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Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

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Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#21

Post by pwython »

sensanaty wrote: post #14

I'm no economist, but how exactly does this make sense? Amazon is basically just giving them 5B which will then be used to repay them back 20x that amount??

> Amazon is investing $5 billion in Anthropic today, with up to an additional $20 billion in the future. This builds on the $8 billion Amazon has previously invested.

> Today’s agreement will quickly expand our available capacity, delivering meaningful compute in the next three months and nearly 1GW in total before the end of the year.

They need a bunch of compute, now.

https://www.anthropic.com/news/anthropic-amazon-compute

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#22

Post by ithkuil »

sensanaty wrote: post #14

I'm no economist, but how exactly does this make sense? Amazon is basically just giving them 5B which will then be used to repay them back 20x that amount??

in exchange for service that presumably a) costs something to amazon to operate (so not pure 100B profit) and b) anthropic would have to spend anyway to operate their business.

so basically ...

you could view this as a kind of discount, but instead of paying less later, you get some cash now and then pay full later.

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#23

Post by nl »

iot_devs wrote: post #7

Someone can explain to me what's the expectations for these AI labs? I mostly see their products as commodity at this point, with strong open source contenders. Eventually it will become hard to justify the premium on these models.

$30B ARR says otherwise.

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#24

Post by loveparade »

shubhamjain wrote: post #11

If you think you need to spend $100B, does using a third-party cloud provider still make sense? It doesn’t matter what sweet deal Amazon is pitching—in that scenario, you’d want to own your stack. Especially in a hyper-competitive field like this, where margins are going to matter a lot soon. It feels like these hyperscalers are just raising as much as they can giving extremely rosy projections becauses these sooner…

Good lucking getting GPUs.

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#27

Post by mossTechnician »

gabrielsroka wrote: post #13

$25B https://news.ycombinator.com/item?id=47844891

$5B is part of a contact, the remaining $20B is just a non-binding statement that doesn't hold the same weight (but somehow commands the same media fanfare).

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#28

Post by Sayrus »

nl wrote: post #23
iot_devs wrote: post #7

Someone can explain to me what's the expectations for these AI labs? I mostly see their products as commodity at this point, with strong open source contenders. Eventually it will become hard to justify the premium on these models.

$30B ARR says otherwise.

ARR says nothing about the ability of these companies to retain customers once subsidies stop.

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#29

Post by loveparade »

iot_devs wrote: post #7

Someone can explain to me what's the expectations for these AI labs? I mostly see their products as commodity at this point, with strong open source contenders. Eventually it will become hard to justify the premium on these models.

I give it one to two more years before open source models have fully caught up. Products are commodities and models are commodities too. GPUs cores are still hard to get for inference at scale right now. They need a platform with lock in but unsure what that would look like and why it wouldn't be based on open source models.

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#30

Post by LogicFailsMe »

shubhamjain wrote: post #11

If you think you need to spend $100B, does using a third-party cloud provider still make sense? It doesn’t matter what sweet deal Amazon is pitching—in that scenario, you’d want to own your stack. Especially in a hyper-competitive field like this, where margins are going to matter a lot soon. It feels like these hyperscalers are just raising as much as they can giving extremely rosy projections becauses these sooner…

Classic time value of money situation. They get access to the HW now so they can continue to grow the business. Of course, if you think AI is just pets.com redux, I can see how you'd think it's already peaked. All those years of very important people insisting Bezos couldn't just pull a switch on reinvesting all the revenue into growing Amazon and then he did exactly that comes to mind.
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