Amazon is making its largest outside investment in its three-decade history as it looks to gain an edge in the artificial intelligence race.
The tech giant said it will spend another $2.75 billion backing Anthropic, a San Francisco-based startup that’s widely viewed as a front-runner in generative artificial intelligence. Its foundation model and chatbot Claude competes with OpenAI and ChatGPT.
The companies announced an initial $1.25 billion investment in September, and said at the time that Amazon would invest up to $4 billion. Wednesday’s news marks Amazon’s second tranche of that funding.
Amazon will maintain a minority stake in the company and won’t have an Anthropic board seat, the company said. The deal was struck at the AI startup’s last valuation, which was $18.4 billion, according to a source.
Over the past year, Anthropic closed five different funding deals worth about $7.3 billion. The company’s product directly competes with OpenAI’s ChatGPT in both the enterprise and consumer worlds, and it was founded by ex-OpenAI research executives and employees.
News of the Amazon investment comes weeks after Anthropic debuted Claude 3, its newest suite of AI models that it says are its fastest and most powerful yet. The company said the most capable of its new models outperformed OpenAI’s GPT-4 and Google‘s Gemini Ultra on industry benchmark tests, such as undergraduate level knowledge, graduate level reasoning and basic mathematics.
“Generative AI is poised to be the most transformational technology of our time, and we believe our strategic collaboration with Anthropic will further improve our customers’ experiences, and look forward to what’s next,” said Swami Sivasubramanian, vice president of data and AI at AWS cloud provider.
Amazon’s move is the latest in a spending blitz among cloud providers to stay ahead in the AI race. And it’s the second update in a week to Anthropic’s capital structure. Late Friday, bankruptcy filings showed crypto exchange FTX struck a deal with a group of buyers to sell the majority of its stake in Anthropic, confirming a CNBC report from last week.
Read more CNBC reporting on AI
What is generative AI?
The term generative AI entered the mainstream and business vernacular seemingly overnight, and the field has exploded over the past year, with a record $29.1 billion invested across nearly 700 deals in 2023, according to PitchBook. OpenAI’s ChatGPT first showcased the tech’s ability to produce human-like language and creative content in late 2022. Since then, OpenAI has said more than 92% of Fortune 500 companies have adopted the platform, spanning industries such as financial services, legal applications and education.
Cloud providers like Amazon Web Services don’t want to be caught flat-footed.
It’s a symbiotic relationship. As part of the agreement, Anthropic said it will use AWS as its primary cloud provider. It will also use Amazon chips to train, build and deploy its foundation models. Amazon has been designing its own chips that may eventually compete with Nvidia.
Microsoft has been on its own spending spree with a high-profile investment in OpenAI. Microsoft’s OpenAI bet has reportedly jumped to $13 billion as the startup’s valuation has topped $29 billion. Microsoft’s Azure is also OpenAI’s exclusive provider for computing power, which means the startup’s success and new business flows back to Microsoft’s cloud servers.
Google, meanwhile, has also backed Anthropic, with its own deal for Google Cloud. It agreed to invest up to $2 billion in Anthropic, comprising a $500 million cash infusion, with another $1.5 billion to be invested over time. Salesforce is also a backer.
Anthropic’s new model suite, announced earlier this month, marks the first time the company has offered “multimodality,” or adding options like photo and video capabilities to generative AI.
But multimodality, and increasingly complex AI models, also lead to more potential risks. Google recently took its AI image generator, part of its Gemini chatbot, offline after users discovered historical inaccuracies and questionable responses, which circulated widely on social media.
Anthropic’s Claude 3 does not generate images. Instead, it only allows users to upload images and other documents for analysis.
“Of course no model is perfect, and I think that’s a very important thing to say upfront,” Anthropic co-founder Daniela Amodei told CNBC earlier this month. “We’ve tried very diligently to make these models the intersection of as capable and as safe as possible. Of course there are going to be places where the model still makes something up from time to time.”
Amazon’s biggest venture bet before Anthropic was electric vehicle maker Rivian, where it invested more than $1.3 billion. That too, was a strategic partnership.
