The latest Microsoft AI deal highlights tight links in AI supply chain

When Microsoft, Anthropic and Nvidia announced their latest partnership arrangement on Tuesday, analysts said that what appeared to give flexibility to IT buyers might instead complicate their choices.

“This partnership will make [Anthropic’s] Claude the only frontier model available on all three of the world’s most prominent cloud services. Azure customers will gain expanded choice in models and access to Claude-specific capabilities,” the Microsoft statement said. “Anthropic is scaling its rapidly-growing Claude AI model on Microsoft Azure, powered by Nvidia, which will broaden access to Claude and provide Azure enterprise customers with expanded model choice and new capabilities. Anthropic has committed to purchase $30 billion of Azure compute capacity and to contract additional compute capacity up to one gigawatt.”

The statement also said, “Nvidia and Microsoft are committing to invest up to $10 billion and up to $5 billion respectively in Anthropic.”

In an accompanying video, Microsoft CEO Satya Nadella said, “For us, this is all about deepening our commitment to bringing the best infrastructure, model choice and applications to our customers. And of course, this all builds on the partnership we have with OpenAI, which remains a critical partner for Microsoft, and provides more innovation and choice.”

More choice or less?

But multiple analysts raised eyebrows, questioning whether this move will deliver more choice, or less.

Some said this partnership, along with similar efforts recently involving Oracle and Softbank, are reshaping some of the AI choices for IT leaders. 

“A lot of CIOs are starting to question whether their current AI infrastructure choices will hold up in the long run. It’s not just about picking a cloud provider anymore. The lines between cloud, models, and hardware are blurring fast,” said Sanchit Vir Gogia, the chief analyst at Greyhound Research. “This deal also reveals how tightly linked the AI supply chain has become, with cloud capacity, model availability, and silicon strategy now moving in lockstep rather than as separate decisions.”

Gogia stressed that the potential purchase decision strategy changes could be much more significant.

“Here’s the part that matters to CIOs: when you pick a model now, you’re not just picking a model. You’re picking a hardware path, a cloud footprint, and a cost profile that will shape how your AI projects scale or don’t. Microsoft’s move to integrate Claude into Foundry and Copilot isn’t just about more choice. It signals a shift in posture. What used to be a one-model strategy is now moving toward a portfolio play. That gives buyers more options, but it also introduces more complexity,” Gogia said.

He added, “there is also a deeper pattern emerging. The flow of capital, compute and model access between these companies is becoming circular in nature. Infrastructure vendors are funding the very AI labs that become their largest customers, which can blur the real economics for enterprises planning long-term budgets. You’ll need stronger governance to keep those options manageable.”

But another analyst said the new partnership highlights Anthropic’s growing needs.

“Anthropic, like OpenAI, needs to hedge its bets across multiple XPU and GPU vendors,” said Patrick Moorhead, CEO of Moor Insights & Strategy. “This is smart, as they can compare TCO across all the vendors over time and keep vendors hungry.”

Forrester Senior Analyst Alvin Nguyen agreed, noting, “[because] Anthropic has partnerships with AWS and Google as well, I see this as a hedge to ensure they are not locked in to any single vendor. This also acts as a hedge for Microsoft and Nvidia to ensure they are not locked in too closely with OpenAI.”

Nguyen added that some of this is simply an admission that the soaring size increases of all of the key enterprise AI vendors makes such cross-pollination deals essential.

One player can’t serve all AI demand

“No single vendor is able to satisfy the entirety of the demand for AI. Anthropic is at the size where their growth will be limited by staying with too few vendors,” Nguyen said. “This brings concerns, [given that] virtually all major AI vendors are invested in each other. The ultimate take for enterprises is to not bet on any single one.”

But even these partnerships don’t necessarily make it easy to shift from one company to another. “The data egress costs start to cost quite a bit,” Nguyen said.

But, Gogia added, the focus of this deal really should be on Anthropic.

“What this really shows is Anthropic continuing a very deliberate multi-chip strategy. They are using Nvidia, TPU v5 and AWS Trainium for different strengths, rather than trying to push everything through one platform,” Gogia said. “Nvidia gives Anthropic stronger inference performance, wider enterprise reach, and access to an ecosystem that already powers most production AI deployments. The partnership also includes joint engineering on future Claude models for upcoming Nvidia architectures. That kind of co-design creates long-term benefits for both sides, but it does not replace Anthropic’s reliance on TPUs or Trainium.”

Gogia said that he doesn’t see this deal as signifying Anthropic has chosen a winner in the AI battles. “It is Anthropic making sure it never becomes dependent on a single hardware source,” he said. “GPU supply volatility, rising inference costs, and the scale of future models are all pushing the company toward a diversified compute strategy. If anything, this move signals to enterprises that the smartest AI builders are hedging across all major chip platforms, and that long-term resilience will require the same mindset.”

He added, “Anthropic isn’t cutting ties with other platforms. They’re still working with Google’s TPUs and Amazon’s Trainium chips. That’s a smart hedge. It also tells us something important: no single cloud or hardware vendor owns the future of AI infrastructure. We’ve also seen a jump in CIO involvement in AI hardware decisions. Nearly half of enterprise tech leaders are now weighing in directly on chip selection, which would’ve been unthinkable just two years ago. AI infrastructure is no longer a back-end topic. It’s a boardroom one.”

Phil Smith, systems engineer for AI architecture for Substratos, said the technologies’ capabilities and limitations were a powerful driving force behind this alliance. 

“Frontier models saturate HBM [high bandwidth memory] bandwidth long before they saturate raw FLOPs. Nvidia and TPU memory topologies hit different limits, which makes diversification essential,” Smith said. “And make no mistake: this does appear to be diversification. There is no mention of exclusivity.”

Smith also weighed in on whether this partnership involved choosing a winner, arguing that some elements suggest yes and other elements suggest the opposite. 

On the “yes it was choosing a winner” side, Smith said, “by aligning so deeply with Nvidia’s architecture on the hardware side, Anthropic is signaling that it believes Nvidia’s platform will be a key winner for large-scale AI training and inference. The cooperation to optimize Anthropic’s workloads for Nvidia future chips suggests a bet: that Nvidia’s next-gen hardware will form the base of a major model deployment pipeline.”

Smith added that Microsoft is “reinforcing their ecosystem — Azure + Anthropic — which leverages that same stack. This is classic vertical integration around a preferred hardware platform.”

That said, Smith also noted some opposing points. “The AI hardware landscape remains highly competitive and multi-node. Many players, including cloud providers, chip vendors and custom ASICs are in play. Aligning with one major vendor doesn’t exclude future diversification. Even here, Anthropic may not be publicly committing to only Nvidia, at least not in this announcement, though it’s heavily biased. Microsoft and Anthropic still need to remain competitive with other ecosystems, including Google, AWS and custom chips, so a single-vendor alignment is risky if that vendor stalls or gets constrained by supply chain, regulation or export control.”

“In effect, this is both a bet and a hedge. [Anthropic] is placing a big bet on Nvidia and Microsoft’s stack, but likely still preserving some optionality,” Smith said. “So yes: it is a strong signal that Nvidia is being bet on, but I’d avoid saying it is locked in. The war is not over yet.”