Amazon is set to invest up to $25 billion in Anthropic, the tech giant said, as the AI firm commits to spending over $100 billion on Amazon’s cloud technology over the next decade.

The deal will start with a $5 billion investment into Anthropic now, with the additional $20 billion set aside for the future and subject to certain conditions.

The investment announcement comes after Amazon said it would invest $50 billion in OpenAI, a top rival to Anthropic.

Amazon has struggled to cement its own AI model, Nova, in the market, but is making waves as a critical infrastructure provider, leveraging its cloud computing power to benefit from the AI race.

Anthropic, like many AI firms, is also seeking large deals for cloud and data resources to power their AI models. The AI firm anticipates it will bring about one gigawatt of capacity through Trainium2 and Tranium3 chips by the end of this year, with expectations it will gain five gigawatts of this capacity.

The use of the custom-designed AI chips from Amazon “reflects the progress we’ve made together on custom silicon,” Amazon CEO Andy Jassy said.

The deal matches each firms’ individual goals – Anthropic needs more compute power to test its models focussing on coding and designed to win the AI race, and Amazon needs more customers for their AI chips.

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Amazon is expecting to spend £200 billion on capital expenditure this year, mainly for AI developments as it cements itself as a critical infrastructure provider in the industry.

The deal saw Amazon’s shares rise 2.7% in extended trading.