Google plans to invest up to $40B in Anthropic

https://archive.ph/u274V

Context: a few weeks ago, Anthropic signed a deal to buy "multiple gigawatts of next-generation TPU capacity" from Google and Broadcom [1]. There have been several previous deals, too.

Some people call this sort of thing a "circular deal", but perhaps a better way to think of it is as a very large-scale version of vendor financing? The simple version of vendor financing is when a vendor gives a retailer time to pay for goods they purchased for resale. This is effectively a loan that's backed by the retailer's ability to resell the goods. There's a possibility that the retailer goes broke and doesn't pay, but the vendor has insight into how well the retailer is doing, so they know if they're a good risk.

Similarly, Google likely knows quite a lot about Anthropic because Anthropic buys computing services from Google for resale. They're making an equity investment rather than a loan, but the money will be coming back to Google, assuming Anthropic's sales continue to rise as fast as they have been.

Also, if you own Google stock, some small part of that is an investment in Anthropic?

[1] https://www.anthropic.com/news/google-broadcom-partnership-c...

I think the subtext of the last few weeks is the Anthropic was becoming severely capacity constrained (or approaching that). They seem to have had to sign two somewhat adverse contracts with Amazon and Google in short succession. suddenly model quality is back up again.

It feels like the market is full Wiley Coyote on frontier model makers, and I like Anthropic's B2B business model.

But all progress points to a commodification of foundation models--Google first named it as "we have no moat, neither does anyone else." So there must be some secondary play driving this, right? Hardware sales? Hedging for search ad revenue?

Still feels mispriced. I think asset inflation leaves too much money desperate for the Next Big Thing.

It feels like Anthropic is everybody's insurance policy against someone else winning the AI race. So you have Amazon, Google, Microsoft basically every major tech company pushing their own tech hard but simultaneously ensuring they have a survival level stake in Anthropic if they can't build or acquire their way to stay at frontier level performance themselves.

Good, maybe they can do something about their awful limits cutting you off mid-generation.

$40B. Insane. Imagine what could be done with this money to improve humanity. Instead, it’s spent on a fancy text generator that promises to eliminate most of the non mundane and physical jobs, as well as create autonomous killing machines, on top of burning the entire worlds electricity. Crazy.

If you added up all the major AI valuations, it's apparently worth more than products Americans constantly buy and rely on for their main life. So either AI is going to be involved in every Americans life to a large degree, and paying real money for, or these valuations are insanely wrong.

It is very difficult for me to see any amount of money being thrown at Anthropic as a bad idea.

The amount of new revenue that I am personally able to create for my clients, using Claude models for dev, and Claude models inside the insanely agile products delivered, is astounding.

If I was not currently experiencing this myself, and someone told me that this was possible, I would be calling them names.

Anyone else has an increasing feeling that all the AI hype is turning into a "Dot-Com Bubble x 2008 Credit Default Swaps" collab?

I consider them competitors… This reminds me of Microsoft in 1997 investing $150 million in Apple, saving it from near bankruptcy

Google investing in its own customer, Anthropic buying Google's compute. the money doesn't really leave the room.

Funny how the strongest challenge to Nvidia's near-monopoly(full monopoly?) is coming from Google, and not AMD.

Still rooting for AMD to catch up too, especially if they can continue improving their software stack. They seem to be moving in the right direction.. though, they could benefit from speeding up a bit more.

Google now has it's fingers in all the pies.. is successfully fully vertically integrated and now expanding horizontally.

I work at google for chrome, I can assure you nobody in our team is using gemini over claude. Haha this is hilarious

so does that mean anthropic is going to using google tensor gpu chips ?

>> $10 billion now ... another $30 billion to follow if Anthropic hits certain performance targets...

If they're investing at the same valuation Anthropic had in their last round, what happened to all that previous money?

Google puting a 40 billions in anthropic but anthropic spends it Google's own servers. The money will come back to Google. Lol

My opinion about this is that Google see it as a way to weaken OpenAI, and few other side benefits, including the option to acquire Anthropic.

