Google to invest $10B in Anthropic at $350B valuation with up to $30B more tied to AI growth targets

Source: https://finance.yahoo.com/sectors/technology/articles/google-plans-invest-40-billion-155018538.html

Google will invest $10 billion in Anthropic PBC, with another $30 billion potentially to follow, strengthening the relationship between two companies that are at once partners and rivals in the race to build artificial intelligence.

Anthropic said that Google is committing to invest $10 billion now in cash at a $350 billion valuation, the same amount it was valued at in a funding round in February, not including the recent money raised. The Alphabet Inc.-owned company will invest another $30 billion if Anthropic hits performance targets, the startup said Friday, and support a significant expansion of Anthropic’s computing capacity.

Anthropic has ramped up its fundraising amid the breakout success of Claude Code, an AI agent that speeds the process of writing computer software. The startup said earlier this week that it nabbed another $5 billion from Amazon, also at a valuation of $350 billion, with the option to inject another $20 billion over time. Anthropic raised $30 billion in February and investors have since sought to back the firm at a valuation of $800 billion or more.

Anthropic is a major customer of Google’s chips and cloud services, businesses that Google is striving to grow as its main moneymaker, search advertising, matures. Google Cloud will provide 5 gigawatts worth of computing capacity to Anthropic over the next five years, and several more gigawatts could follow. The deal marks an expansion of an agreement announced earlier this month between Anthropic, Google and Broadcom Inc. (A single gigawatt is enough to power about 750,000 US homes at any given time.)Shares of Google were up more than 1% on Friday after the news, trading at $341 as of 12:03 pm.Google’s tensor processing units, or TPUs, are one of the best alternatives to Nvidia’s chips, making them a scarce and precious resource for Anthropic and other AI developers in a business that requires tremendous amounts of computing power.

Anthropic, which is considering an initial public offering as soon as October, has been on the hunt for more infrastructure to meet growing demand for its products. Claude Code has quickly become the go-to for engineers across Silicon Valley, including some at Google, spurring a scramble in the rest of the industry to catch up. Anthropic’s Cowork agent, which does not require coding skill and can be used to complete a wider range of tasks, is also growing quickly, according to the company.

Anthropic Chief Executive Officer Dario Amodei worked at Google as an AI researcher earlier in his career. The companies have maintained close ties since Amodei founded Anthropic with a group of former OpenAI employees in 2021. Last year, Google said it would provide up to 1 million of its TPU chips to Anthropic, in a deal worth tens of billions of dollars. The search giant had already invested about $3 billion into the startup by that point.

Yet as Google pours more money into Anthropic, the companies are also battling to be the first to create AI that can match humans’ capabilities, and to put their tools in the hands of businesses across the economy. In recent months, Google’s leaders have become increasingly worried about the company’s position in the burgeoning market for AI coding, which is dominated by Anthropic, current and former employees have said.

Anthropic’s future is not without risk either. The company has been deemed a supply-chain risk by the Pentagon — a designation it is currently fighting in court— after a public dispute about how Anthropic’s technology could be used by the US military.Some financial analysts have also raised concerns about so-called circular deals between major computing power providers and AI startups such as Anthropic and OpenAI, in which the tech giants both invest in the startups and sell their chips or data center capacity to them.