Should You Buy Alphabet Stock After Anthropic Raised Its Google Commitment to $121 Billion?

Anthropic, the artificial intelligence company known for its Claude AI, recently updated its IPO filing to include its third-quarter results. The company reported having $95.6 billion in cash and short-term investments, totaling around $132 billion, which is close to its total at the end of June. Anthropic has also committed to spending at least $121.3 billion with Google between April 2026 and July 2033, regardless of its usage. Alphabet shares were trading near $283 per share at the time of writing.

Google Cloud's revenue backlog, which represents contracted revenue not yet recognized, reached $560.8 billion as of Sept. 30. This is an increase from $513.9 billion three months earlier and $157.7 billion a year prior. However, growth in cloud revenue has slowed, with a third-quarter increase of $47 billion, compared to $52 billion in the previous quarter.

The $121.3 billion commitment from Anthropic represents around 22% of Google Cloud's backlog. Anthropic estimates it could spend an additional $125 billion to $150 billion on Google's custom AI chips, although some of this amount might be provided by third-party providers. For the next year, Anthropic's cash and investments cover almost twice the amount due.

While Anthropic's commitment is a significant portion of Google Cloud's revenue, it is not the entirety of the company's business. Google Cloud's third-quarter revenue grew by 103% year-over-year to $30.7 billion, which is roughly equivalent to $123 billion per year. This places the minimum commitment at around 13% of Google Cloud's current sales, a substantial but not overwhelming amount.

In conclusion, although the amended filing introduces a new factor to consider, Alphabet stock remains an attractive option at its current price. The $121.3 billion commitment represents solid revenue in the near term, while the later years present a bet on Anthropic's growth potential.