Anthropic has entered a groundbreaking agreement with Akamai Technologies, committing to spend a staggering $11.6 billion over the next seven years on cloud infrastructure. Announced on Thursday, this deal significantly eclipses the previous $1.8 billion partnership reported by Bloomberg back in May.
While this commitment is monumental, it is not entirely binding. According to Akamai’s recent securities filing, the agreement is contingent upon the company meeting specific delivery and service availability standards. There are provisions allowing either party to terminate the agreement under certain circumstances.
This is now the largest contract in Akamai’s history and continues Anthropic’s trend of seeking extensive computational power. The deal is particularly noteworthy as it focuses on a less-publicized segment of AI infrastructure: CPUs. Demand for these general-purpose chips has surged, as the need for running various tasks, including executing code and web browsing, increases in AI applications. However, Akamai has not disclosed how Anthropic plans to utilize these resources.
Akamai does not anticipate generating revenue from the deal within the current year. During an investor call, company executives projected revenue of between $150 million and $300 million in 2027, starting in the latter half of the year, with an expected annual revenue pace of around $1.7 billion by the end of 2028.
To expand its capacity, Akamai plans to invest approximately $5.5 billion. Furthermore, the company intends to add around $1.7 billion to this year’s capital expenditures to secure components like memory in advance.
An intriguing aspect of this deal is the warrant issued to Anthropic, granting the company the option to purchase non-voting preferred stock convertible into approximately 7.7 million common shares, which accounts for nearly 5% of Akamai’s outstanding shares, priced at $111.33 each. About 2% of this stock is expected to become available once Anthropic makes its initial payment. The remaining shares hinge on Anthropic increasing its spending with Akamai, where each additional $3 billion unlocks about 1% in warrants, potentially raising the total deal value to around $20 billion.
This arrangement marks the first instance where Akamai has integrated a warrant into a cloud deal, highlighting the significance of the contract. Such strategies differ from the conventional model in the AI industry, where suppliers mainly invest in AI labs that buy their products. In this scenario, Akamai has opted to provide a potential equity stake to Anthropic that grows alongside its cloud expenditure—a concept previously utilized by AMD with OpenAI.
Anthropic has experience in similar arrangements, having received investments from tech giants like Amazon, Google, Microsoft, and AMD while also engaging in product transactions. CEO Dario Amodei mentioned to The New York Times last December that Anthropic’s involvement in such deals does not rival that of larger players in the sector.
Following this announcement, Akamai’s shares rose sharply, hitting up to 17% in after-hours trading, according to The Wall Street Journal.
Editor’s Take
This landmark deal between Anthropic and Akamai reflects the growing demand for cloud services in the AI sector, particularly in CPU capabilities. As Anthropic expands its computational resources, this could enable more sophisticated AI applications, impacting developers and businesses. The innovative incorporation of a stock warrant suggests a strategic shift in how cloud agreements are structured, potentially influencing future partnerships in the tech industry.
Source: techcrunch.com
