Some big news rocked the AI ecosystem last week. It’s no secret that Anthropic had been gaining steam, but few were anticipating that the company would announce that its annual run rate had jumped from $9 billion to $30 billion in just a few months.
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What does that mean for other AI firms such as Alphabet (NASDAQ:GOOG)?
Anthropic’s surge seems to reflect well on the future growth of AI and the various companies working to support its adoption. GOOG has gained some 6% over the past five days, though some of this increase is likely tied to improved market-wide sentiment following a tenuous ceasefire in the Middle East.
On the one hand, it’s easy to see why GOOG and many of its peers would enjoy a nice little jump following the Anthropic news. After all, those firms that are supplying the hardware for the AI surge have just received further affirmation for this growing trend.
And yet, AI fatigue has been pressuring tech stocks this year. Which dynamic will play out?
Top investor Harsh Chauhan is taking the glass half-full approach and sees plenty of upside from these developments.
“Anthropic’s success wouldn’t have been possible without its hardware partners, which enable its popular LLMs to do the heavy lifting in data centers and deliver results to customers,” explains the 5-star investor, who is among the top 1% of stock pros covered by TipRanks.
Chauhan details that Anthropic’s rise is directly benefiting Alphabet. Indeed, Anthropic is using Google’s TPUs, or custom silicon processors. Last October, Anthropic announced that it would deploy up to 1 million TPUs in order to deliver “well over” 1 GW of computing capacity online in 2026.
And now, Anthropic has signed another agreement with Google Cloud and Broadcom for “multiple gigawatts of next-generation TPU capacity that we expect to come online starting in 2027,” adds Chauhan, quoting from the company’s press release.
It’s a rising tide of AI demand, in other words. Increasing adoption is likely to bode well for the ecosystem at large and support the massive capex sloshing around. And that’s another reason why Chauhan takes comfort from the news.
“Concerns about whether the huge investments in AI will pay off or not don’t seem justified,” concludes Chauhan. (To watch Chauhan’s track record, click here)
Wall Street is also gung-ho about GOOG. With 12 Buys and 1 Hold, GOOG enjoys a Strong Buy consensus rating. Its 12-month average price target of $385.90 points to an upside of roughly 22%. (See GOOG stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.