> Google is committing $10 billion now in cash at a $350 billion valuation and will invest a further $30 billion if Anthropic meets performance targets, the report said.
How much of this goes back to Google as cloud spend?
Google investing $40bn in a company that competes directly with Gemini is one of those moves that only makes sense if you think of it as buying compute customers, not backing a competitor. Anthropic pays Google for TPUs and Cloud services, a big chunk of this investment surely has to flow right back to Google.
Hopefully this money means more compute infrastructure to help Anthropic counter the efficiency changes that have created this perceived downtrend in claude quality.
There's been a spat between some people on X, about how few engineers inside Google want to work with Gemini, given that it apparently is not great with code, and they would rather use Claude.
This same sentiment is there within Deepmind, except they have more power it seems. Perhaps Google is hedging their bet?
Google buys Anthropic.
Microsoft buys Open AI (or vice versa depending on how things go).
SpaceGrok buys Cursor, limps along in 3rd place.
Meta is the last man standing, get's stuck with Oracle, dies.
And then hopefully some open source models save us from this nightmare before China commadatises everything.
Edit: I forgot Amazon. Who knows what they will do. They're the wildcard anyway.
OpenAI buying Microsoft.. I honestly think I'd like to see that.
Anything to invigorate the desktop.
Microsoft buying OpenAI.. 10 minutes later it's rebranded Copilot.. and.. nothing much changes in the world. Oh, except all the AI improvements are around Enterprise governance.
> the efficiency changes that have created this perceived downtrend in claude quality”
Why the euphemism? What Anthropic did was an aggressive degradation of their model to save compute, and it's not just “perceived downtrend”, Anthropic themselves have acknowledged the quality of service degradation.
It makes every bit as much sense as investing in Snap while still operating their own social network product. Seems to have worked out fine (for Google, not Snap).
Urs used to talk (internally) about not publishing "industry-enabling papers" which is why most Google infrastructure papers were describing something that had already been turned off, or was already in the process of being replaced by the next system (GFS, Vitess, etc). The things that did get published were either considered not key advantages, that other companies simply cannot do, things that other companies wouldn't bother doing, or experiments that never worked at all. There were exceptions of course. But it led to a public perception of the Google stack involving mostly technologies that were long dead or were never adopted.
"Attention Is All You Need" was a very very different thing and I also wonder if they are glad they published it. But I imagine if they hadn't, the motivation for researchers to leave Google would have been even larger.
Google makes a competing product to Claude's main product? So competing, in fact, that they have to ban Googlers from using Claude in order to get enough dogfooders.
At this point if you have cash or compute credits laying around in the tens of billions, better to hedge your bets than to find out the winner that took all was not you.
Unless none of the current crop of AI companies is “the winner,” either because a newcomer appears or the craze fizzles… in which case have $40B in the bank seems superior.
It’s pretty wild how badly Altman siding with Hegseth has backfired. (And how competently Dario has played his hand.)
I don’t think that’s the ultimate cause of the turnaround in fortunes. But it strikes me, at least from the investor and potentially urban-consumer perspectives, as a pivotal moment in both companies’ fortunes.
Sure. Neither OpenAI or Anthropic do. Amazon and Google have followed institutional investors bidding up Anthropic over OpenAI in private markets, all of which—I suspect—followed user-pattern shifts following the fiasco. (Well, fiascos. Altman is a host unto himself.)
Opposite of what you said. The "dig" was not retrenching to more use, but rather I evaluated what I saw them doing and have migrated our company to much better options.
Ant's recent rise has little to none to do with retail subscribers, it is Claude Code with Opus 4.5+, followed by their Mythos stunt
I would say the flood of $20 Claude Subscribers due to news cycle backfired on them, now everyone is getting worse outputs and exposed their shortage on compute, which they can't fix anytime soon.
Pretty much everyone I know has both cc and codex now, just because how unreliable cc has become.
> would say the flood of 20+ Claude Subscribers due to news cycle backfired
This is a good hypothesis. I suspect we are both correct.
The PR boost from Anthropic standing its ground drove signups. That, in turn, drove investors. But the users also drove utilization, which degraded quality across the board.
