Got $500? 2 Magnificent AI Stocks to Buy Hand Over Fist Before the Anthropic IPO

Source The Motley Fool

Key Points

  • Amazon and Alphabet offer indirect exposure to Anthropic while also owning dominant, cash-generating businesses that can thrive regardless of the start-up's IPO outcome.

  • Anthropic's value could boost both companies, but its stakes are still small relative to the overall size of these two tech giants.

  • 10 stocks we like better than Amazon ›

Anthropic, the company behind the Claude AI models, is marching toward one of the most anticipated public offerings in years, reportedly at a valuation near $1 trillion.

The catch is that most investors cannot buy Anthropic yet. But two members of the "Magnificent Seven" already own big pieces of it, and with $500, you can buy both of these stocks. I am talking about Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG).

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An AI chip rests on a purple computer board.

Image source: Getty Images.

1. Amazon

Amazon is Anthropic's largest corporate backer. It has committed roughly $33 billion to the AI lab, with a pledge to invest tens of billions more, giving it a stake worth well over $100 billion.

The relationship runs deeper than money, too. Anthropic has agreed to spend more than $100 billion on Amazon Web Services and Amazon's own Trainium chips, turning the AI leader into an anchor customer for Amazon's most profitable division. So $500 here buys you a slice of Anthropic ahead of its debut, plus a stake in a company that dominates cloud computing, e-commerce, and advertising.

2. Alphabet

Alphabet owns roughly 14% of Anthropic, a stake worth around $135 billion at recent valuations, and Anthropic has committed to spending about $200 billion on Google Cloud over five years. On top of Anthropic exposure, you get Google Search, YouTube, and the Gemini AI models, a collection of businesses generating enormous cash while weaving AI throughout. For $500, that is a lot of quality wrapped around a stake in the AI front-runner.

The catch worth naming

I would keep expectations grounded. As large as these Anthropic stakes are in dollar terms, they are still modest compared with the multitrillion-dollar market caps of Amazon and Alphabet, so Anthropic alone will not transform either stock overnight.

A chunk of the eye-catching "AI profits" both have reported lately comes from marking up the paper value of those stakes, not from selling more products, and those marks can reverse if sentiment sours. There is also a circular quality here, since both companies invest in Anthropic, and Anthropic spends that money right back on their clouds. And Anthropic itself is still burning cash.

If you have $500 and want a stake in Anthropic before it goes public, splitting it between Amazon and Alphabet is a smart way to do it. You capture upside from two of the AI lab's biggest owners while owning dominant, cash-generating businesses worth holding on their own.

My honest advice is to buy each for the whole company first and treat the Anthropic stake as a valuable bonus. That way, you win whether the IPO dazzles or merely does fine.

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Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Amazon. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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