These partnerships have been picking up in the face of more antitrust scrutiny. A drop in acquisitions by the Magnificent Seven — Amazon, Microsoft, Apple, Nvidia, Alphabet, Meta and Tesla — has been offset by an increase in venture-style investing, according to Pitchbook.
Big Tech’s investments
AI and machine-learning investments from those seven tech companies jumped to $24.6 billion last year, up from $4.4 billion in 2022, according to Pitchbook. At the same time, Big Tech’s M&A deals fell from 40 deals in 2022 to 13 last year.
“There is a sort of paranoia motivation to invest in potential disruptors,” Pitchbook AI analyst Brendan Burke said in an interview. “The other motivation is to increase sales, and to invest in companies that are likely to use the other company’s product — they tend to be partners, more so than competitors.”
Big Tech’s spending spree in AI has come under fire for the seemingly circular nature of these agreements. By investing in AI startups, some observers, including Benchmark’s Bill Gurley, have accused the tech giants of funneling cash back to their cloud businesses, which in turn, may show up as revenue. Gurley described it as a way to “goose your own revenues.”
The U.S. Federal Trade Commission is taking a closer look at these partnerships, including Microsoft’s OpenAI deal and Google and Amazon’s Anthropic investments. What’s sometimes called “round tripping” can be illegal — especially if the aim is to mislead investors. But Amazon has said that this type of venture investing does not constitute round tripping.
FTC Chair Lina Khan announced the inquiry during the agency’s tech summit on AI, describing it as a “market inquiry into the investments and partnerships being formed between AI developers and major cloud service providers.”
Correction: This article has been updated to clarify the deals Anthropic has closed in the past year.
Check out the companies making headlines in midday trading. Crypto stocks – Stocks tied to crypto prices jumped amid reports that President-elect Donald Trump could release an executive order making crypto a national priority as soon as the first day of his new term. Shares of crypto exchange operators Coinbase and Robinhood advanced 4.5% and 6%, respectively. Trading activity in small cap cryptocurrencies benefits trading platforms. Bitcoin proxies MicroStrategy and Mara Holdings gained 6% and 10%, respectively. Novo Nordisk — Shares slipped 5% after the company’s semaglutide, which is the active ingredient in the its diabetes drugs Ozempic and Rybelsus and its obesity treatment Wegovy, landed on a list of drugs that will be included in Medicare’s next round of price negotiations . Qorvo – Shares gained more than 12% after activist investor Starboard Value disclosed a 7.7% stake in Qorvo and is seeking changes to improve the company’s share price. Vistra — The energy company’s stock shed 1.9% after a major fire erupted at its battery-storage facility in Northern California and led to the evacuation of nearby residents. MoonLake Immunotherapeutics — The biopharma stock added 4% following an upgrade to buy from neutral at Goldman Sachs. Analyst Richard Law said that the company’s experimental treatment for a chronic skin condition, SLK, could “potentially deliver best-in-class results.” Lam Research , Applied Materials — The semiconductor equipment stocks rose 1.3% and 2.2%, respectively, after KeyBanc Capital Markets upgraded both companies to overweight from sector weight. Lam Research and Applied Materials have exposure to artificial intelligence-related devices that should lead their stocks higher, the firm said. J.B. Hunt — The transport stock fell 6% after a fourth-quarter earnings miss. J.B. Hunt generated $1.53 in earnings per share, while analysts surveyed by LSEG were looking for $1.61. The company reported that revenue declined year over year in each of its major business segments. Fastenal — Shares of the fastener distributor added 1% even though the company missed fourth-quarter expectations due to ongoing manufacturing-related challenges. Fastenal earned 46 cents per share on revenue of $1.82 billion, while analysts polled by FactSet were expecting 48 cents per share on $1.84 billion in revenue. The company did see higher unit sales during the quarter amid growth at locations opened in the past two years. Life360 — The location-sharing app’s stock rallied 8% after UBS upgraded it to buy from neutral , citing more confidence in the company’s midterm ad revenue opportunity. Intel — Shares of the chipmaker popped by 8% as the beaten-up chipmaker continues to be a part of takeover speculation following the departure of its CEO in December. The stock, which was booted from the Dow in November, is still down more than 50% in the last 12 months. — CNBC’s Alex Harring, Sean Conlon, Jesse Pound, Tanaya Macheel, Samantha Subin, Lisa Han and Michelle Fox contributed reporting.
