Amazon and Google-Backed Anthropic Targets $34.5B in AI Revenue by 2027

AI startup Anthropic is making impressive strides in the rapidly evolving artificial intelligence (AI) sector, forecasting a revenue surge to $34.5 billion by 2027. Supported by substantial investments from Amazon and Alphabet (Google), Anthropic is positioning itself as a formidable competitor to OpenAI, the maker of ChatGPT, and is progressing rapidly in the AI arms race.

Anthropic’s Ambitious Revenue Projections

Anthropic, backed by tech giants Amazon and Google, has made a bold projection that its revenue will reach $34.5 billion by 2027.

• The AI startup disclosed these forecasts during an investor presentation, revealing its strong growth trajectory.
• Anthropic expects to generate $2.2 billion in revenue by 2025, with the base case scenario projecting at least $12 billion in 2027—representing a staggering 445% increase over the period.

Investment Backing from Amazon and Google

Anthropic is positioned as one of the top private AI companies competing against OpenAI.

• Google has invested roughly $3 billion in Anthropic, spread across two funding rounds.
• Amazon has also made significant investments, with close to $5 billion in funding directed to the startup.
• These large-scale investments reflect confidence in Anthropic’s potential to play a pivotal role in the AI industry.

Current Financials and Cash Burn

Like many startups, Anthropic is currently burning cash as it scales.

• The company expects to spend $3 billion in cash this year, down from $5.6 billion spent in the previous year.
• Despite the cash burn, Anthropic has plans to stop this practice by 2027, aiming for sustainable financial growth.

Anthropic’s Claude AI Models

Anthropic’s foundation AI models, under the Claude family, are gaining traction in the market.

• These models possess multimodal capabilities, meaning they can interpret both text and images, offering versatile AI solutions.
• Claude is available directly through Anthropic and via third-party cloud providers, including Amazon Web Services (AWS), which sells the models.

Valuation and Market Position

Anthropic is growing rapidly, with the latest funding round in January valuing the company at nearly $60 billion.

• The startup’s rapid expansion and market positioning make it a key player in the AI space, with strong backing from Amazon and Google.
• Despite current losses, the company’s long-term outlook and ambitious goals suggest significant potential for growth in the AI sector.

Google vs. Amazon: Who’s Winning the AI Race?

Both Amazon and Google are heavily investing in AI infrastructure, setting the stage for an intense competition.

• Amazon has committed $100 billion in AI infrastructure spending for this year, while Google plans to spend $75 billion.
• Wall Street is currently more bullish on Amazon’s stock, with a Strong Buy consensus rating, while both stocks have similar upside potential (around 17.5%).

Is Google or Amazon a Better Stock?

While both tech giants are making massive investments in AI, they differ in stock valuation metrics.

• Google currently trades at a cheaper price-to-earnings (P/E) multiple compared to Amazon, suggesting that GOOGL stock is undervalued in comparison.
• Despite this, Amazon’s strong outlook in AI and its Strong Buy consensus rating position it as a strong contender in the tech race.

Important Highlights

• Revenue Forecast: Anthropic forecasts $34.5 billion in revenue by 2027, driven by the increasing demand for AI models and solutions.
• Investment Backing: Amazon and Google have invested significant capital in Anthropic, with Amazon contributing $5 billion and Google $3 billion.
• Claude AI Models: Anthropic’s Claude family of multimodal AI models is gaining traction, with distribution through AWS and other cloud providers.
• Financials: Despite significant cash burn, Anthropic expects to stop burning cash by 2027, with projections of $12 billion in revenue for that year.
• Tech Giants’ Investments: Amazon and Google are both making substantial investments in AI infrastructure, with Amazon’s spending at $100 billion this year and Google at $75 billion.
• Stock Comparison: Amazon holds a Strong Buy consensus rating, while Google trades at a lower P/E, suggesting GOOGL stock may be undervalued.