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What Amazon's up to $4B commitment to Anthropic could mean for AI space

Amazon (AMZN) has made an investment in the AI firm Anthropic, announcing their willingness to commit up to $4 billion this morning. Anthropic will utilize Amazon's Web Services (AWS) along with their custom chips to facilitate the training and deployment of their AI models.

SmartEye Deputy CEO, Dr. Rana el Kaliouby, sees this as a beneficial move for both Anthropic and Amazon, highlighting how it allows Amazon Web Services to partner with other companies and introduce Anthropic's technology to those already using Amazon's data services.

"Amazon, like many other companies, was caught flat-footed by the release of ChatGPT back in November", Chris Callison-Burch, Associate Professor at the University of Pennsylvania’s School of Engineering, tells Yahoo Finance on AI investment trends, adding: "But, I think this is a really excellent strategic move that will help them catch up."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

JULIE HYMAN: Amazon has just made a billion bet on the AI firm Anthropic in an attempt to rival Microsoft's partnership with OpenAI and ChatGPT. Amazon announcing early this morning that it will invest up to $4 billion to build, train, and deploy its AI models using custom chips.

Here to help dig into the details of this is Dr. Rana el Kaliouby, an author and deputy CEO of the AI company Smart Eye and Chris Callison-Burch, a professor of computer and information science at the University of Pennsylvania. Thank you both for being here. Really appreciate it.

Dr. el Kaliouby, let's start with you here. What is your impression of the way that Amazon is sort of entering into this investment? In other words, there are some critics who have said Amazon has not been as aggressive in generative AI. Is this the sign that that is perhaps changing?

RANA EL KALIOUBY: Yeah, I think this is a very strategic move on Amazon's behalf. It allows Amazon Web Services to partner with companies and make the Anthropic APIs and technologies available to companies that are already housing their data at Amazon.

And so I think that's very interesting. That will open up a whole new kind of generative AI interface for the Amazon Web Services. And I also think the potential use of Anthropic in Amazon Alexa could be very interesting because, of course, that allows Alexa to become way more conversational. So I think it's very strategic and makes a lot of sense.

JARED BLIKRE: And Chris, your big-picture views here, please?

CHRIS CALLISON-BURCH: I agree with Rana. I think this is a really great strategic move by Amazon. Amazon, like many other companies, was caught flat-footed by the release of ChatGPT back in November. I think most places were surprised by how much of a breakthrough this technology was.

But Amazon was unexpectedly surprised. I think of all the tech giants, you would have expected Amazon to have a strategy already in place for these large language models. It has the compute infrastructure. It has the buying power to collect talent to train these things. And the fact that Amazon got surprised and is sort of playing catch up was a little unexpected in my book. But I think this is a really excellent strategic move that will help them catch up.

JULIE HYMAN: Chris, let's talk applications. You've got one of the applications of AI right behind you, in fact, a bunch of them in the R2s that are little statues, that are little figures that are behind you. You know, what do you think are the key ways that we could see Amazon start to deploy some of this generative AI both visible to consumers and not.

CHRIS CALLISON-BURCH: So I think one of the amazing things about generative AI is that it has the potential to transform a huge range of different industries. And I think Amazon by partnering with Anthropic is going to allow other companies to integrate it into their businesses via the AWS services.

So you could imagine startup companies offering intelligent tutoring systems, or more intelligent web search, or personalized shopping, all these sorts of things that would be possible by building on top of the AWS infrastructure that a lot of startup companies already use, and then being able to call out to the generative AI technology that Amazon is strategically partnering with Anthropic to provide.

JARED BLIKRE: And Dr. el Kaliouby, when we think about this too, one of the things that leapt off the page to me was Amazon using-- at least designing its own chips for the process for Anthropic to use. How big of this-- how big is this in terms of the deal just kind of cementing Amazon and Anthropic together perhaps more so than Microsoft and ChatGPT? Your thoughts on that.

RANA EL KALIOUBY: Yeah, I think what we're learning is in this space, it's so important to think about the end-to-end system starting with the compute and the chips, all the way to how you train and retrain and kind of deploy these models.

I think it's very interesting that they are-- I mean, I think it's a win-win situation because for Anthropic, it's really powerful and strategic to have access to this much compute and kind of specifically designed chips. And I think that's going to allow Anthropic and Amazon together to move really fast.