Alphabet plans up to $40B investment in Anthropic: report

Google is set to invest $10 billion in Anthropic, with the potential to commit an additional $30 billion tied to performance targets, reported Bloomberg.

Anthropic said the initial investment values the company at $350 billion, matching its valuation from a February funding round.

The deal also includes support for a significant expansion of Anthropic’s computing capacity, highlighting the growing importance of infrastructure in the AI race.

Strategic investment strengthens cloud and chip ties

The partnership underscores Anthropic’s role as a major customer of Google’s cloud and semiconductor businesses, areas the tech giant is increasingly prioritizing as growth in its core search advertising business matures.

Under the agreement, Google Cloud will provide 5 gigawatts of computing capacity to Anthropic over the next five years, with the potential for additional capacity beyond that.

The deal expands on a broader collaboration announced earlier this month involving Broadcom.

Google’s tensor processing units (TPUs), which serve as an alternative to Nvidia chips, are a critical component of the partnership.

These chips have become a scarce resource as AI developers compete for computing power to train and deploy large-scale models.

Anthropic has been ramping up fundraising to support its rapid growth.

Earlier this week, the company said it secured $5 billion from Amazon, also at a $350 billion valuation, with an option for an additional $20 billion over time.

The startup had previously raised $30 billion in February, and investor interest has since pushed potential valuations as high as $800 billion.

AI products drive demand for infrastructure

Anthropic’s recent momentum has been fueled by the success of its AI products, particularly Claude Code, an agent designed to accelerate software development.

The tool has gained traction among engineers across Silicon Valley, including some within Google, according to the company.

The startup’s Cowork agent, which does not require coding expertise and can handle a broader range of tasks, is also seeing rapid adoption.

This growing demand has intensified the need for computing infrastructure, prompting Anthropic to seek additional capacity through partnerships and funding.

Anthropic CEO Dario Amodei, a former Google AI researcher, founded the company in 2021 alongside other former OpenAI employees.

Since then, the two companies have maintained close ties, with Google previously committing billions of dollars and agreeing to supply up to 1 million TPU chips in a deal worth tens of billions.

Partnership reflects both collaboration and competition

Despite the deepening relationship, Google and Anthropic remain competitors in the race to develop advanced AI systems and capture enterprise adoption.

Google’s leadership has grown increasingly concerned about its position in the AI coding market, where Anthropic has emerged as a leading player.

At the same time, the partnership reflects broader dynamics in the AI industry, where major technology companies both invest in startups and supply them with critical infrastructure.

Anthropic’s growth is not without challenges. The company is considering an initial public offering as early as October, but it is also facing scrutiny.

The Pentagon has labeled Anthropic a supply-chain risk following a dispute over potential military applications of its technology, a designation the company is contesting in court.

Additionally, some analysts have raised concerns about so-called circular deals, in which large tech firms both fund AI startups and sell them computing resources, potentially inflating valuations and reinforcing dependencies.