Anthropic and Google Strike a Deal. How Broadcom and Amazon Fit In.

Broadcom takes the lead in designing Google’s AI chips. (Getty Images/Cultura RF)

Key Points

• Anthropic is expanding its use of Google’s tensor processing units, gaining access to up to one million TPU chips.
• The expansion agreement is valued at tens of billions of dollars and will bring over one gigawatt of computing capacity online in 2026.
• Broadcom is the primary partner in developing Google’s TPUs, with Google’s program accounting for over 80% of Broadcom’s AI compute sales.

Anthropic, an AI start-up, is using more of Google’s tensor processing units. That’s good for both the search company’s parent, Alphabet, and its primary chip-design partner Broadcom .

In the deal, Anthropic will use up to a million TPU chips as well as additional Google Cloud services, it said late Thursday in a statement.

“The expansion is worth tens of billions of dollars and is expected to bring well over a gigawatt of capacity online in 2026,” Anthropic said.

Despite the benefit for Google’s cloud-computing services, the deal could raise red flags about a slower rate of expansion for Amazon.com’s cloud business.

Amazon has committed up to $8 billion of investment to Anthropic, founded by former OpenAI engineers in 2021. Google has invested about $3 billion in Anthropic, according to Bloomberg.

In its announcement, Anthropic stressed the important role that Amazon plays in its business, calling Amazon “our primary training partner and cloud provider.”

The start-up also said it is still working on Amazon’s Project Rainier, what Amazon Web Services describes as “the world’s most powerful computer” for training AI models.

“The strength of our strategic collaboration with Anthropic remains unchanged, and AWS continues to be both Anthropic’s primary training partner and cloud provider,” an Amazon Web Services spokesperson told Barron’s.

Regardless, the new deal is a vote of confidence in Google’s TPUs and Broadcom, which is the primary partner in developing the hardware. Google’s program probably accounts for more than 80% of Broadcom’s AI compute sales, according to BofA Securities.

Alphabet stock has climbed 3.2% on Friday, and Amazon shares were up 1.7%. The S&P 500 rose 1%.

If there’s a loser, it might be chip designer Marvell Technology , which works with Amazon on its chips. Marvell has been dogged by worries that it might lose out on designing the next generation of Amazon’s Trainium AI chips, which will now be watched to see to whether they lose any market share with Anthropic.

Anthropic, which developed the AI assistant Claude, said it would keep using Nvidia’s graphics-processing units and will keep investing in computing capacity. In September, Anthropic said it had raised $13 billion in new capital in a deal that valued the start-up at $183 billion.

Write to Adam Clark at adam.clark@barrons.com