Anthropic signs $10B+ Google deal for 1M TPUs, challenging Nvidia dominance

Anthropic has signed a massive partnership with Google to deploy up to one million of the tech giant’s tensor processing units (TPUs), marking a deal worth tens of billions of dollars. The agreement directly challenges Nvidia’s dominance in the AI hardware market while helping Anthropic avoid vendor lock-in by diversifying its chip sourcing strategy.

The big picture: This partnership represents the latest wave of massive AI infrastructure investments, following recent deals like Nvidia’s $100 billion investment in OpenAI and a $40 billion data center agreement involving Nvidia, Microsoft, xAI, and BlackRock.

Why this matters for Google: The deal provides Google with a multi-billion-dollar cloud revenue stream while validating its long-underestimated TPU technology as a credible alternative to Nvidia’s dominant GPUs.
• “It gains a banner AI tenant to rival Microsoft’s OpenAI partnership and crucially, achieves a massive public validation of its custom TPUs as a credible, large-scale alternative to Nvidia’s dominant GPUs,” said Nick Patience, an analyst at the Futurum Group.
• The partnership also boosts Google’s early minority investment in Anthropic and could force Nvidia to lower its pricing due to increased competition.

Strategic benefits for Anthropic: The arrangement allows Anthropic to focus on building powerful AI models like Claude rather than managing data center infrastructure while securing better chip pricing through increased leverage.
• Anthropic is building a diversified foundation using Google’s TPUs, Amazon’s Trainium chips, and Nvidia’s GPUs to avoid single-vendor dependency.
• “By refusing to lock in with a single vendor, it is building a diversified foundation using Google’s TPUs, Amazon’s Trainium chips and Nvidia’s GPUs,” Patience explained.

What experts think: Industry analysts see this as part of a broader pattern where AI companies partner with hyperscalers to ensure scalability without heavy infrastructure investments.
• “This just continues the pattern where AI companies strike deals with hyperscalers to ensure scalability and the ability to focus on their core business, instead of getting too deep into the data center business,” said Torsten Volk, an analyst at Omdia.
• “It establishes the new multi-cloud playbook for AI labs, demonstrating how to use competition between Google, Amazon, and Microsoft to maintain negotiating leverage and avoid the critical risk of vendor lock-in,” Patience added.

Key challenges ahead: Both companies face significant execution hurdles that could complicate the partnership’s success.
• Google must deliver over a gigawatt of new TPU capacity online by 2026, which could bring heightened regulatory scrutiny over deepening ties between hyperscalers and top-tier AI labs.
• Anthropic will need to optimize its models across different chip architectures, while the arrangement creates an unusual dynamic where Claude competes with Google’s own Gemini AI models.
• “This deal allows Google to observe how Claude behaves in massive-scale production scenarios,” Volk noted, potentially giving Google insights into Claude’s revenue patterns and performance characteristics.