Amazon’s Found Its Own ChatGPT Clone

Amazon’s Found Its Own ChatGPT Clone
Paul Allison, CFA

5 months ago2 mins

Mentioned in story

What’s going on here?

It took a while, but Amazon has finally found its very own ChatGPT lookalike.

What does this mean?

Microsoft kicked off the AI frenzy back in January when it acquired a $10 billion stake in ChatGPT creator OpenAI. And ever since, we’ve all been waiting to see how the other tech titans would respond. So far, we’ve had Alphabet’s Bard and Alibaba’s Ernie, of course, and on Monday, well, we got Amazon’s. The company announced it’s buying a $4 billion minority stake in Anthropic, creator of ChatGPT lookalike Claude 2. There are some seriously smart and creative people in artificial intelligence but, really, those names, people.

Why should I care?

For markets: A-W-Yes.

Microsoft told AI-hungry investors on its most recent earnings conference call that ChatGPT would boost revenue growth for Azure – the firm’s high-flying cloud services business – by around two percentage points. And that’s a not-too-shabby improvement on the 25% growth rate Azure is already seeing. The question now is whether Anthropic can do the same for AWS – Amazon’s even-bigger cloud wing – with a strategic partnership aimed at giving all those AWS customers access to its nifty AI tech. And with a stunning $100 billion or so of annual revenue coming from AWS, it would take only a tiny percentage in uplift to deliver a handsome return on Amazon’s $4 billion outlay.

Zooming out: Chipping away at Nvidia’s lead.

Nvidia makes the semiconductors that power AI, so its stock has been one of the unsurprising go-tos for anyone wanting in on the AI megatrend. But there’s some fine print in this Amazon deal that might interest Nvidia shareholders. As part of its tie-up with Amazon, Anthropic will use chips designed by AWS to train all its AI models. And that’s one big, 800-pound gorilla of a competitor for Nvidia to try to outmaneuver.

Nvidia stock
Source: Google Finance
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