Amazon and Anthropic: A New Force in AI Competition
On Nov. 30, 2022, OpenAI, a then-unknown start-up, rocked the tech world. OpenAI is the creator of ChatGPT, a generative AI model that can respond to queries, generate software code, create images, and more. The launch of ChatGPT prompted major tech firms to invest billions into rival AI model developers to keep pace with OpenAI.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Amazon’s Strategic Investment in AI
E-commerce giant Amazon (NASDAQ: AMZN) formed a partnership with Anthropic, investing a substantial $8 billion over the past two years. While OpenAI led the charge in generative AI, Amazon’s recent developments with Anthropic show the intensity of the competition.
Could Amazon have made a pivotal move against OpenAI? Read on to find out.
Understanding Amazon’s Latest AI Model
ChatGPT and Amazon’s Claude are examples of large language models (LLMs), which allow users to easily ask questions and receive instant responses. Amazon is advancing this concept with the introduction of a hybrid reasoning model that operates in two modes: standard and extended thinking.
In standard mode, users can pose a question to Claude and receive varying levels of detail in the response. Conversely, extended thinking mode utilizes reasoning frameworks, enabling the model to present a “chain of thought” prior to generating an answer. This method provides users insights into Claude’s reasoning process, allowing for follow-up questions and deeper dives into the content.
Image source: Getty Images.
A Competitive Landscape in AI
It may appear that OpenAI has stumbled, but the reality is that many mainstream LLMs, including OpenAI’s solutions, share overlapping features along with unique capabilities. Although Amazon has introduced a hybrid reasoning model ahead of OpenAI, it does not necessarily signal the end for ChatGPT.
Recently, OpenAI CEO Sam Altman acknowledged on X (formerly Twitter) that the platform has become “complicated” with numerous model options. OpenAI is currently focusing on unifying these systems to offer users flexibility—similar to the hybrid reasoning model recently launched by Amazon and Anthropic.
While harmonizing its offerings might take some time, Altman’s vision suggests that Amazon’s Claude update isn’t automatically a checkmate against OpenAI. The allure of a hybrid reasoning model may create temporary excitement for Amazon, boosting Amazon Web Services (AWS) in the near term. Nevertheless, multiple LLMs capable of hybrid reasoning are expected to emerge, with OpenAI likely maintaining a strong position in the future.
Is Amazon a Smart Investment Right Now?
Before considering a purchase of Amazon Stock, take note:
The Motley Fool Stock Advisor analyst team identifies what they view as the 10 best stocks for investors today—and Amazon isn’t included on that list. The selected stocks have the potential for significant returns in the years to come.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $710,848!*
Stock Advisor offers investors a straightforward roadmap for success, including portfolio building guidance, analyst updates, and two new Stock picks each month. The Stock Advisor service has more than quadrupled the return of the S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of March 3, 2025
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
