(Amazon AWS)

Amazon to invest up to $25 billion more in Anthropic; Claude developer to spend more than $100 billion on AWS AI technology

This is the latest edition of a frenetic dash for AI compute to power Claude, which is undergoing some problems of success.

Luke Kawa

Anthropic is continuing its scramble to accumulate more computing power, and Amazon is only too happy to oblige.

As part of an expanded pact, the e-commerce and cloud giant is poised to invest an additional $5 billion in the Claude developer now and up to $20 billion more in the future.

Anthropic, for its part, aims to spend more than $100 billion on Amazon Web Services tech over the next decade. That totals 5 gigawatts of computing capacity, some of which is expected to come online this year. The outlays are said to include multiple generations of the Trainium chips and Gravitron CPUs.

AWS has been Anthropic’s primary cloud provider and an investor in the AI startup turned private juggernaut since 2023. Before this news, Amazon held an $8 billion stake in Anthropic. CNBC reports that the initial investment comes at the $380 billion valuation from its Series G round that closed in February; per Business Insider, its valuation may have effectively more than doubled since then.

This is the latest edition of a frenetic dash for AI compute to fuel Claude, which is undergoing some problems of success. As its tools have become increasingly popular (and, allegedly, disturbingly powerful), users have bemoaned use limits and stealth token rationing in recent weeks, with rival OpenAI saying that its competitive advantage is access to compute.

Anthropic’s computing crunch has helped rejuvenate the AI trade in recent weeks by testifying to downstream end user demand. In other words, the cacophony of complaints about Claude access is being viewed as evidence that the appetite for compute has meaningful breadth across businesses and isn’t just an arms race among hyperscalers.

In April alone, Anthropic reached an AI compute deal with CoreWeave and boosted its agreements with Google and Broadcom.

“Our users tell us Claude is increasingly essential to how they work, and we need to build the infrastructure to keep pace with rapidly growing demand,” Anthropic CEO and cofounder Dario Amodei said in the press release.

For Amazon, this marks an acceleration in its custom chip business (a subset of the AI trade that seems to be going from strength to strength as of late).

Earlier this month, CEO Andy Jassy also said its custom chip business was “on fire” and had exceeded a $20 billion annual revenue run rate, doubling from the $10 billion reported earlier this year.

Max Knoblauch1h

Alaska Air expects higher fuel costs to add $600 million in expenses in Q2

Alaska Airlines on Monday kicked off a big week for airline earnings, reporting its first-quarter results after the bell. The stock ticked down after hours.

Alaska Air reported:

An adjusted loss of $1.68 per share, compared to Wall Street estimates of a loss of $1.65 per share.
$3.3 billion in revenue, compared to estimates of $3.29 billion.
A 17% year-over-year increase in fuel costs to $796 million.

Looking ahead, Alaska said it expects a second-quarter loss per share of $1, deeper than the Wall Street consensus (-$0.15). The company expects April fuel costs of $4.75/gallon and for fuel across the second quarter to add $600 million in expenses.

“Absent the fuel price spike, we would have guided to a solidly profitable quarter,” the airline said in its release.

Alaska Air, like the rest of the commercial airline industry, has been pummeled by fuel costs since the beginning of the war in Iran. Along with Delta Air Lines, United Airlines, American Airlines, Southwest Airlines, and JetBlue, the carrier recently hiked its bag fees to offset higher fuel costs.

Tasha Matsumoto

Stocks close lower as Trump says Strait of Hormuz will remain closed until deal is signed

Oil raillied and stocks closed lower, paring steeper losses.

Luke Kawa

COUNTERPOINT

The stock market makes just as much sense as it usually does right now

Does the stock market make sense right now? I don’t know. But it doesn’t not make sense.

J. Edward Moreno10h

Fermi plunges after CFO, CEO depart

Fermi is down more than 18% in premarket trading after it disclosed in regulatory filings that its now former CEO, Toby Neugebauer, and its CFO, Miles Everson, departed on Friday and Monday, respectively.

The company dubbed its executive shake-up as “Fermi 2.0.” In addition to ousting Neugebauer and Everson, Fermi added Marius Haas as chairman of its board and Jeffrey S. Stein as director of the board.

Fermi, which was cofounded by former Energy Secretary Rick Perry, plans to build nuclear energy infrastructure to power data centers. But the cost to build out its power site is mounting while it still doesn’t have any customers secured, according its annual report released on March 30.

In September, Fermi announced that it had entered into a nonbinding letter of intent with a tenant to lease a portion of its Project Matador power grid site in Amarillo, Texas. That contract was terminated in December.

The company, which went public in October, is down about 75% from its IPO through Friday’s close.

J. Edward Moreno12h

Marvell and Google reportedly in talks to develop new AI chips

Marvell Technology rose nearly 6% in premarket trading Monday after The Information reported over the weekend that the chip company is in talks with Google to develop two ‌new chips to run AI models.

Broadcom, which counts Google as its most important customer (having developed multiple generations of its TPUs), is down 1% as Marvell muscles in on its turf.

However, the custom chip giant still appears poised to benefit from Google’s chip deployment for years to come. Earlier this month, Broadcom disclosed in a regulatory filing that it had entered into a long-term agreement with Google to supply future generations of AI accelerator chips. That filing also revealed that Broadcom, Google, and Anthropic expanded a partnership that will see the Claude developer access 3.5 gigawatts of AI compute capacity beginning in 2027.

Marvell’s reported new business would also be the latest in a series of wins for custom chips in general. Nvidia, the most valuable chip designer and GPU specialist, is also lower in premarket trading.

Google, with help from its custom chip designers, has been increasingly positioning itself as a competitor to chip giants.

Marvell, meanwhile, appears to have gained pride of place as an Nvidia partner while gaining exposure to the custom chip business that’s impressed Wall Street (and downstream AI customers). On March 31, Nvidia announced that it would invest $2 billion in Marvell as part of a strategic partnership, and the stock has been on a tear since.

Google in Talks With Marvell to Build New AI Chips for Inference