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So yes, but that doesn't negate the circular investment aspect, for most intents and purposes.

The risk is from this structure is mostly to do with how this affects market cap. Companies using the value of their shares to fund demand for their services.

That's a risk.

To be honest, I think "vendor financing" is still a very risky premise.

Vendors may be positioned to know how a customer is doing, but they're also incentivized to overestimate how well a customer is going to perform.

GE Capital (edit: and GMCA) is a great example of how seemingly reasonable vendor financing can cause the lender serious problems.

Reciprocal agreements aren't new, sometimes they're used to gain access to a market the other party already has established a foothold in for other industry segments. These companies operate in the same general industry: tech/internet so it could be complementary services they are each after.

So far both of these companies have shown they suck at support so we know that's not it. It could be that it might help Anthropic to leverage Gemini in their competition with OpenAI and Google will take compute commitments.

Anecdata: I'm finding a lot of my "type random question in URL/search bar" has decent top Gemini answers where I don't scroll to results unless I need to dive deeper.

In another context I might see it as vendor financing. However given that Google and Anthropic are competitors in this segment and given that Google has previously invested in them I'd rather see this as a sort of bartered stock purchase presumably for the purpose of hedging against failure. If Anthropic wins the race and it turns out to be winner takes all and you happen to own half of Anthropic then you still win half of the immediate spoils even though your internal team lost. If you view losing the race as an existential threat then having all your eggs in the one basket is a terrible proposition.

Good perspective.

Let's say Anthropic fails to pay it's debt, can Google take those TPU's back and make money from them?

IIRC Google already outright owns 15% of Anthropic.

It's pretty much vendor financing (although we could argue whether it should be classed as circular investment), with the extra trick being that both sides get to make number go up with it, through stock market valuations and the ability to borrow more money to set fire to so you can show how successful you are.

It could be legit, it could be a thickly veiled accounting fraud continuing the valuation inflation with fake deals that count money multiple times.

Maybe a little bit of both.

it's your time..

~ TK

That’s what’s needed when you go from $9B in ARR … to $30B in ARR literally just one quarter later.

That kind of insane growth & demand is unprecedented at that scale.

https://www.anthropic.com/news/google-broadcom-partnership-c...

> suddenly model quality is back up again.

I agree about the core motivation behind these deals, however I'm skeptical as to how "suddenly" we'll see substantial improvements. Despite their size, I'd be surprised if Google or Amazon had uncommitted chunks of Anthropic-scale, top-tier AI compute sitting around waiting to be activated.

They're already over-subscribed and waiting for new data centers (and power plants) to come online. I suspect Anthropic will get a modest amount of new capacity right away with more added over coming quarters. These two deals don't change the total amount of AI compute available on planet Earth over the next 18 months. Anthropic parting with high-value equity has now made them the new highest bidder for an already over-bid resource. I suspect the net impact will be Amazon & Google pushing prices even higher on everyone else as they reallocate compute to their new top whale.

It takes me 6 minutes minimum to get a response in the last 3 days, I don’t think model capacity is better.

Perhaps the adversity of the contracts cancels out with their sudden success and increase in valuation and it ends up a wash compared to the counterfactual scenario where they would have speculated on high growth early on.

They should probably look at moving away from general purpose hardware for their actual products, and reserve GP hardware for RnD. You don't need frontier nodes to run circles around GPGPUs, an ASIC made with 28nm is more than enough to embarrass an H100 (and much cheaper)

AI is in such desperate need to adopt software-hardware co-development practices, it's infuriating watching the industry drag its feet about it. We are wasting so much electricity and absolutely wrecking the "free" market just because these companies are incentivized to work at an unsustainable breakneck speed in getting shit to market.

another llm user exhibiting the behavior of a gambling addict "That table is cold this week" "that machine is't hot, you wont win on it" Every month llm users are coming up with reasons why they think the model is under preforming from some occulted reasoning only they perceive. Maybe you're just frying your brain by using llms the way you do.

