A CTO's Thoughts on Skyrocketing AI Valuations

On Tuesday, Anthropic announced a massive round of funding from Microsoft and Nvidia. Microsoft will invest around $5B into the AI giant, with Nvidia investing $10B. The combined investment of $15B translates into an absolutely enormous valuation of $350B, up from an already sky-high $183B valuation as of September.

As part of the deal, Anthropic will commit to purchasing 1 gigawatt of compute capacity from Microsoft. Interestingly, Anthropic has had a long-running partnership with AWS which invested $4B in Anthropic in September of 2023 and signed a strategic collaboration agreement with them in 2024. As part of the strategic agreement, Anthropic selected AWS as its primary training partner, leveraging AWS's custom Trainium silicon to "train and deploy" its foundation models. The agreement also brought an additional $4B of funding from AWS. When asked about how Microsoft's investment would impact that agreement, Anthropic and AWS both made it clear that the partnership is as strong as ever, and AWS will continue to be the primary cloud provider.

Strange Bedfellows

For the better part of the last decade, Microsoft and AWS have been competing to be the industry-leading public cloud provider, and the competition has been stiff. Yet, here we are in the closing weeks of 2025, and AWS and Microsoft are now both investors in the same business to the tune of billions of dollars.

Microsoft CEO Satya Nadella was quick to put messaging out in the world downplaying what appears on the surface to be a strange situation, saying:

  “As an industry, we really need to move beyond any type of zero-sum narrative

   or winner-take-all hype. What’s required now is the hard work of building broad,

   durable capabilities together so that this technology can deliver real, tangible

   local success for every country, every sector and every customer. The

   opportunity is simply too big to approach any other way.”

With the hype of AI at a crescendo, it's hard to argue with Nadella's message. While there are still plenty of AI naysayers, every passing day brings more and more evidence that large language models are here to stay, and are providing tangible value to businesses and consumers alike.

Of course, Microsoft and AWS are committed to being the best providers of the critical infrastructure to run AI workloads. They crave growth, and it's clear that money is continuing to pour into AI initiatives at a high rate. The adage that "a rising tide floats all ships" is apt when considering the huge TAM for AI, so both hyperscalers throwing money at Anthropic makes perfect sense.

That Valuation, Though...

But, here's the thing. A $350B valuation is shockingly high, even considering the fact that Anthropic produces some of the best models in the business. I am a big believer in Anthropic, and appreciate their continued commitment to act for the global good. I think they are likely to succeed in being around for the long haul, but producing revenue and profit that justifies the valuation is going to take hard work, continued innovation, long-term partnerships, and most of all, time.

What do you think about Anthropic's skyrocketing valuation? I'd love to hear your takes!