And it may very well be bad news for OpenAI.

Hopefully this money means more compute infrastructure to help Anthropic counter the efficiency changes that have created this perceived downtrend in claude quality.

Weren't there reports of Anthropic's stock trading on secondary markets at $1T valuation recently? Now Google invests at a $350B valuation. I get valuations are often times just smoke and mirrors, but this seems like a pretty big disconnect. What's going on there?

My $0.02: Competing against exp(t/2) + exp(t/2) is much much easier than exp(t/2+t/2)=exp(t).

(If anthropic didn't exist, ØpenAI would suck up all the capital and talent in the room. Anthropic's existence has helped divide capital+talent that'd otherwise be gobbled up by the single fastest growing player.)

At this point if you have cash or compute credits laying around in the tens of billions, better to hedge your bets than to find out the winner that took all was not you.

$40B. Numbers mean nothing anymore

They just announced their new chip, and they are the ones created transformers yet investing this amount in a competitor?

I don’t know what to make of it

"Google investing $40B in Anthropic while also competing against them is the most Silicon Valley thing I've ever seen. These companies will fund their own competition just to make sure they have a seat at the table when it wins. Also $800B valuation for a company that hasn't IPO'd yet?? We are so cooked."

So $40B in google cloud credits in return for % in equity.

Didn't Amazon AWS do the same recently?

Are they done with so called state of the art Gemini models

A 10B insurance policy on google’s business sounds like a bargain?

And with cashback through gcp usage!

my take is Anthropic needs a large cash infusion since it's the one of the popular model providers.

if it runs of out of cash - then it's bad for the whole industry.

same as OpenAI. so all players - will provide cash & compute to keep them going.

Cool. Will they use their balance sheets to pour all of this cash or are they going to bring the banking system to its knees and then we bail out everyone again ?

Ive wanted to invest in Anthropic for years. The cost of not having ability to invest is hundreds of thousands for a retail investor. Maybe i should just invest in google for exposure

I think Google is using this to put pressure on OpenAI, while also getting some extra upside—like a possible path to acquire Anthropic later. And honestly, this could turn out to be bad news for OpenAI.

Its like when bit torrent and utorrent were the same thing. Right now the most popular frontier model makers are Anthropic, OpenAI, Google.

Google seems to own a bit of everyone.

In the last couple of weeks, seeing all the announcements of new models by OAI, Anthropic and Chinese companies I was thinking if Google has something up their sleeve, but this news suggests otherwise.

i intend to invest $40B in my wife's pottery business; she will invest the same amount in my uber-for-dogs AI SaaS startup. our GDP is gonna be wild.

When they said we’d soon have a circular economy I didn’t know it’d be made up of investments in AI companies that will get fed right back into inference.

This feels weird to me. Why wouldn't Google want to go all in on Gemini? Unless they feel anthropic is pretty far ahead with claude?

> Google is committing $10 billion now in cash at a $350 billion valuation and will invest a further $30 billion if Anthropic meets performance targets, the report said.

How much of this goes back to Google as cloud spend?

The bubble is so big.

Is anthropic really that good when you got deepseel V4 that has a fraction of the cost and works just as good ?

"The Alphabet subsidiary is committing to invest $10 billion now, at a $350 billion valuation for Anthropic, with another $30 billion to follow if Anthropic hits certain performance targets, according to Anthropic."

this is insane. on the secondary market the valuation is 2-3x that. what gives?

I wonder what happens to the “Gemini enterprise”. Will it do a Google plus or Google wave ?

IIRC Google already outright owns 15% of Anthropic.

It's a little weird. I work for Google, but I spend way more time helping get Anthropic serving and running than anything to do with Gemini.

Anthropic, meanwhile, is spending hundreds of millions buying customer commitments from PE firms to inflate that DAU number. They now have a larger war chest to spend on artificial user acquisition to further inflate that value for future funding rounds.

I wonder what will this mean for Gemini? Will it survive?