Amazon Deepens AI Bet with Anthropic and Internal Automation Overhaul

Amazon (NASDAQ: AMZN) is raising the stakes in the AI arms race. By expanding its partnership with AI startup Anthropic and embedding generative AI deep into its internal operations, the tech giant is positioning itself not just as a retailer or cloud provider, but as a central pillar in the emerging AI infrastructure economy.

More Than Just a Partner: Amazon Eyes Larger Stake in Anthropic

Reports indicate that Amazon could boost its total investment in Anthropic to over $8 billion. Already its largest outside backer, Amazon’s strategic approach contrasts with rivals like Microsoft and Google, who have taken center stage with consumer-facing models like ChatGPT and Gemini. Instead, Amazon’s play is infrastructure-first: provide the power behind the models, not the models themselves.

Anthropic's Claude models are hosted exclusively on AWS, integrated tightly into Amazon’s proprietary Trainium2-powered Project Rainier data centers in Indiana. This setup gives developers end-to-end control across compute, storage, and deployment — all within Amazon’s ecosystem. The move reinforces Amazon Web Services (AWS) as the platform of choice for developers looking to build and scale large language models.

Automation From Within: AI as Performance Metric

Beyond external partnerships, Amazon is using AI to transform its internal workflows. The company now requires employees at its Ring and Blink units to demonstrate effective AI usage to qualify for promotions. This mandate reflects Amazon's broader vision of workforce automation, where generative AI tools are not just enhancements, but essential tools for productivity.

CEO Andy Jassy has been candid about AI’s role in shaping Amazon’s future headcount. With generative AI agents now handling everything from inventory forecasting to customer interactions, the need for human intervention is shrinking. This could lead to a leaner corporate structure, reduced costs, and expanded profit margins over time.

Project Greenland: AI-Powered Profit Boost

Behind the scenes, Amazon is optimizing AI workloads with "Project Greenland," an initiative that maximizes GPU usage efficiency and curtails waste. The effort has already delivered an estimated $2.5 billion in added operating profit and around $670 million in direct cost savings. In an environment of rising cloud infrastructure costs and chip scarcity, such internal wins are strategically vital.

AWS’s performance underscores the value of these moves. In Q1 alone, the cloud division generated $29.3 billion in revenue and $11.5 billion in operating income. With AI deployments accelerating and customer demand increasing, the outlook for Amazon’s cloud margins continues to improve.

Competitive Edge Against Microsoft and Google

Amazon’s approach provides a unique counterweight to Microsoft Azure and Google Cloud. Instead of competing directly in the AI application layer, it’s fortifying the infrastructure layer — the backbone of every AI deployment. Analysts see this as a calculated move that could give AWS a structural edge, especially as Anthropic’s business scales.

Morgan Stanley projects Anthropic-related cloud revenues for Amazon could hit $1.3 billion in 2025 and rise to $5.6 billion by 2027. With AI as the engine, AWS might emerge not just as a cloud giant, but as the default operating system for enterprise AI development.

Tips for Traders

• Watch AMZN price action around Anthropic announcements — further investment could signal deeper cloud monetization.

• Monitor AWS earnings for AI margin expansion — internal optimization projects like Project Greenland are profit levers.

• Track workforce updates — job cuts linked to AI deployment may trigger investor reactions tied to cost-efficiency themes.

• Gauge competition with Azure and Google Cloud — a growing Anthropic partnership could tip enterprise workloads in Amazon’s favor.

• Stay alert for AI regulation news — policy shifts around enterprise AI use may impact Amazon's cloud growth trajectory.