My hypothesis rests on Anthropic’s user mix having significantly shifted to consumers (versus enterprise) after the mix-up. Whenever we get public numbers it would be interesting to test that.
I think it was psychological to a degree. For many consumers OpenAI, or at least ChatGPT was AI. The controversy was enough for folks to be introduced to competitors in the AI space and suddenly OpenAI's success felt a lot less inevitable.
I agree with OP though that this won't actually be the cause of OpenAI's downfall, should it happen. But I still think it's an interesting inflection point.
Anecdotally a whole lot more people around me started using Anthropic models in the last few weeks and seem to like them more than OpenAI. For many of these people it was the second provider they ever used.
Of course this is part of what has lead to such insane demand and outages they've experienced since then.
> Is the simpler explanation that Alpha was already an investor
Individually, yes. Anthropic surging in private markets the weekend after the supply-chain risk designation, and raising from not only Google but also Amazon in such short clip (following credibly reports of it turning down $800+ billion valuation cheques from financial investors), all while OpenAI gets pilloried in the press and struggles to hold its $800bn valuation in private markets, collectively—to me—paints a bigger picture.
Can’t speak to citations, unfortunately, but if you have a banker or broker with secondary flow right now, ask them which they can get you more of and at what valuation: OpenAI or Anthropic.
"(And how competently Dario has played his hand.)"
lol hes barely done anything, but sometimes that is all that's necessary when a bozo opponent is hell-bent on screwing things up. He didn't get fired the first time for no reason.
> hes barely done anything, but sometimes that is all that's necessary when a bozo opponent is hell-bent on screwing things up
An former chess instructor told me most games are won not by brilliant maneuver, but by not screwing up. Repeatedly making the boring play is a winning strategy far more often than any mastermind play.
Actually I have the opposite take. This is largely a play to procure compute capacity (and I suspect, distribution via Google Cloud), and I think Dario wildly underestimated the amount of demand they would see.
I always wondered why Anthropic was not out there feverishly scrambling to procure compute like the other big players. While Altman was being laughed at as a "podcasting bro asking for trillions in investment" Dario was on Dwarkesh expounding on how tricky it is to predict the demand for capacity. Now Dario has to give equity to a competitor to get compute. (OpenAI does this too, of course, but I suspect the terms are much better.)
At this point, it's pretty clear that compute is the only moat in this business. Even as an outsider, the extreme demand curves and compute crunch were painfully obvious, so this seems like a serious strategic error on Dario's part.
"The Alphabet subsidiary is committing to invest $10 billion now, at a $350 billion valuation for Anthropic, with another $30 billion to follow if Anthropic hits certain performance targets, according to Anthropic."
this is insane. on the secondary market the valuation is 2-3x that. what gives?
That's the last round they raised at. They had other offers from VCs at ~850B they rejected. Seems like may have been in works since that last round was being raised and just finished paperwork?
Googles giving them something thats a lot more scares to them then dollars, large volumes of chips quickly.
If you gave anthropic 10b cash they couldn't get chips in the 0-6mo timeframe at scale. Anthropic is suffering reputational damage due to choices they have to make around capacity constraints.
Google, AWS, and Azure are the only people who can help them so they hold the cards, thus the good terms.
Anthropic raised $30 billion at a $350 billion valuation (pre-money) in February.
Google's deal from prior rounds likely lets them buy in at the same valuation other investors get every round, so they're just getting the February valuation.
Amazon did almost the same thing last week, at the same valuation.
The GOOG and AMZN deals announced earlier this week would be considered part of the same Feb'26 round. I.e. it would have the same seniority rights as that round.
It is not uncommon to keep a round open after the formal announcement for a bit so that few investors who could not close for whatever reason are part of it. It can be hard to line up everyone at the same time, especially when they are public companies.
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Specific to your point on why valuation can be lower than market at the same time - Goods(and stocks) while feel to be homogeneous, divisible, fungible, they are not. Size can value of its own.
A block of 10% shares may be worth more (or less) than unit share price, because them being available together has a property of its own, making it either more desirable when someone wants to acquire or harder to sell because there is not enough demand if all of them get dumped at the same time
[1]
In this deal terms, just cause few ten millions are trading at $850B, or some investors can put in say $1-2B doesn't mean you can raise $40B at the same valuation.