> suddenly model quality is back up again

Is that not down to this? https://www.anthropic.com/engineering/april-23-postmortem

You really think that for companies of this size, signing a contract would immediately reflect in you as end user noticing improved model quality?

Well to a certain extent it also blunts competition, Gemini is less of a threat if their main investor is also backing Anthropic. The issue is when the pyramid scheme collapses...

I don't get why people are so gung-ho about these companies having a moat.

As a user and a consumer, I don't want them to have a moat. Moat means pseudo-monopoly. That is the exact opposite of what we want.

Only the investors and owners want a moat, to keep others out.

So what they're doing? They're competing. Good.

Google does have a sort of temporary moat. They have a much better hardware supply line story than anyone else and the revenue to maintain that edge indefinitely.

I haven't thought about any secondary play, but if these companies converge on Google's TPUs, they would probably eagerly slice from NVIDIA's current market.

> In September 2025, Google is in talks with several "neoclouds," including Crusoe and CoreWeave, about deploying TPU in their datacenter. In November 2025, Meta is in talks with Google to deploy TPUs in its AI datacenters.

https://en.wikipedia.org/wiki/Tensor_Processing_Unit

The “no moat” comment is from May 2023, very early in the LLM era. Agents were not a thing yet, it was all just text generation.

The integration of LLMs with tools and data via agent harnesses has created the opportunity for a real moat. As these products start differentiating, the moats will develop to be significant.

"we have no moat, neither does anyone else." is just an employee's personal work blog

We have no moat could be a bad assessment. First, the models have personalities, and that matters. I like talking Claude better. OpenAI is really different from Grok. The ai models are an extension of the main concern of the company they’re in.

Also those personalities, quirks and choices accumulate. A lot of people talk about using Claude Code and Codex for different things. This is 100% my experience. Some people make better models, but on the top 3, there are often differences that are fixed only by switching between them. If I feel the need to switch between them, then there are significant enough differences and those differences will accumulate.

You don't need a moat if you're selling shovels and everyone's digging holes.

YouTube is a kind of moat for Google.

You might be miss remembering, the last round they raised 30b.

Maybe it was never really about maximizing the model technology as the ultimate end goal and far more about the business side and infrastructure.

The software will only improve for so long before it hits a wall. The best models were just a proxy for early mainstream market adoption, keeping your head above the water … plus some useful marketing hype about longshots for developing something bigger than LLMs (“AGI”).

People who work in tech are biased to obsess about the technical side and short term uptime/performance outrage. Despite that being mostly just standard immature market issues.

I find it interesting that Anthropic is in this position and not OpenAI. Where did OpenAI go wrong? Lack of focus and overambitious in some of their spending commitments?

you can say the same about every recent US war, and add one 0 to the sum.

Or, more controversially, say EU green deal which decimated EU car industry and lost/will lose us few millions of jobs. Losses up to a trillion and nothing to show for that

Technology and productivity have reduced more death than any redistribution

there are plenty of people who basically believe this is the end of the human economy - there will be nothing left that isn't done by AI in the future. Even the bits left that humans do will be human facades on AI driven activity (like your hairdresser will be viewing you through AI powered glasses using AI powered scissors etc).

So from that point of view you can indeed look at it as the entire value of the economy should be invested into AI companies.

At some point in American history you probably could have said the same about railroads.

> it's apparently worth more than products Americans constantly buy and rely on for their main life

What are you counting in this category?

The valuations on AI companies are a bet on them capturing enough of the $60 trillion annual wages paid to people to have a good ROI.

I'm not sure exactly what kind of point you are making but the valuations are at least nominally based on the expected value of the business far into the future and aren't comparable to, say, purchases done over a year despite both being denoted in dollars.

Stocks vs Flows! You can't compare (as in subtract and check sign) $ and $/s!

You could say the same about Codex (and other tooling). Opus as a model is market leading (trading blows with the greatest that OpenAI is peddling), but there will be a reckoning when open weight models are good enough - and I'd argue we are almost there with some of the latest releases. If you hook up the latest OpenAI models to something like OpenCode, its a taste of what an open harness with a powerful model (outside of a providers ecosystem) will be able to offer developers in the future.

