Amazon's $8 Billion Investment In AI Developer Anthropic 'Mutually Beneficial,' Says Analyst

Last week, Amazon.com, Inc. AMZN deepened its partnership with Anthropic through an additional $4 billion investment, bringing Amazon's total investment in the artificial intelligence research and development company to $8 billion.  

The Details: As part of the investment, Anthropic has named Amazon Web Services as its primary training partner, in addition to continuing to be its primary cloud provider, and will use AWS Trainium and Inferentia chips to train and deploy its future foundation models.

Amazon also said Anthropic will work with AWS's chip-making division, Annapurna Labs, to continue the development of its custom Trainium chips. 

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Expert Ideas: Bank of America Securities analyst Justin Post sees the expanded partnership as beneficial for both companies. Amazon needs a strong AI partner in order to ensure it can maintain competitive large language model (LLM) capabilities for AWS, and Anthropic likely needs more capital to compete with rival AI developer, OpenAI. 

Post also noted that the co-development of Amazon's Trainium chip capabilities could accelerate progress and build credibility for the chips among other AI customers. Also, Anthropic likely finds the potential cost savings for training and inference of its models attractive, given the company's current cash burn rate. 

The analyst reiterated his view that the expanded partnership will prove to be mutually beneficial for Amazon and Anthropic. 

"In our view, Amazon's growing investment will further advance Anthropic's capabilities, which should help capture incremental AI spend from Amazon's leading customer base," Post wrote.

Bank of America Securities maintained its Buy rating and $230 price objective on Amazon stock. 

Price Action: According to Benzinga Pro, Amazon shares ended Monday's session 2.2% higher at $201.45.

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