Google’s $40bn investment in Anthropic underscores circular AI boom

This article appeared as part of the Daily Sensemaker newsletter – one story a day to make sense of the world. To receive it in your inbox, featuring content exclusive to the newsletter, sign up for free here.

Google has agreed to invest up to $40bn in Anthropic, one of its main AI competitors. The deal includes an upfront $10bn to significantly expand Anthropic’s computing capacity, with the rest dependent on undisclosed targets. The two companies already have a partnership under which Google has sold billions of dollars’ worth of chips to the maker of Claude. The deal is another example of the circularity of the AI boom, with chipmakers pouring vast sums into developers that are also their biggest customers. The result is a web of companies whose fortunes depend on each other. This carries severe risks when most AI startups are still a long way from turning a profit. If one major company fails, it will reverberate throughout the global economy.