The wave of artificial intelligence spending and investment shows no signs of slowing down. With AI expected to create $20 trillion in global economic impact by 2030, tech giants increasingly invest in technology to strengthen their competitive edge and unveil new products. Amazon (AMZN) has once again reiterated its AI investments by pumping $4 billion into AI startup Anthropic.
Anthropic Investment
The e-commerce giant has already invested close to $8 billion into Anthropic, affirming the push to keep pace with rivals investing in new AI tools poised to reshape the tech space. Anthropic is the creator of generative artificial intelligence AI, a technology that can learn from enormous volumes of data to produce text and images that resemble those of a human.
In addition to being used to build chatbots, these tools are thought to have the ability to automate a variety of tasks and change the face of the global economy. Anthropic has made an effort to establish itself as one of the more accountable players in the artificial intelligence space. Executives at the company have cautioned that if the technology is not developed carefully, it could be an existential threat.
The $4 billion investment comes as Anthropic is one of Amazon’s biggest data centre customers. It also leverages its cloud computing platform and semiconductors as part of its partnership. This implies that San Francisco-based Anthropic will reinvest a portion of its funds in Amazon as it purchases computer servers and other services from the tech behemoth headquartered in Seattle. The agreement helps Amazon to overtake Nvidia, the industry leader in the sale of artificial intelligence chips.
Soaring AI Investments
With plans to invest $75 billion in capital projects in 2024, Amazon is also pushing itself amid the AI frenzy. Meta Platforms (META) prediction, which ranges from $38 to $40 billion, is just a little behind. All organizations agree that keeping their AI advantage takes consistent and substantial investment.
Talks are underway to raise additional funding for Elon Musk’s xAI, which could be worth up to $40 billion. OpenAI raised $6.6 billion in October, increasing its valuation to $157 billion. The combined spending on AI by tech giants is projected to exceed $240 billion by year-end.
Increased spending on AI comes as AI model training and operation; significant infrastructure investment is required, ranging from high-performance GPUs to data centres. In order to control costs, Alphabet (GOOGL) reduced its workforce by 9,000 workers last quarter, but it still increased its capital expenditures by 62% over the same period the year before.
Soaring investments come as AI increasingly demonstrates its worth. Microsoft’s (MSFT) AI division is predicted to grow at the fastest rate in the company’s history, bringing in $10 billion a year. In contrast, Alphabet streamlines operations by using AI to write more than 25% of its new code.
Amazon vs. Nvidia
Meanwhile, Amazon intends to develop its chips for artificial intelligence. The e-commerce behemoth is attempting to reduce its reliance on Nvidia’s (NVDA) hold on the market by developing its chips in a lab in Texas. Nvidia is the primary supplier of hardware for AI chips and overtook Apple as the largest company in the world in terms of market value. Amazon and Alphabet, two of its largest clients, are eager to reduce their reliance on, if not replace, Nvidia chips. However, analysts think Amazon will soon overtake Nvidia as the industry leader.