There isn't depth in the market to raise $65B (including the AMZN deal) at $850B valuation. There is always some demand at any price point in the demand supply curve, you will probably find few people who will buy few shares at $10T, or $100T or some ridiculous number but that doesn't mean you can raise a large round on that.
Strictly speaking it is not even $350B per se, i.e. Google and AWS benefit from this as vendors. It very much like vendor financing with convertible debt. Meaning it is worth that much to them, but not to you and me because we are not getting some of the money back as sales that boosts are own stock.
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[1] In the same vein, price can also depend on what you are getting in return, hard immediate dollars is the highest value. However if you are getting shares in return, you can usually negotiate a premium depending on risk of the shares you are getting.
The recent SpaceX - Cursor deal is a good example, any founder would likely take say $10B all cash offer over the $60B from SpaceX, or price would be closer to cash if it GOOG, AMZN, APPL shares instead - proven deeply liquid market etc.
It just keeps the lights on for the whole industry.
The tech is great but valuations are out of control. It's cheaper to keep valuations high through these circular financing deals, rather than to allow for any deflation.
googles multiple businesses and gemini isn't the largest one.
anthropic is the anchor external customer of tpu's and nvidia is worth more than all of google. If tpu's actually breakout as a viable alternative over the next few years for multiple clients the business could easily be worth as much as search, maybe more.
Possibly because they just haven't been able to manufacture enough of them yet to be a viable business to others? They're fighting everyone else for foundry space and time.
You essentially have to run in google to use them and that probably limits their ability to breakout. Anthropic might be doing this deal as a way to shore up their supply chain and cost of both inference and training by leveraging Google's hardware and chip manufacturing expertise.
there are literally not enough tpu's on earth for them to break out, every tpu thats been made is in use, the spike in demand is recent and google has heavy competition for foundry space.
TPUs are not that portable and easy for both inferencing and training. It has since improved a lot with their effort on the torch backend (XLA/TorchTPU) and JAX though.
But as far as i know it currently supports just that + tensorflow (which nobody uses it anymore, least here). And last we tried, so much of our kernels needs rework that it’s not worth the effort.
This may change since ironwood but we haven’t tried that generation.
What's the explanation behind this? I am sure they use AI in their ad network (matching web sites with ad offerings, maybe generating ads automatically), but is there more to it?
I know AI companies are selling ad training into the models so the models know about your product. I'm not sure if that is what they were referring to, but it could be related.
That was precisely my thought on seeing the news. I did not know about Google's existing entanglements with anthropic, but it seemed like a clear message - Do not panic on the money, do the work.
If you look at their recent actions, they all seem financial as if they have become the monopoly already and can do anything. Maybe it is driven by fear of going bankrupt
Example. Them doing a AB test where they remove Claude CLI from the 20$ pro plan ... they rolled it back now. Other rate limits where they publicly double your quota at NON peak times but lower it during peak quietly. These are tacky and signs of panic.
One such issue is experimentation. But when you see back to back issues, it looks odd.
Of course this is well known. Everything Microsoft does is for selfish capitalist reasons and everything Apple does is for altruistic philanthropic reasons.
> Microsoft in 1997 investing $150 million in Apple, saving it from near bankruptcy.
If only Apple could pass the favor forward. But no, they can't be bothered to invest even a single million in Asashi Linux to benefit their own hardware.
Well, the way Apple sees it, their hardware ships with a perfectly good OS. And they know their hardware has so far been so good that even if they ruin said OS, they'd still make money. What we (and Apple, as competition) need is a serious macbook-killer with full Linux support.
It was more complicated than that. Microsoft was only kind of a competitor to Apple. Apple was also a platform for them. They shipped software that was popular on the Mac (mainly Word).
Especially in those days Microsoft was both a platform for software to run on, and a maker of software, and being flexible to emphasize one or the other aspect depending on the way the market is... has been good for them.
If you added up all the major AI valuations, it's apparently worth more than products Americans constantly buy and rely on for their main life. So either AI is going to be involved in every Americans life to a large degree, and paying real money for, or these valuations are insanely wrong.
I guess I’m not surprised that if one “added up all the major AI valuations,” it’s more than any single consumer purchase or even most single companies.
