Anthropic Invests $200 Billion in Google Cloud

A Massive Investment in Google Cloud

Anthropic, a company specializing in artificial intelligence, has made the bold decision to invest approximately $200 billion in Google Cloud services over the next five years. This colossal financial commitment aims to secure Anthropic a server capacity of five gigawatts, an essential resource to support its rapidly expanding operations.

This initiative places Anthropic alongside OpenAI, another major player in the AI sector, in the race for massive cloud investments. Together, these two companies represent about half of the $2 trillion in future revenues contractually committed to cloud giants such as Amazon, Microsoft, Google, and Oracle.

A Strategy Based on Future Growth

Despite the fact that these companies are currently operating at a loss, their strategy is based on anticipating significant growth in their future revenues. For cloud providers like Google, these agreements are particularly advantageous. Indeed, they allow for workloads to be executed on their own chips, resulting in higher profit margins.

The agreement between Anthropic and Google, set to take effect next year, is part of a broader partnership where Google commits to providing a server capacity of five gigawatts to the AI company. Although the financial details were not officially disclosed at the announcement of the partnership last month, the scale of this commitment is significant.

A Major Impact on Google's Backlog

According to available information, this agreement represents over 40% of the revenue backlog recently communicated by Google to investors. In the first quarter, Google Cloud's future revenue backlog nearly doubled, reaching over $460 billion. This impressive 63% growth is largely attributed to the Anthropic API operating on Google Cloud.

The Rise of Cloud Driven by Two Startups

Anthropic and OpenAI play a crucial role in the rise of cloud computing. Together, they are responsible for about half of the $2 trillion in combined backlog at Amazon, Microsoft, Google, and Oracle. For example, at AWS, this figure saw a 49% increase in the first quarter, reaching $364 billion.

OpenAI recently increased its commitment to $100 billion, while Anthropic signed another $100 billion agreement covering up to five gigawatts over ten years. These figures illustrate the growing dependence of the AI industry on cloud infrastructure.

Ambitious Projections for the Future

The spending plans of Anthropic and OpenAI are ambitious. OpenAI plans to spend about $45 billion on servers this year, compared to $17 billion in 2024, with the majority of these funds allocated to Microsoft. Meanwhile, Anthropic has budgeted over $20 billion for 2025, which is triple what it spent the previous year.

By 2029, Anthropic has budgeted a total of around $200 billion from Microsoft, Google, and Amazon, while OpenAI anticipates about $180 billion for the same period. However, achieving these projections will depend on their ability to multiply their revenues by 20 to 30 times by then.

Cloud Providers in a Strong Position

Cloud providers that successfully resell AI models are in a strong position to capitalize on this momentum. For example, Microsoft now retains 100% of the Azure revenue generated by OpenAI models, whereas previously, 20% of that revenue went to OpenAI.

Google, on the other hand, benefits from an additional advantage through the use of internal TPU chips by Anthropic. These chips offer higher margins than renting Nvidia servers, which are often more expensive. This strategy allows Google to maximize its profits while supporting the rapid expansion of AI.