Google's strategy isn't just to sell AI chips; it's a platform play. By offering its powerful and potentially cheaper TPUs to companies, Google can create a powerful incentive for those customers to run their entire AI workloads on Google Cloud, creating a sticky, integrated ecosystem that challenges AWS and Azure.

The competition for AI dominance has moved beyond chips to securing massive energy and infrastructure. Anthropic's new deal with Google for 3.5 gigawatts of power capacity highlights this shift. This single deal effectively created a multi-billion dollar business for Google, reframing the AI race as a battle for power plants.

Google Cloud's impressive growth is attributed to servicing the massive compute needs of Anthropic, a company it heavily invested in. This highlights a circular dynamic where cloud providers fund AI companies, which in turn become their captive, high-margin customers for GPUs and TPUs.

Google is positioned to take market share from OpenAI and Anthropic because its diversified business model does not depend heavily on token revenue. This allows Google to offer the cost controls and predictable pricing that enterprises demand, potentially using its AI models as a loss leader to drive cloud adoption.

The AI industry is consolidating into two roles. A few firms like OpenAI build foundation models, while everyone else, including giants like Google, becomes an "arms dealer," renting compute power or licensing models for others to use, as seen in Google's partnership with Apple.

High-profile departures from DeepMind and Google selling 20%+ of its TPU capacity to competitor Anthropic show a strategic shift. Google is prioritizing its profitable cloud (GCP) business over winning the frontier model race, effectively becoming a "picks and shovels" provider for the AI industry rather than a leading research lab.

Cloud providers like Amazon and Google benefit regardless of which AI model wins. By structuring deals as large-scale compute commitments in exchange for equity (e.g., with Anthropic), they profit from cloud usage fees, drive adoption of their in-house silicon, and gain visibility into data center capex recovery, effectively hedging their bets across the entire AI ecosystem.

Google's cloud division (GCP), incentivized to sell compute, is allocating scarce TPU chips to external customer Anthropic. This directly constrains Google's own AI lab, Gemini, hindering its progress in the hyper-competitive AI race and revealing significant internal friction between business units with conflicting goals.

By investing billions in both OpenAI and Anthropic, Amazon creates a scenario where it benefits if either becomes the dominant model. If both falter, it still profits immensely from selling AWS compute to the entire ecosystem. This positions AWS as the ultimate "picks and shovels" play in the AI gold rush.