Amazon Stock Pressured As Anthropic, Pentagon Debate Over Military AI Use

Amazon shares are on one of their worst runs, down eight straight sessions amid a tech selloff and concerns over its $200 billion capex plan.

• Anthropic is reportedly refusing to allow the U.S. military to use its AI for purposes including American surveillance and battlefield operations, stoking tensions between the two sides. 
• The Pentagon is considering designating the AI company a ‘supply chain risk.
• Amazon shares could have a bearing from the news, although Stocktwits sentiment holds up in the ‘bullish’ zone.

Amazon.com, Inc. (AMZN) shares will be in focus on Tuesday after reports over the weekend said the U.S. government was considering ending its relationship with Anthropic after  the AI firm refused to ease certain restrictions regarding the military's use of its technology.

Amazon is one of the biggest investors in Anthropic, having put over $8 billion in the company founded by former OpenAI employees, and offers its AI models through its Amazon Web Services platform.

Anthropic won a $200 million contract from Pentagon last year, and is one of its vendors for AI technology besides OpenAI, Google and xAI. 

The Issue

The government is reportedly pushing the four firms to let the military use their tools for "all lawful purposes," even in the most sensitive areas of weapons development, intelligence collection, and battlefield operations. Anthropic has not agreed to those terms, and insists that at least two areas remain off limits: the mass surveillance of Americans and fully autonomous weaponry, Axios reported over the weekend.

The dispute recently reached a boiling point over the military’s use of Claude in the operation that led to the capture of Venezuela’s Nicolas Maduro, the report said. 

In a separate report, Axios said the Defence Department might go so far as cancelling the AI contract and designating Anthropic a "supply chain risk." The characterization, typically reserved for foreign adversaries, means that anyone who wants to do business with the U.S. military has to cut ties with the company.

"The Department of War's relationship with Anthropic is being reviewed. Our nation requires that our partners be willing to help our warfighters win in any fight. Ultimately, this is about our troops and the safety of the American people," Chief Pentagon spokesman Sean Parnell was quoted as saying by Axios.

AMZN Stock In Focus 

The development could have a bearing on Amazon shares when trading begins in the holiday-trimmed week on Tuesday. AMZN’s stock edged 0.5% lower in overnight trade on Monday, extending its slide of over 18% over the last eight sessions, amid the selloff in technology stocks across the market over AI capex concerns. 

AMZN stock has slid sharply – it has lost about 18% by ending in the red for eight straight sessions – amid selloff in technology shares over fears of disruption from AI. 

That included a wide selloff after Amazon revealed plans to increase its capital spending by 50% to a whopping $200 billion this year.

On Stocktwits, retail sentiment for Amazon was ‘bullish,’ the same as yesterday but lower from ‘extremely bullish’ territory in the prior week. Members, while discussing the Anthropic news and Amazon stock selloff, remained largely positive about the company.

One user said Amazon’s AWS was one of the best cloud services in the market and Anthropic was a “fabulous AI pick,” anticipating good things in the year to come.

“$AMZN AWS is the best cloud service; they will bypass the internet as they add additional satellites.. reducing traffic and outage issues while increasing security .... Anthropic was a fabulous AI pick.. good things coming as the year progresses.” a user said.

Last week, Anthropic announced it had raised $30 billion in new funding led by co-led by D. E. Shaw Ventures, Dragoneer, Founders Fund, ICONIQ, and MGX and joined in several existing investors such as Accel and BlackRock. The deal more than doubled the AI company’s valuation to $380 billion.

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