The average person spends 2,800 with prime or 1100 without. 75% of Amazon shoppers have prime so about $2500 a year. Amazon collects 35% on each sale where they ship and package for you.
Amazon makes 800 dollars off of each person in revenue.
> My neighbors just gave Ford $60k. It'll be a while until my neighbor gives Anthropic $60k.
How much of that 60K does Ford actually keep? And how much will it be once BYD is allowed in the US? The forecast for Ford is pretty much only downwards, the possible upside on AI is huge.
If every company in the F500 starts spending $2000+ on AI credits per employee, then every consumer product will indirectly be funding AI companies. I think it's already the case that companies small enough to avoid/skip getting O365 or Google Suite subscriptions will pay for AI first.
At 20 year depreciation it’s $250 a month. Close to Anthropic’s $200 model. IMHO at this point a lot of developers would rather walk than code manually.
Cable TV begs to differ. I grew up working poor and plenty of people around me dumped a lot of money into cable TV subscriptions, and $120 back in the late 90s is $240 now.
Computer costs keep collapsing. Image and audio generation is turned out to be less computer intensive than text (lol).
First company to launch 24/7 customized streaming AI slop wins!
I think the poster was saying giving away the models for $200 isn't sustainable for the provider, not that a user won't pay $200 for the latest and greatest models.
Valuations are based on future expected earnings, not revenue. It cost Ford a lot of money to make that $60k car. The margins for AI companies are unknown but the market is pricing that they’ll be higher at one point. Not that they’ll attract more revenue from the average person.
> My neighbors just gave Ford $60k. It'll be a while until my neighbor gives Anthropic $60k.
AI company revenues aren't driven by consumer subscriptions.
The people doing $20 or even $200 per month plans for their side projects aren't driving the demand. It's going to be business customers spending $1000/month or more per developer and all of the companies feeding their business processes through the API like call centers, document processing, and everything else.
If you're thinking of AI companies as consumer plays you're only seeing the tip of the iceberg. We get cheap access to Claude because they want us playing with it so when it comes time for our employers to choose something we can all lobby for Anthropic.
Ford probably made 3k profit on that car. Given the falling costs of inference, what are the chances your neighbor gives anthropic 3k in profit over the next few years? Not terribly bad.
I'm not sure exactly what kind of point you are making but the valuations are at least nominally based on the expected value of the business far into the future and aren't comparable to, say, purchases done over a year despite both being denoted in dollars.
How much of this goes back to Google as cloud spend?
It's more understanding for Amazon or Microsoft to make such an investment, because they're not as competitive in the model space.
This same sentiment is there within Deepmind, except they have more power it seems. Perhaps Google is hedging their bet?
Best non-X link I could find: https://benzatine.com/news-room/internal-strife-at-google-th...
Edit: I forgot Amazon. Who knows what they will do. They're the wildcard anyway.
Anything to invigorate the desktop.
Microsoft buying OpenAI.. 10 minutes later it's rebranded Copilot.. and.. nothing much changes in the world. Oh, except all the AI improvements are around Enterprise governance.
Why the euphemism? What Anthropic did was an aggressive degradation of their model to save compute, and it's not just “perceived downtrend”, Anthropic themselves have acknowledged the quality of service degradation.
Didn't Amazon AWS do the same recently?
https://news.ycombinator.com/item?id=47848276
I don’t know what to make of it
"Attention Is All You Need" was a very very different thing and I also wonder if they are glad they published it. But I imagine if they hadn't, the motivation for researchers to leave Google would have been even larger.
https://youtu.be/ue9MWfvMylE
Jeff Dean is asked this question by Geoffrey Hinton at 37:35 - might worth watching. Overall an interesting video.
I don’t think that’s the ultimate cause of the turnaround in fortunes. But it strikes me, at least from the investor and potentially urban-consumer perspectives, as a pivotal moment in both companies’ fortunes.
Sure. Neither OpenAI or Anthropic do. Amazon and Google have followed institutional investors bidding up Anthropic over OpenAI in private markets, all of which—I suspect—followed user-pattern shifts following the fiasco. (Well, fiascos. Altman is a host unto himself.)