Check out the companies making headlines before the bell. J.B. Hunt Transport Services – Shares fell more than 7% after the company’s fourth-quarter earnings came in weaker than expected. J.B. Hunt earned $1.53 per share, below the LSEG consensus estimate of $1.61 per share. Meanwhile, revenue for the period came in line with expectations at $3.15 billion. Qorvo – The stock rose more than 7% after The Wall Street Journal, citing people familiar with the matter, reported that activist investor Starboard Value has built a 7.7% stake in the company and is looking to make changes to boost the company’s share price. MoonLake Immunotherapeutics – The biotech stock jumped more than 4% after receiving an upgrade to buy from neutral at Goldman Sachs. The firm cited the anticipation of positive phase 3 trial data for its treatment of a chronic skin condition known as hidradenitis suppurativa. Fastenal – Shares dropped more than 4% after the company’s fourth-quarter earnings and revenue missed Wall Street’s expectations. Fastenal earned 46 cents per share on revenue of $1.82 billion, while analysts polled by FactSet were expecting 48 cents per share on $1.84 billion in revenue. Life360 – The location-sharing app’s stock moved more than 3% higher after UBS upgraded it to buy from neutral , citing more confidence in the company’s midterm ad revenue opportunity as a catalyst. Rivian Automotive – The electric vehicle maker’s stock rose 2.6% after the company finalized a loan agreement with the Department of Energy for up to $6.6 billion to help build a new manufacturing site in Georgia. Construction is set to begin in 2026 with the production of customer vehicles expected to happen in 2028, according to the Thursday press release. Apple – The iPhone maker gained nearly 1%, clawing back some of the losses seen in the previous session. On Thursday, Apple shares fell around 4%, experiencing its worst day since August, on the backs of reports of lackluster iPhone sales in China . Lam Research , Applied Materials – The semiconductor equipment stocks rose about 2% after KeyBanc Capital Markets upgraded both to overweight from sector weight. The investment firm said Lam Research and Applied Materials have exposure to AI-related devices which should help push their shares higher. Salesforce – The stock advanced 2% after a TD Cowen upgraded shares to buy from hold. The firm said its recent pullback has created a “compelling entry point” for investors. Cloudflare – Shares popped 3.5% on the heels of Citi’s upgrade to buy. Citi said it has improved confidence on the cloud stock’s fundamentals and growth potential. — CNBC’s Alex Harring, Jesse Pound, Sarah Min, and Pia Singh contributed reporting.
Capital One said an unspecified technical issue was hampering customer account access Thursday, as some users reported issues with direct deposits.
In response to complaints on social media platform X, a Capital One representative said the bank was experiencing a “tech outage” that was affecting “a variety of functions,” with no timetable for a restoration of services.
Just before noon Thursday, the company released an official statement about the problem.
“We are experiencing a technical issue with a third-party vendor that is temporarily impacting some account services, deposits, and payment processing for portions of our consumer, small business, and commercial bank,” it said.
Late Thursday, the vendor, Fidelity Information Services (FIS) released a statement saying it was working to restore applications affected by a local area power outage at one of its data centers. An FIS spokesperson did not respond to multiple follow-up questions.
According to Downdetector.com, which tracks reports of user complaints about digital services, the issues began around 6 a.m. ET, with some 2,000 reports observed.
The site indicated the frequency of reports had started leveling off around 9 a.m. ET, but by 4 p.m., there had still not been a significant reduction in complaints registered.
The issues at Capital One come a day after Citibank acknowledged a problem affecting customers’ ability to access their accounts from mobile devices, as well as an apparent issue related to fraud alerts. While the mobile access issue appeared to have been resolved, a Citi rep said on X on Thursday it was still working to fix the fraud-alert item.
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