Musk Concedes Anthropic Leads AI Race, Bolstering Bull Case for Amazon and Alphabet

Musk Concedes Anthropic Leads AI Race, Bolstering Bull Case for Amazon and Alphabet

Elon Musk has publicly reversed his earlier skepticism of Anthropic, conceding the artificial intelligence startup is the clear front-runner in the global AI race — a landmark acknowledgment that strengthens the long-term investment thesis for its key backers and infrastructure partners Amazon.com Inc. (AMZN) and Alphabet Inc. (GOOG, GOOGL).

In a response to a user post on his social network X, the chief executive of Tesla and SpaceX said he was “clearly wrong” about Anthropic’s competitive trajectory. He noted that no other AI lab has released systems matching the performance of Anthropic’s Claude Mythos and Claude Fable models, and that the company will almost certainly roll out its next-generation Mythos 2 iteration in the near future. Musk added that he would never move to severely damage Anthropic even as a direct competitor, framing the position as consistent with his philosophy of fair competition.

The comments mark a dramatic about-face from September 2025, when Musk publicly claimed victory was “never in the set of possible outcomes for Anthropic.” The startup has since delivered a major technical leap with the launch of its Claude Mythos 5 and Claude Fable 5 models. Those systems were briefly restricted from global access last month amid U.S. export control measures, before the Commerce Department lifted the curbs following a thorough review of Anthropic’s proprietary technology.

The broader AI sector has entered a busy product release cycle. OpenAI unveiled its latest ChatGPT version Thursday after clearing a federal review of national security and cybersecurity risks, complying with an AI executive order that had temporarily paused its broad rollout. On Wednesday, Musk’s newly integrated SpaceXAI launched its Grok 4.5 model, the first product release since SpaceX merged with xAI, completed its initial public offering and acquired AI coding startup Cursor. Independent research firm Artificial Analysis ranks Grok 4.5 as the “top non-Anthropic model,” while three Anthropic systems still hold the top three positions in its industry benchmark.

Anthropic’s widening technical lead translates directly into financial tailwinds for Amazon and Alphabet, both of which have made large investments in the company and supply its underlying compute infrastructure. The startup trains and runs its models across both Amazon Web Services and Google Cloud Platform, relying on Amazon’s custom Trainium training chips and Inferentia inference chips, as well as Google’s tensor processing units for specialized workloads.

Each generational upgrade in AI models drives steep increases in compute consumption, lifting utilization rates for specialized cloud capacity and expanding both revenue scale and operating leverage for the two hyperscalers. Since their initial investments in Anthropic in 2023, AWS annual revenue growth has accelerated from 13% to 28%, with operating margins expanding from 30% to 38%. Google Cloud’s annual sales growth has surged from 28% to 63%, while its operating margins have stayed consistently above 30%.

Despite those visible operational gains, the full long-term value of Anthropic’s ascent has yet to be fully reflected in the two tech giants’ share prices. Forward price-to-earnings multiples for both Amazon and Alphabet have compressed, signaling that the upside tied to Anthropic’s growth trajectory has not been fully priced into current valuations.

With the upcoming Mythos 2 model expected to demand even greater compute resources than its predecessors, demand for custom silicon and cloud capacity is on track for another step-function increase. While Anthropic’s existing ecosystem is already contributing to top-line growth and margin expansion at both cloud platforms, the generational leap in AI compute needs is set to deliver sustained earnings elasticity for Amazon and Alphabet for years to come.