You’re paying the subsidized cost. Those margins will shrink once the real bill comes due. I really think everyone will look back at this time as the golden area of cheap AI. We are already seeing the costs (and restrictions/limits) creep up with the Western models.

Would you mind sharing what you can and want about how the sausage is made? I would love to hear concrete cases where actual leverage is measurable. I‘m asking in good faith, not to attack your standpoint.

Same with Codex and very soon with open source & local models. Training great models (for coding and similar tasks) seems to be a question of scale and not much more.

It is likely that 99% of the value created by Anthropic / OpenAI / friends will go the end user. Which is great news.

Curious, what do you do btw?

Why do AI boosters like yourself all have the same writing style? Was the comment AI generated?

It's like insane hype marketing speak. "insanely agile products delivered" like huh?

I feel the same until I’m reminded I’m paying Anthropic $100 every month for something that’s indispensable to me now and would probably pay a lot more. Very inelastic demand as long as competition is low at the frontier.

I think a lot of people suspect that, but no one is able to help themselves. Manias are a feature/bug of humanity.

Actually no. I think we're just getting started.

I've got two max 20 plans and totally get value from it.

It's an actual bubble specific to AI. This investment is just another example of the bubble. Pre-2008, all the investment would be coming from banks. Post-2008, all the investment came from VCs... but VCs got tapped out, so AI companies went to bigger private capital. They tapped out all the private capital. So now they're making the rounds, making deals with any corporations left with tens/hundreds of billions in cash, because they're the only possible investors left. When all of them are tapped out, and without a release of pressure from the hardware market, the only investor left will be the government. After that it's kaplooie.

You'll notice that all the really big deals have fallen through, because they're based on promises and meeting objectives that can't be met. So it's likely that there will be really big writeoffs but not a huge implosion like 2001/2008. The real losers will be the retail investors who put all their money in a handful of stocks at ridiculous valuations.

x oil shock (due to Ormuz).

googles multiple businesses and gemini isn't the largest one.

anthropic is the anchor external customer of tpu's and nvidia is worth more than all of google. If tpu's actually breakout as a viable alternative over the next few years for multiple clients the business could easily be worth as much as search, maybe more.

If I remember correctly, Microsoft allegedly did that for the very selfish reason of looking better in terms of being a monopoly.

> Microsoft in 1997 investing $150 million in Apple, saving it from near bankruptcy.

If only Apple could pass the favor forward. But no, they can't be bothered to invest even a single million in Asashi Linux to benefit their own hardware.

Google is right (I think) to invest in winning compute share from Nvidia over winning token share from other frontier model builders.

They are, but Google Vertex has been one of the official ways to use Claude since forever.

They already had a non trivial stake in Anthropic though?

It just keeps the lights on for the whole industry.

The tech is great but valuations are out of control. It's cheaper to keep valuations high through these circular financing deals, rather than to allow for any deflation.

Anthropics erratic behavior is going to get Google regulated. This is "don't rock the boat" money. Google existentially needs AI for advertising.

This sounds like a conspiracy theory if you don’t know how basic finance and economics work

It’s ridiculous. Are those investments at least taxed in the US?

What do you even mean?

  including the option to acquire Anthropic.

They're worth $1 trillion in private market. If they IPO today, I'm willing to bet my house that the hype will drive them to $2 trillion market cap or 50% of Google's marketcap.

OpenAI and Anthropic will be the biggest IPOs ever - bigger than SpaceX. That's my prediction.

> including the option to acquire Anthropic.

I have feeling that Dario is not the type of man who would want to be acquired and then have Google's CEO telling him what to do.

That boat has sailed off. Not even Google has the cash to buy a company valued at almost a trillion dollars.

It'd be funny if Google offered 750m in stock + cash just to see what happened... :D

The drama on HN alone would last for days. Twitter would implode in on itself.