Opposite of what you said. The "dig" was not retrenching to more use, but rather I evaluated what I saw them doing and have migrated our company to much better options.
Ant's recent rise has little to none to do with retail subscribers, it is Claude Code with Opus 4.5+, followed by their Mythos stunt
I would say the flood of $20 Claude Subscribers due to news cycle backfired on them, now everyone is getting worse outputs and exposed their shortage on compute, which they can't fix anytime soon.
Pretty much everyone I know has both cc and codex now, just because how unreliable cc has become.
This is a good hypothesis. I suspect we are both correct.
The PR boost from Anthropic standing its ground drove signups. That, in turn, drove investors. But the users also drove utilization, which degraded quality across the board.
My hypothesis rests on Anthropic’s user mix having significantly shifted to consumers (versus enterprise) after the mix-up. Whenever we get public numbers it would be interesting to test that.
I think it was psychological to a degree. For many consumers OpenAI, or at least ChatGPT was AI. The controversy was enough for folks to be introduced to competitors in the AI space and suddenly OpenAI's success felt a lot less inevitable.
I agree with OP though that this won't actually be the cause of OpenAI's downfall, should it happen. But I still think it's an interesting inflection point.
This is my suspicion. Consumers hadn’t previously heard of Anthropic and Claude. Now they had, particularly in cities.
> this won't actually be the cause of OpenAI's downfall, should it happen. But I still think it's an interesting inflection point
Also agree. Hence why I said “I don’t think” the fight is “the ultimate cause.”
Of course this is part of what has lead to such insane demand and outages they've experienced since then.
This is true. OpenAI WAS the story of AI, now it is just 50% of it, at max. Losing the monopoly of imagination towards AGI is bad for them.
One thing I don't agree though, consumers aren't the important part of AI, they are a liability.
AI is too expensive, consumers can't pay for it. Instead they will compete with enterprise for the same tokens, with less money.
"Stunt", eh?
Individually, yes. Anthropic surging in private markets the weekend after the supply-chain risk designation, and raising from not only Google but also Amazon in such short clip (following credibly reports of it turning down $800+ billion valuation cheques from financial investors), all while OpenAI gets pilloried in the press and struggles to hold its $800bn valuation in private markets, collectively—to me—paints a bigger picture.
lol hes barely done anything, but sometimes that is all that's necessary when a bozo opponent is hell-bent on screwing things up. He didn't get fired the first time for no reason.
An former chess instructor told me most games are won not by brilliant maneuver, but by not screwing up. Repeatedly making the boring play is a winning strategy far more often than any mastermind play.
I always wondered why Anthropic was not out there feverishly scrambling to procure compute like the other big players. While Altman was being laughed at as a "podcasting bro asking for trillions in investment" Dario was on Dwarkesh expounding on how tricky it is to predict the demand for capacity. Now Dario has to give equity to a competitor to get compute. (OpenAI does this too, of course, but I suspect the terms are much better.)
At this point, it's pretty clear that compute is the only moat in this business. Even as an outsider, the extreme demand curves and compute crunch were painfully obvious, so this seems like a serious strategic error on Dario's part.
this is insane. on the secondary market the valuation is 2-3x that. what gives?
Correct. But I think $5 to 10bn are sitting ready for $700 to 800, which strongly implies Google is getting a solid deal on this.
If you gave anthropic 10b cash they couldn't get chips in the 0-6mo timeframe at scale. Anthropic is suffering reputational damage due to choices they have to make around capacity constraints.
Google, AWS, and Azure are the only people who can help them so they hold the cards, thus the good terms.
Google's deal from prior rounds likely lets them buy in at the same valuation other investors get every round, so they're just getting the February valuation.
Amazon did almost the same thing last week, at the same valuation.
It is not uncommon to keep a round open after the formal announcement for a bit so that few investors who could not close for whatever reason are part of it. It can be hard to line up everyone at the same time, especially when they are public companies.
---
Specific to your point on why valuation can be lower than market at the same time - Goods(and stocks) while feel to be homogeneous, divisible, fungible, they are not. Size can value of its own.
