Last week, Amazon.com, Inc. AMZN deepened its partnership with Anthropic with an additional investment of $4 billion, bringing Amazon’s total investment in the artificial intelligence research and development company to $8 billion.
The details: As part of the investment, Anthropic 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 core models.
Amazon also said Anthropic would work with Annapurna Labs, the chip manufacturing division of AWS, to continue 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 to ensure it can maintain competitive extended language model (LLM) capabilities for AWS, and Anthropic likely needs more capital to compete with its rival AI developer . OpenAI.
Post also noted that co-developing Amazon’s Trainium chip capabilities could accelerate progress and boost the chips’ credibility with other AI customers. Additionally, Anthropic likely finds the potential cost savings of training and inferencing its models attractive, given the company’s current cash burn rate.
The analyst reiterated his view that the expanded partnership will prove mutually beneficial for Amazon and Anthropic.
“In our view, Amazon’s growing investment will further advance Anthropic’s capabilities, which should help capture additional AI spending from Amazon’s core customer base,” Post wrote.
Bank of America Securities maintained its Buy rating and $230 price target on Amazon stock.
Price action: According to BenzingaProAmazon shares ended Monday’s session up 2.2% at $201.45.
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