OpenAI was created to counter the threat of Google controlling a possible AGI. What if we still end up in the same state in the end? Both Anthropic and OpenAI have abandoned any pretense of altruism at this point and find themselves overwhelmed bythe forces of capitalism.

The puzzling thing is why Google would try to help with that. Aren't they competitors? Wouldn't they want their competitor to have problems?

It's more understanding for Amazon or Microsoft to make such an investment, because they're not as competitive in the model space.

> the efficiency changes that have created this perceived downtrend in claude quality”

Why the euphemism? What Anthropic did was an aggressive degradation of their model to save compute, and it's not just “perceived downtrend”, Anthropic themselves have acknowledged the quality of service degradation.

Unless none of the current crop of AI companies is “the winner,” either because a newcomer appears or the craze fizzles… in which case have $40B in the bank seems superior.

Amazon and Google get discounts because they bring more than just cash and help solve a very immediate problem for Anthropic

Great position to be in if you're Amazon and Google

There's always backroom negotiations going on with investments like these. Private valuations are normally hyped-up, and with the current batch of AI companies, 100x so.

I assume Anthropic said something like "We'll give you 3% of our company for $30B, since we're valued at $1T now! So cheap!", and Google immediately came back with "Hell no. We'll give you even more, $40B... but it's for 11% of the company. Take it or leave it." With all the issues they're having, what leverage does Anthropic have at that point?

Basically, Google made them an offer they couldn't refuse.

tech is the biggest sector in the world. We're seeing what happens when those war chests for rainy days get brought out

Yes, and it's incredibly wasteful.

Yup. You can actually buy several European airlines with that kind of money.

For example, you can buy KLM Air france for less than $3B.

It is a profitable business that does $30B in sales and $1B in profit. (and has been profitable since for the past 4-5 years)

yep, you know what's better than billions? trillions.

Come to Gehenna 666. Loosen your tongue. The tongue is Iniquity.

~ TK

Is that like Lyft and Uber?

I wonder if Google regrets publishing that article on transformers.

Why do you think Google considers Anthropic a competitor?

It makes every bit as much sense as investing in Snap while still operating their own social network product. Seems to have worked out fine (for Google, not Snap).

Given that anthropic is probably paying it all back to them in compute bills, they may not be giving them anything.

hedge your bets, I know I would

Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

https://news.ycombinator.com/item?id=47848276

> if it runs of out of cash - then it's bad for the whole industry.

Why? I don’t think we would suffer if anthropic disappeared tomorrow

They need compute

I don't see why not. The US is bailing out foreign countries, might as well bail out unsustainable businesses too.

you might even say they own the whole alphabet at this point

If you can get influence at your competitor you take it. It's valuable for both of them regardless

Google investing $40bn in a company that competes directly with Gemini is one of those moves that only makes sense if you think of it as buying compute customers, not backing a competitor. Anthropic pays Google for TPUs and Cloud services, a big chunk of this investment surely has to flow right back to Google.

At least from an European perspective it is impossible to use DeepSeek v4 right now, as there are no privacy safe offerings.

I think their cli still leading for some reason.

Not sure if it’s going to be good enough to replace IDEs with neatly integrated superior models.

Anthropic raised $30 billion at a $350 billion valuation (pre-money) in February.

Google's deal from prior rounds likely lets them buy in at the same valuation other investors get every round, so they're just getting the February valuation.

Amazon did almost the same thing last week, at the same valuation.

Googles giving them something thats a lot more scares to them then dollars, large volumes of chips quickly.

If you gave anthropic 10b cash they couldn't get chips in the 0-6mo timeframe at scale. Anthropic is suffering reputational damage due to choices they have to make around capacity constraints.

Google, AWS, and Azure are the only people who can help them so they hold the cards, thus the good terms.

The GOOG and AMZN deals announced earlier this week would be considered part of the same Feb'26 round. I.e. it would have the same seniority rights as that round.

