Alphabet (GOOGL) Stock Pops After Anthropic’s $200 Billion Google Cloud Deal

TLDR

• Alphabet (GOOGL) rose 2% in after-hours trading Tuesday following the report
• Anthropic has committed to spending ~$200 billion with Google Cloud over five years
• The deal accounts for more than 40% of Google’s total cloud revenue backlog
• The agreement includes 5 gigawatts of server capacity starting in 2027
• Alphabet is also investing up to $40 billion directly into Anthropic

Alphabet stock jumped roughly 2% in after-hours trading Tuesday after The Information reported that Anthropic has committed to spending approximately $200 billion with Google Cloud over the next five years.

Alphabet Inc., GOOGL

The deal is set to begin in 2027 and accounts for more than 40% of Google’s total cloud revenue backlog disclosed to investors last week.

As part of a separate April agreement, Anthropic signed a deal with Google and chip partner Broadcom for multiple gigawatts of tensor processing unit capacity, also expected to come online in 2027.

Anthropic is projected to spend upwards of $20 billion renting servers this year alone — triple last year’s spending. That projection was made in mid-December, before Anthropic’s revenue surged in Q1, so the final number could be higher.

Alphabet is also investing up to $40 billion directly into Anthropic, deepening a partnership with a company that is simultaneously its rival in the AI race.

Cloud Giants Leaning Heavily on AI Firms

Contracts involving Anthropic and OpenAI now account for more than half of the $2 trillion in backlogs across major cloud providers — Amazon Web Services, Microsoft Azure, and Google Cloud Platform.

OpenAI is projected to spend around $45 billion on servers this year, up from $17 billion last year, with much of that going to Microsoft, which has invested more than $13 billion in the ChatGPT maker.

While backlog figures represent future revenue rather than current earnings, they are a closely watched metric for assessing the long-term health of cloud businesses.

The figures suggest cloud providers are becoming increasingly dependent on just two companies — Anthropic and OpenAI — for their future revenue growth.

Anthropic Secures Computing Capacity From Multiple Sources

Anthropic has been on a signing spree. Last month it struck a multi-year deal with cloud infrastructure firm CoreWeave and is set to secure nearly 1 gigawatt of capacity via Amazon’s chips by year-end.

The company trains and runs its Claude models on a range of hardware, including AWS Trainium, Google TPUs, and Nvidia GPUs.

Strong demand for the Claude family of AI models is what’s driving Anthropic to lock in this level of computing capacity.

Reuters was unable to immediately verify the report. Anthropic declined to comment, and Google redirected queries to the AI firm.

Alphabet is currently on the cusp of overtaking Nvidia as the world’s most valuable company, fueled by its AI efforts and a booming cloud business.

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