Google and Anthropic join forces in $40bn deal as AI race intensifies

Google plans to invest up to $40bn into artificial intelligence (AI) firm Anthropic through its parent company Alphabet Inc., strengthening ties while competing in the fast-growing AI market.

The proposed deal, first reported by Bloomberg, includes an initial $10bn cash injection, with a further $30bn tied to performance targets.

The investment would expand Anthropic’s valuation to the region of $350bn, placing it among the most highly valued global private tech companies.

Beyond capital, the agreement is expected to significantly expand Anthropic’s access to computing power.

Google first partnered with Anthropic in 2022, with the San Francisco-based startup using its tensor processing unit (TPU) chips and Google Cloud services. Earlier in April, Anthropic struck a deal with Google and Broadcom for 5 gigawatts (GW) of data-center capacity beginning in 2027.

Interestingly, while Google and Anthropic are partners, they are also competitors, with the startup’s Claude models going head-to-head with Google’s own Gemini AI systems even as the two collaborate on infrastructure.

Anthropic’s rapid growth helps explain the urgency. The company’s reported annualized revenue surged past that of OpenAI in April to around $30bn, up sharply from $9bn just months earlier, driven by what the company called “extraordinary demand” for its AI coding tools and enterprise products.

The deal also lands in the context of intensifying rivalry among tech giants. Last week, Amazon committed billions to Anthropic on securing 5 GW capacity for training and deploying Claude. A dynamic is emerging in which major tech rivals are simultaneously backing and competing with the same AI players.