Anthropic Commits $807 Billion to Compute Ahead of Record IPO

Summary

• Anthropic has committed $807 billion through 2036 to computing and chip deals it largely cannot exit.
• The company ran short of compute late last year, limiting free use and raising some product prices.
• Compute scarcity now shapes what could be the largest initial public offering ever attempted.

The latest

Anthropic has locked in $807 billion in computing and chip commitments running through 2036, obligations it largely cannot walk away from, according to the prospectus for an initial public offering this month that could raise $100 billion. The company devoted more than 10 pages of that filing to compute risk, writing that staying at the frontier of AI depends substantially on securing compute at the scale its workloads require.

Details

• The spree: Anthropic signed dozens of contracts with former crypto miners, data center start-ups, chipmakers and tech giants, The New York Times reported, citing 14 people with knowledge of the AI lab, investors and industry experts. The effort followed a realization late last year that the fast-growing company was running out of computing power.
• The big contracts: According to the prospectus, Anthropic has committed $120.5 billion with SpaceX, $114.5 billion with Google, $110 billion with Amazon and $44.9 billion with Microsoft through 2036. It added a $50 billion deal with the compute provider Fluidstack and $41.3 billion with Lambda.
• The scale: Anthropic is expected to have more than 3.5 gigawatts of computing power this year, two people with knowledge of its plans said, roughly enough electricity to power every home in Chicago. The company aims to double that next year, the same people said.
• The financing: The costs are intensifying the push to go public, the Times reported. Anthropic is also raising debt, including $63 billion last week from Wall Street banks and private credit firms, and has warned it may need to seek additional financing sooner than anticipated.
• The bottleneck: Tom Brown, Anthropic's chief compute officer, said at a Group of 20 event in September that finding enough computing power is very clearly the bottleneck for all of the company's progress, describing a huge shortage of the power and labor needed to support AI demand. Claude Code, its coding tool, became a hit last year, and the company had to limit free use and raise some prices.
• Building it directly: Anthropic is helping design data centers that other firms will build and operate, three people said, adding construction and supply chain experts. It is buying chips directly from Nvidia, AMD and Broadcom, plus cooling systems and other equipment so operators can install components faster, two people said.
• The friction: Fluidstack pushed back on some Anthropic data center designs over concerns that power fluctuations could cut electricity and damage equipment before a solution was reached, two people familiar said. TeraWulf, building a site in upstate New York, competed for electricians with the owners of the Buffalo Bills' stadium.
• Lowering the bar: Anthropic began considering sites of at least 200 megawatts, enough for about 140,000 US homes, three people familiar said — less than it originally wanted but faster. It has since accepted sites as small as 50 megawatts, supplemented by batteries and natural gas.
• The outside view: Erik Bernhardsson, chief executive of the New York compute seller Modal, said Anthropic is gobbling up a lot of the capacity. Asher Genoot, chief executive of Hut 8, which is constructing data centers for the company, said the two firms operate as one team.

Background

Founded in 2021, Anthropic turned to Amazon and Google, which agreed to invest a combined $6 billion in 2023. It spent much of that on their cloud services. Brown later led efforts to diversify beyond Nvidia chips into Amazon, Google and AMD silicon.

Between the lines

Unlike Amazon, Google, Microsoft and Meta, younger labs must rent what the giants own outright. John Tough of Energize Capital assessed that Anthropic does not control the pipelines of computing power and may have to build gigawatts and megawatts at a time, scavenging for available power lines — a reading consistent with its shift from 200-megawatt sites down to 50.

What's next

The initial public offering is expected this month, with a target of up to $100 billion. Watch whether the doubling of compute capacity planned for next year holds, and whether Anthropic returns to debt markets earlier than its prospectus signaled.

Source: The New York Times