Level 1 — Absolute Beginner
A company called Akamai helps other companies use computers on the internet. Akamai made a big new deal with a company called Anthropic. Anthropic makes computer programs that can talk and think like a person.
Anthropic will pay Akamai a lot of money over seven years. The total is 11.6 billion dollars. That is the biggest deal Akamai has ever made.
When people heard the news, they wanted to buy Akamai's stock. The price of Akamai's stock went up a lot. Stock is a small piece of a company that people can buy.
The deal could grow even bigger. If Anthropic buys more computer power later, the deal could reach almost 20 billion dollars.
- company
- a business that sells products or services
- deal
- an agreement between two people or groups
- cloud computing
- using computers and storage over the internet instead of on your own machine
- billion
- the number 1,000,000,000
- stock
- a small piece of a company that people can buy and sell
- surge
- a sudden and big increase
- contract
- a written agreement between two sides
- artificial intelligence
- computer technology that can perform tasks that usually need human thinking
Level 2 — Elementary
Akamai Technologies, a company that helps businesses run websites and computer systems on the internet, announced a new deal with the artificial intelligence company Anthropic on September 25.
Under the agreement, Anthropic will pay Akamai 11.6 billion dollars over seven years to use Akamai's cloud computing power. It is the largest contract in Akamai's history.
Akamai also gave Anthropic a special option called a warrant. The warrant lets Anthropic buy shares of Akamai stock later at a set price. This is the first time Akamai has added a warrant to one of its cloud deals.
Investors reacted quickly. Akamai's stock price jumped after the announcement. Analysts say the deal could grow even larger, reaching up to 20 billion dollars if Anthropic buys more computing power in the future.
- artificial intelligence
- technology that lets computers learn and make decisions in ways that resemble human thinking
- agreement
- an arrangement or promise made between two or more parties
- warrant
- a financial option that gives someone the right to buy stock at a fixed price later
- investor
- a person or company that puts money into a business hoping to make a profit
- analyst
- a person who studies information, such as businesses or markets, to give expert opinions
- shares
- equal parts into which a company's ownership is divided
- computing power
- the ability of computers to process data and run programs
- announcement
- a public statement giving information about something
Level 3 — Intermediate
Akamai Technologies, a company best known for helping websites load quickly and securely, disclosed on September 25 that it had signed an $11.6 billion, seven year agreement to supply cloud computing capacity to the artificial intelligence company Anthropic.
The deal, which covers computing power for Anthropic's central processing unit (CPU) workloads, is the largest contract Akamai has ever signed and could expand by as much as 9 billion dollars more, pushing the total toward 20 billion dollars if Anthropic purchases additional capacity within the seven year term.
Notably, Akamai attached a warrant to the agreement, a financial instrument it has never used in a cloud contract before. The warrant gives Anthropic the right to purchase shares representing up to roughly 5 percent of Akamai's outstanding stock at a fixed exercise price, with the shares vesting gradually as Anthropic's spending with Akamai grows.
Investors responded enthusiastically, sending Akamai's shares sharply higher. Analysts compared the arrangement to a similar warrant based deal that the chipmaker AMD struck with the AI company OpenAI, suggesting that tying equity incentives to long term cloud and computing contracts may be becoming a more common practice among technology firms racing to secure artificial intelligence business.
- capacity
- the maximum amount that something can produce, hold, or handle
- workload
- the amount of work that a system or person needs to process or complete
- financial instrument
- a contract or asset that represents a monetary value, such as a stock or bond
- exercise price
- the fixed price at which an option or warrant can be used to buy or sell a stock
- vest
- to gradually earn the full right to something, such as stock or benefits, over time
- outstanding stock
- all the shares of a company currently owned by investors
- equity
- ownership interest in a company, usually represented by stock
- enthusiastically
- with great excitement or eagerness
Level 4 — Advanced
Akamai Technologies, a firm whose infrastructure underpins much of the internet's content delivery and cybersecurity, disclosed on September 25 that it had entered an unprecedented $11.6 billion, seven year commitment to furnish cloud computing capacity to the artificial intelligence developer Anthropic, marking the largest contract in the company's history.
The arrangement, structured around Anthropic's central processing unit workloads on Akamai Cloud, carries the potential to expand by a further 9 billion dollars, which would elevate the total value toward 20 billion dollars should Anthropic's consumption of Akamai's services continue to scale over the contract's duration.
What distinguishes this agreement from a conventional service contract is the attached warrant, the first time Akamai has embedded such an equity incentive into a cloud deal. The instrument entitles Anthropic to acquire non voting convertible preferred stock equivalent to roughly 5 percent of Akamai's outstanding shares at a fixed exercise price, vesting incrementally as Anthropic's spending commitments materialize.
Markets registered swift approval, propelling Akamai's share price sharply upward on the news. Observers drew parallels to a comparable warrant linked arrangement between the semiconductor manufacturer AMD and OpenAI, suggesting that equity for compute agreements are emerging as a favored mechanism through which infrastructure providers seek to align their fortunes with the breakneck expansion of artificial intelligence demand.
- infrastructure
- the basic physical and organizational structures needed for an enterprise to operate
- unprecedented
- never done or known before
- commitment
- a pledge or promise to do something, often involving significant resources
- convertible preferred stock
- a type of company share that can be exchanged for common stock under certain conditions
- incrementally
- in small, gradual stages
- materialize
- to become real or actual, especially after being expected or planned
- semiconductor
- a material or device, central to computer chips, that conducts electricity under certain conditions
- breakneck
- extremely fast, often recklessly so