Anthropic secures $807B in computing power deals to fuel AI growth

The scramble for compute

Anthropic is currently engaged in an aggressive effort to secure the physical resources required to power its artificial intelligence. The company recently faced a shortage of computing power as its growth accelerated, leading executives to describe the situation as a "cone of uncertainty." Because the demand is so difficult to predict, the company is moving quickly to sign dozens of contracts to ensure it can continue developing its models.

To solve this, Anthropic has partnered with a wide variety of entities, including tech giants like Amazon, Google, Microsoft, and SpaceX. They are also working with "neoclouds," which are companies that provide computing power, and former cryptocurrency miners. These partnerships are designed to provide the massive scale of hardware and electricity needed to run products like the Claude chatbot.

The scale of these commitments is immense, with the company pledging $807 billion through 2036 for computing and chip deals. These agreements are largely binding, meaning Anthropic cannot easily back out of them. The company even dedicated more than 10 pages of its public offering prospectus to explain how vital these resources are to its ability to remain at the frontier of AI capabilities.

Infrastructure and energy

Building the infrastructure for AI requires enormous amounts of electricity, which Anthropic is currently trying to secure across the United States. This year, the company expects to have more than 3.5 gigawatts of computing power, which is enough to power every home in the city of Chicago. Next year, the company intends to double that amount to meet the rising demand from its users and developers.

Because large-scale power is scarce, Anthropic is exploring diverse locations to build data centers, including old coal plants and factories. They are meeting with developers in states like Texas and Indiana to discuss permits and connections to the power grid. The company is even considering smaller sites of 50 megawatts and supplementing them with batteries and natural gas to get online faster.

The company is also taking a hands-on approach to construction by hiring experts in data centers and supply chains. They are buying cooling systems and other equipment directly so that data center operators can install components more quickly. By helping to design the data centers that other companies will build and operate, Anthropic aims to bypass some of the standard backlogs faced by larger providers.

Diversifying the supply chain

Anthropic is actively working to reduce its reliance on a single source of hardware to ensure a steady flow of computing power. While Nvidia remains a primary source, the company is diversifying into chips from Amazon, Google, and Advanced Micro Devices. This strategy helps mitigate the risk of shortages while providing more options for their various workloads.

The company is also looking for partners who can bring capacity online faster than the major cloud providers. While giants like Amazon and Microsoft have deep pockets, they are often backlogged with demand. In contrast, neoclouds and former crypto miners like TeraWulf and Hut 8 have access to land and power, allowing them to build and launch new sites more rapidly.

These partnerships involve complex logistical hurdles, such as competing for specialized labor and navigating local regulations. In one instance, Anthropic and a partner had to hire traveling electricians from other areas because local workers were busy with a stadium project. Despite these costs and difficulties, the company continues to pursue these diverse sources to ensure its progress is not stalled by a lack of hardware.

Financial stakes and IPO

The massive cost of securing computing power is driving Anthropic toward a potential initial public offering, or IPO. The company hopes to raise $100 billion in this offering to fund its ongoing development and infrastructure needs. Because the costs are so high, Anthropic is also seeking debt financing, including a recent $63 billion deal from Wall Street banks and private credit firms.

The company has warned that it may need to find additional funding sooner than it originally planned due to the high price of the AI boom. This financial pressure is a direct result of the "voracious demands" of the technology. As Anthropic grows, it must balance the need for massive capital expenditures with the need to maintain a profitable and sustainable business model.

The company's ability to deliver products to businesses and consumers depends entirely on its success in these negotiations. If it cannot secure enough compute, it may have to limit the free use of its products or raise prices. This reality makes the upcoming IPO and the ongoing hunt for power some of the most critical business challenges facing the company today.