One of the advantages of owning a large profitable company is when face with competition which seems to be challenging their lead, the company has the ability to use its cash and credit to buy a company or companies to shore up their leadership.

In an article by Jeffery Dastin of Reuters, Amazon said it will invest up to $4 billion in the startup company named Anthropic in its effort to compete with growing cloud rivals on AI.

Amazon’s employees and cloud customers will gain early access to technology from Anthropic as part of the deal, which they can infuse into their business. Anthropic will rely primarily on Amazon’s cloud services, including its future AI models on large quantities of proprietary chips.

Amazon will not gain board seats or will own a minority of shares of Anthropic.

In addition, Anthropic agreed to work on developing technology for Amazon’s inhouse Trainium and Inferentia chips.

Adam Selipsky, Amazon’s Web Services CEO said the pact will help make Anthropic’s models beter, will help make our chip technology and our AI infrastructure better.

Dario Amodei, Anthropic’s CEO said his company has obtained the money in a way that allows it to prioritize safety and allows us to scale up our models.

One of AWS’s service is called Amazon Bedrock, a service that has attracted thousands of users to start building AI applications.

Anthropic, founded by former OpenAI executives including Mr. Amodei, is one of a series of companies building generative AI systems that can draft content as if a human created it. Anthropic has aimed to distinguish its work by training AI to adhere to moral values.

Anthropic clients include: LexisNexis (legal data analytics company), Bridgewater Associates (investments) and Lonely Planet.

Linking to dividend paying stocks, when you buy one of these companies you are buying a profitable company and they have the ability to remain in leadership in their business because they can do mergers and joint ventures to continue to make money. The companies rarely invent the next best thing, but they capitalize on the next best thing to maintain and increase sales. As a dividend investor you can watch what they are doing and determine if you believe they are doing the right thing.

There are more questions than answers, till the next time – to raising questions.