News broke earlier this week that artificial intelligence (AI) specialist Anthropic has reportedly committed to spend roughly $200 billion with Alphabet&#x27;s (NASDAQ: GOOG)(NASDAQ: GOOGL) Google Cloud over five years -- a staggering figure that, if accurate, could meaningfully shift the balance in AI infrastructure spending. The Information first reported the number on Tuesday. Shares of the search giant climbed about 2% in extended trading following the report.

Alphabet's Risky Two Hundred Billion Anthropic Bet

Elon Musk Podcast

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**Podcast:** Elon Musk Podcast

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Anthropic committed to spending $200 billion with Google Cloud for server capacity and infrastructure. You know, to put that in perspective, if you look at the total revenue backlog for Google Cloud in the latest reporting period, it nearly doubled to over $460 billion. Right. So that single startup accounts for more than 40% of Alphabet's entire contracted future cloud revenue. Which is just a wild concentration of risk.

I mean, the obvious question hanging over those numbers is whether this huge infrastructure build out is a bulletproof strategy to own the artificial intelligence market or basically a house of cards resting on the survival of one single startup. Yeah, it really forces you to look closely at the underlying mechanics here because you are essentially watching the world's most profitable advertising company quietly attempt to turn itself into a heavy industry, highly leveraged utility.

And if you just glance at the recent performance data, the shift seems to be paying off on paper at least. Google Cloud's revenue jumped 63% to $20 billion. Wow. Yeah, and their operating income tripled to $6.6 billion. Those are exceptionally strong numbers for the reporting period. They are, definitely. But the nature of the product they are actually selling is fundamentally different now. I mean, Alphabet isn't just selling generalized cloud storage or basic website hosting anymore. Right, it's a completely different ballgame. Exactly.

They are locking in gigaw...

Alphabet's Risky Two Hundred Billion Anthropic Bet

Transcript

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Every day you wait, your competitors are finding
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Alphabet's Risky Two Hundred Billion Anthropic Bet

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.