Microsoft (MSFT +0.31%), along with Nvidia, has sealed what appears to be a landmark agreement with Anthropic. The three tech giants will become each other's customers in a major partnership.
Under the terms of the deal, Anthropic will purchase $30 billion worth of Azure's computing capacity from Microsoft. Anthropic will scale its Claude AI model on Azure, running it on Nvidia architecture powered by Grace CPUs and Blackwell and Vera Rubin GPUs.
This is obviously huge for Microsoft. But it's not Microsoft's most important artificial intelligence (AI) deal.
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The deal with Anthropic
This new agreement, combined with the fact that Claude is now available on the three largest platforms, will give the chatbot a competitive advantage. It should also increase Claude's popularity, particularly thanks to a move that will bring Claude for Business to Microsoft Foundry.
In terms of dealmaking, investors should remember that Microsoft has grown to a $3.5 trillion market cap behemoth, and it has been a publicly traded company since 1986. Even with that long history, this is one of its largest deals. Nonetheless, it pales in comparison to Microsoft's relationship with OpenAI.
The relationship between OpenAI and Microsoft dates back to 2019, predating the 2021 founding of Anthropic. But time is not the only factor. Microsoft and OpenAI announced an updated agreement on Oct. 28. At that time, the public learned that Microsoft's position in privately held OpenAI is valued at around $135 billion. That represents a 27% stake based on OpenAI's valuation from recent fundraising rounds.
Additionally, OpenAI is under contract with Microsoft to purchase $250 billion worth of Azure services through 2032. That's significantly more than the $30 billion deal Microsoft just inked with Anthropic.
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Key Data Points
Improving Microsoft's AI position
The recent evolution of Microsoft's agreement with OpenAI likely also paved the way for its Anthropic deal. Under its terms. OpenAI and Microsoft are each free to "independently continue advancing innovation and growth." In other words, Microsoft can partner with whichever players in the AI space it wants to.
Moreover, now Microsoft will provide the computational horsepower to both Anthropic's Claude AI and OpenAI's ChatGPT, making Azure the critical cloud ecosystem for a significant portion of the AI environment.
OpenAI's latest agreement with Microsoft explicitly spells out where the companies can work separately and together on artificial general intelligence (AGI). Analysts often refer to AGI as "human-level intelligence AI," meaning that, in theory, such systems could match or surpass human capabilities in cognitive tasks. Depending on where AGI advances, Microsoft is now more strongly positioned to capitalize on those innovations.
These deals position Microsoft to benefit from more technological innovations driven by two of the most advanced AI models. It also provides it with the flexibility to work more with Anthropic should its offerings stand out over time.
Ultimately, the OpenAI partnership remains Microsoft's most important AI agreement, but this Anthropic deal cements Microsoft's position as a more critical AI company.
