The nearly daily announcement of multi-billion-dollar deals for artificial intelligence hardware continued on Tuesday. Microsoft (MSFT), Nvidia (NVDA), and Anthropic announced a partnership. Unfortunately, these are circular investing deals. They might count toward results, but require refinancing among the participants.
Microsoft will commit as much as $5 billion into Anthropic. Nvidia will commit up to $10 billion into that AI firm. In return, however, Anthropic will spend $30 billion to buy Microsoft’s Azure compute capacity. It will also sign contracts for up to 1 gigawatt in capacity.
In a recent round of raising funds, Anthropic raised $13 billion to set a $350 billion valuation.
AI Bubble Risks
Mainstream media and even Alphabet’s CEO, Sundar Pichai, warned that no firm is immune to the AI bubble. Still, the valuation of unprofitable AI firms like Bigbear (BBAI) risks a steep decline. Firms that claim they use AI, like Peloton (PTON), will not likely fool short-sellers
PTON has an 18.83% short float.
Even when Nvidia (NVDA) likely reports stellar results, the sustainability of the AI buildout among many firms is questionable. When the race stops, the AI industry will have few winners. The likely top AI firms are Anthropic, Google Gemini, along many Chinese AI firms. Tencent (TCEHY), Baidu (BIDU), and Alibaba (BABA) all have free AI models or tools that they released to the public.
