Anthropic inks US$12bn deal with Akamai

LONG-TERM BET: Expanding an earlier agreement, the AI developer committed to a seven-year deal, which Akamai said would drive US$5.5bn in capital spending

Anthropic PBC has signed an US$11.6 billion, seven-year contract with Akamai Technologies Inc for computing power, adding to the AI developer’s growing list of data center deals.

Akamai is to supply Anthropic access to central processing units, or CPUs, a type of generalist chip that has seen renewed demand in data centers to help support AI services. Akamai has also issued a warrant that gives Anthropic the right to buy Series B shares for US$111.33 each that converts into 7.7 million shares of common stock.

The agreement builds on a previous US$1.8 billion computing deal that the two companies struck earlier this year. Anthropic has seen demand for its Claude software soar in recent months with customers flocking to its tools to streamline the process of coding and other tasks. The AI developer has been on a buying spree for the computing necessary to meet that growing demand, tapping companies from Alphabet Inc’s Google to Elon Musk’s SpaceX for access to chips.

An Anthropic logo is displayed at the Moscone Center during the Dreamforce technology summit in San Francisco, California, on Sept. 17.

Photo: Reuters

Akamai generates the vast majority of sales from its content delivery and cybersecurity services, but the company, in search of more growth opportunities, has been rapidly expanding into the computing space. The contract with Anthropic represents the largest deal in the firm’s history, and the company estimated that its capital spending tied to the Anthropic agreement alone will total about US$5.5 billion — more than six times what it spent in all of last year.

Shares of Akamai jumped 17 percent in late trading on Thursday to US$129.60 at about 4:10pm New York time.

Akamai’s cloud business is “growing obviously extremely fast,” Akamai chief executive officer Tom Leighton said in an interview. At this rate, the company’s revenue associated with cloud contracts could eclipse sales from its other segments “fairly soon,” he said. “We’re not looking necessarily at a long time frame for that to happen.”

Akamai said a part of the warrant issued to Anthropic, representing about 2 percent of Akamai’s common stock, vests with the computing agreement, which is expected to begin in the second half of next year. The rest is scheduled to come available over the course of the seven-year deal.

Some Wall Street investors have raised concerns about so-called circular AI deals in which cloud, hardware and AI companies that buy one another’s products are also directly investing in one another, saying the pacts make it more difficult to quantify real demand for AI.

This is the first time Akamai has agreed to such a warrant as part of a cloud deal with a customer, Leighton said. “It’s a serious step, but I think in this case it made sense to do,” he said. “It helps bring the companies together.”

Akamai expects revenue from the Anthropic business to total about US$150 million to US$300 million next year.

“By the time we’re through to 2028, it’ll be an annual run rate of about US$1.7 billion,” Leighton said.

The bulk of capital spending that Akamai is planning to fulfill the Anthropic contract will go toward hardware such as servers, chips and networking gear, and most of it will occur next year, Leighton said.

While acknowledging that it is a “big step up in capex” for the company, he said the returns are strong and the company is discussing even more business with “all the major players,” including the largest data center operators known as hyperscalers and big enterprises.