic was last worth $5 billion in a funding round earlier this year. It is one of the top competitors to Microsoft Corp MSFT backed OpenAI, raising huge sums this year, including Inflection AI.

Jim Hare of Gartner said Amazon's deal with Anthropic would allow AWS to demonstrate that Nvidia's chips were not the only option for AI developers.

The companies will set the valuation of the investment and the size of Amazon's ownership at a later funding round. 

Reportedly, the terms would leave Amazon with a far smaller stake than the 49% ownership that Microsoft is said to have sought with its investment in OpenAI.

Price Action: AMZN shares closed lower by 0.16% at $129.12 on Monday.