It is not uncommon to keep a round open after the formal announcement for a bit so that few investors who could not close for whatever reason are part of it. It can be hard to line up everyone at the same time, especially when they are public companies.

---

Specific to your point on why valuation can be lower than market at the same time - Goods(and stocks) while feel to be homogeneous, divisible, fungible, they are not. Size can value of its own.

A block of 10% shares may be worth more (or less) than unit share price, because them being available together has a property of its own, making it either more desirable when someone wants to acquire or harder to sell because there is not enough demand if all of them get dumped at the same time [1]

In this deal terms, just cause few ten millions are trading at $850B, or some investors can put in say $1-2B doesn't mean you can raise $40B at the same valuation.

There isn't depth in the market to raise $65B (including the AMZN deal) at $850B valuation. There is always some demand at any price point in the demand supply curve, you will probably find few people who will buy few shares at $10T, or $100T or some ridiculous number but that doesn't mean you can raise a large round on that.

Strictly speaking it is not even $350B per se, i.e. Google and AWS benefit from this as vendors. It very much like vendor financing with convertible debt. Meaning it is worth that much to them, but not to you and me because we are not getting some of the money back as sales that boosts are own stock.

---

[1] In the same vein, price can also depend on what you are getting in return, hard immediate dollars is the highest value. However if you are getting shares in return, you can usually negotiate a premium depending on risk of the shares you are getting.

The recent SpaceX - Cursor deal is a good example, any founder would likely take say $10B all cash offer over the $60B from SpaceX, or price would be closer to cash if it GOOG, AMZN, APPL shares instead - proven deeply liquid market etc.

Top of the book? Nobody on the secondary market is investing $30bn

That's the last round they raised at. They had other offers from VCs at ~850B they rejected. Seems like may have been in works since that last round was being raised and just finished paperwork?

Gemini seems more tailored towards information retrieval and product integration (including Android and even iOS via Apple's deal).

Google may reckon they can't (yet) reconcile their vision of Gemini with the raw coding performance of Claude and Codex.

That's b/c the people working on Gemini serving are in GDM.

This is a good strategy. Internal competition between Gemini and GCP.

I think the very smart people already work at Google and the 40B buys some of the rest.

the moat is the tool itself. You understand this after you start using it.

IMO: you are correct, which is why the valuation is only 350B and not significantly more.

> I feel for 40B you can get a lot of very smart people and a lot of very good hardware to outcompete it

Nah, see Meta

25% ;)

What backfired?

Ant's recent rise has little to none to do with retail subscribers, it is Claude Code with Opus 4.5+, followed by their Mythos stunt

I would say the flood of $20 Claude Subscribers due to news cycle backfired on them, now everyone is getting worse outputs and exposed their shortage on compute, which they can't fix anytime soon.

Pretty much everyone I know has both cc and codex now, just because how unreliable cc has become.

Alphabet makes $30 billion profit per quarter.

It was enough for me to dig much deeper into OpenAI, where before we almost exclusively used them for services with any form of SLA.

Is the simpler explanation that Alpha was already an investor and Anthropic has been making strides in their business model?

Actually I have the opposite take. This is largely a play to procure compute capacity (and I suspect, distribution via Google Cloud), and I think Dario wildly underestimated the amount of demand they would see.

I always wondered why Anthropic was not out there feverishly scrambling to procure compute like the other big players. While Altman was being laughed at as a "podcasting bro asking for trillions in investment" Dario was on Dwarkesh expounding on how tricky it is to predict the demand for capacity. Now Dario has to give equity to a competitor to get compute. (OpenAI does this too, of course, but I suspect the terms are much better.)

At this point, it's pretty clear that compute is the only moat in this business. Even as an outsider, the extreme demand curves and compute crunch were painfully obvious, so this seems like a serious strategic error on Dario's part.

"(And how competently Dario has played his hand.)"

lol hes barely done anything, but sometimes that is all that's necessary when a bozo opponent is hell-bent on screwing things up. He didn't get fired the first time for no reason.