A block of 10% shares may be worth more (or less) than unit share price, because them being available together has a property of its own, making it either more desirable when someone wants to acquire or harder to sell because there is not enough demand if all of them get dumped at the same time [1]
In this deal terms, just cause few ten millions are trading at $850B, or some investors can put in say $1-2B doesn't mean you can raise $40B at the same valuation.
There isn't depth in the market to raise $65B (including the AMZN deal) at $850B valuation. There is always some demand at any price point in the demand supply curve, you will probably find few people who will buy few shares at $10T, or $100T or some ridiculous number but that doesn't mean you can raise a large round on that.
Strictly speaking it is not even $350B per se, i.e. Google and AWS benefit from this as vendors. It very much like vendor financing with convertible debt. Meaning it is worth that much to them, but not to you and me because we are not getting some of the money back as sales that boosts are own stock.
---
[1] In the same vein, price can also depend on what you are getting in return, hard immediate dollars is the highest value. However if you are getting shares in return, you can usually negotiate a premium depending on risk of the shares you are getting.
The recent SpaceX - Cursor deal is a good example, any founder would likely take say $10B all cash offer over the $60B from SpaceX, or price would be closer to cash if it GOOG, AMZN, APPL shares instead - proven deeply liquid market etc.
The tech is great but valuations are out of control. It's cheaper to keep valuations high through these circular financing deals, rather than to allow for any deflation.
anthropic is the anchor external customer of tpu's and nvidia is worth more than all of google. If tpu's actually breakout as a viable alternative over the next few years for multiple clients the business could easily be worth as much as search, maybe more.
Why haven't they broken out yet, I wonder, if they're more efficient for inference and LLM costs are now weighted towards inference over training?
But as far as i know it currently supports just that + tensorflow (which nobody uses it anymore, least here). And last we tried, so much of our kernels needs rework that it’s not worth the effort.
This may change since ironwood but we haven’t tried that generation.
Microsoft is in the same boat with Azure.
What's the explanation behind this? I am sure they use AI in their ad network (matching web sites with ad offerings, maybe generating ads automatically), but is there more to it?
Example. Them doing a AB test where they remove Claude CLI from the 20$ pro plan ... they rolled it back now. Other rate limits where they publicly double your quota at NON peak times but lower it during peak quietly. These are tacky and signs of panic.
One such issue is experimentation. But when you see back to back issues, it looks odd.
If only Apple could pass the favor forward. But no, they can't be bothered to invest even a single million in Asashi Linux to benefit their own hardware.
Especially in those days Microsoft was both a platform for software to run on, and a maker of software, and being flexible to emphasize one or the other aspect depending on the way the market is... has been good for them.
What are you counting in this category?
My neighbors just gave Ford $60k. It'll be a while until my neighbor gives Anthropic $60k.
Now count the Amazon deliveries in a year on said same street. And next year, and the year after, and.. however long one keeps a Ford these days..
It's quite a scary thought exercise.
Amazon makes 800 dollars off of each person in revenue.
Ford makes $303 per person in revenue.
AWS makes the same.
AI spend for all platforms $450 per person
Their costs to produce aren't equal.
How much of that 60K does Ford actually keep? And how much will it be once BYD is allowed in the US? The forecast for Ford is pretty much only downwards, the possible upside on AI is huge.
If every company in the F500 starts spending $2000+ on AI credits per employee, then every consumer product will indirectly be funding AI companies. I think it's already the case that companies small enough to avoid/skip getting O365 or Google Suite subscriptions will pay for AI first.
$1k for a lot of developers here is totally worth it.
Computer costs keep collapsing. Image and audio generation is turned out to be less computer intensive than text (lol).
First company to launch 24/7 customized streaming AI slop wins!
AI company revenues aren't driven by consumer subscriptions.
The people doing $20 or even $200 per month plans for their side projects aren't driving the demand. It's going to be business customers spending $1000/month or more per developer and all of the companies feeding their business processes through the API like call centers, document processing, and everything else.
If you're thinking of AI companies as consumer plays you're only seeing the tip of the iceberg. We get cheap access to Claude because they want us playing with it so when it comes time for our employers to choose something we can all lobby for Anthropic.
They should stop messing with us then. Stealth model changes, threatening to take code away on the $20 plan, the list goes on.
How many businesses are paying Ford $10 million per annum?