According to The Information , Anthropic finalized a multi-GW TPU computing power agreement with Google and chip partner Broadcom last month, which is expected to be rolled out gradually starting in 2027.
The deal is staggering; Anthropic plans to spend approximately $200 billion on Google Cloud over the next five years. This contract represents more than 40% of the over $460 billion in revenue backlog that Google disclosed to investors last week. Following the announcement, Alphabet's after-hours stock price rose by about 2%.
The four major cloud computing giants received 2 trillion magnesium orders, half of which came from two cash-burning startups.
The contracts between OpenAI and Anthropic together account for about half of the combined $2 trillion in revenue backlog of the four major US cloud providers: Amazon, Microsoft, Google, and Oracle. The most crucial revenue commitments in AI infrastructure are highly concentrated on these two startups, which are still burning through cash.
In detail, Amazon signed a $100 billion, 10-year contract with Anthropic in April, with Anthropic committing to consuming approximately 2GW of Trainium computing power in exchange.
OpenAI added $100 billion in commitments to AWS in the same quarter (expanding its suites from $38 billion to $138 billion), accounting for more than 80% of the increase in AWS backlog.
- OpenAI projects server spending of approximately $45 billion this year, compared to approximately $17 billion last year.
- Anthropic projected spending to exceed $20 billion this year at the end of last year, but the actual figure may be higher after a surge in Q1 revenue.
Revenue is expected to increase 20 to 30 times by 2029.
The two companies' spending commitments are based on an exaggerated premise: revenue in 2029 must be 20 to 30 times that of 2025. This is not a typical growth forecast, but a rate that very few software companies in history have ever achieved.
The market has already priced in this risk. Since Oracle announced its $300 billion contract with OpenAI last September, its stock price has fallen by about 45% to 50%. Investors are worried about whether these spending commitments can be delivered into actual revenue.
Oracle's total liabilities surged 60% in the quarter to a record high of $153.1 billion.
Google has a structural buffer because it uses its own TPU chips to power Anthropic, which has a higher profit margin than simply leasing NVIDIA GPUs. This means that even if Anthropic's spending falls short of expectations, Google's gross profit contribution per dollar of computing power contract is still higher than its competitors.
But even with a buffer, it's still a huge risk when your largest single customer accounts for 40% of the backlog of orders.
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