The e-commerce and cloud titan, Amazon.com Inc (NASDAQ:AMZN) just revealed it had placed a big bet on AI development by investing $4 billion in AI company Anthropic, which makes chatbots that rival Microsoft Corporation (NASDAQ:MSFT)-backed OpenAI’s ChatGPT. With the aim to advance generative AI development, the strategic partnership will make Amazon Web Services the startup’s primary cloud provider while AWS customers will gain early access to unique features for model customization along with fine-tuning capabilities from Anthropic who was founded by former OpenAI research executives. Anthropic recently debuted its new AI chatbot called Claude 2 and is Amazon’s latest conquest as it continues competing against Microsoft and Alphabet (NASDAQ:GOOG) in AI development.

San Francisco-based Anthropic has its own AI chatbot that rivals that of Microsoft-backed ChatGPT. Released in July, Claude 2 will help AWS customers to develop new generative AI-powered applications that have the power to completely transform their organizations. But, more importantly, Anthropic and Amazon agreed to develop the next set of chips together with Anthropic agreeing to use Amazon’s chips to develop its future models. Therefore, the bigger picture is about a power shift on the AI chip front, maybe not in a year, but in about five years, this deal could power Amazon to dramatically change yet another competitive landscape. 

Moreover, Amazon’s deal with Anthropic aims to show that alternative chips can be used for fueling AI, therefore, challenging the dominance of Nvidia Corporation (NASDAQ:NVDA). The key product of Nvidia is a GPU, semiconductor that is used to train large AI models. With the AI hype, Nvidia smashed financial forecasts, but that may no longer be the case in the future as Amazon clearly showed its intention of developing customized AWS chips. Nvidia is currently the undebatable AI winner simply because it got into it long before anyone else.

Big Tech is increasingly entering collaborations with smaller AI firms. Although Microsoft led the way with its multibillion-dollar investment in OpenAI, Amazon just swooped up a AI hotspot, simultaneously beating Google who was an early investor in Anthropic with the AI startup announcing only seven months ago that it had selected Google as its cloud provider. But Amazon does not have a record of chasing markets but rather creating them. Therefore, only time will show Amazon’s new creation and contribution to the AI future in-the-making.