Alphabet (GOOGL) climbed about 2% in after‑hours trading on Tuesday after The Information reported that AI startup Anthropic has agreed to spend about $200 billion on Google Cloud services over the next five years. This massive commitment has the potential to reshape Google’s long-term cloud revenue outlook.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
The multiyear agreement would begin in 2027 and represent over 40% of Google’s cloud revenue backlog, a metric that reflects contractual commitments from enterprise customers. The report also said that contracts involving Anthropic and OpenAI now make up over half of the $2 trillion in backlogs across major cloud providers.
Alphabet’s Deepening Partnership with Anthropic
Alphabet and Anthropic have grown from simple partners into one of the major integrated alliances in the AI world, involving huge investments, long‑term cloud computing commitments, and collaboration on the chips that power AI models.
In late April, Alphabet disclosed plans to invest up to $40 billion in Anthropic. The deal includes an immediate $10 billion cash infusion. The remaining $30 billion is tied to performance milestones and will be delivered primarily through compute resources rather than cash.
It must be noted that Alphabet already had a nearly 14% equity stake in Anthropic before this new agreement. In Q1 2026, Alphabet recorded a $37.7 billion paper gain on its non‑marketable securities, a jump largely driven by the soaring valuation of its Anthropic stake.
Importantly, Anthropic depends heavily on Google’s custom TPU chips to train and run its Claude models. The expanding partnership is seen as proof that Google’s chip strategy is working, and that its custom TPU chips are becoming an alternative to Nvidia’s (NVDA) GPUs for training large AI models.
Is GOOGL Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Alphabet stock based on 26 Buys and five Holds assigned in the past three months. Further, the average GOOGL price target of $387.68 per share implies 12.83% upside potential.
