Amazon (AMZN) will invest up to $4 billion in artificial intelligence firm Anthropic to aggressively compete with Microsoft-backed ChatGPT and Google's Bard.

The e-commerce giant's immediate investment will be $1.25 billion. Another $2.75 billion in funding can be triggered by either party. Amazon be will a minority partner without a seat on the board, but its exact amount of ownership has not been disclosed.

Through the deal, Amazon Web Services (AWS) will be Anthropic's primary cloud service provider, with early access to exclusive features for customizing and refining models. Anthropic will be able to leverage AWS-designed semiconductors for training the fundamental models that serve as the core of its AI applications, thus receiving access to large amounts of data that can improve its responses and abilities.

Amazon is just the latest of the big tech companies to invest in AI capabilities. Microsoft (MSFT) made a multibillion-dollar investment into OpenAI in January and Alphabet's (GOOGL) Bard was launched in February.

"The agreement has the potential to accelerate adoption and deployment of additional generative AI capabilities to AWS customers and should ease investor concerns that Amazon has been less proactive than its peers in its approach to generative AI, in our view," Wedbush analysts wrote in a note about the deal Monday.

The AI boom has been particularly beneficial for chip manufacturing firm Nvidia (NVDA), which specializes in a semiconductor used to train large AI models. The rising adoption of AI has helped it surpass financial forecasts. However, Amazon's deal with Anthropic indicates that other chips can be used for AI applications as well.

Along with current solutions, AWS Trainium and Inferentia chips will be employed to train and deploy models. Using Amazon Bedrock, AWS customers can build upon Anthropic's AI models.

Amazon wants to position itself as a holistic solution for AI by designing chips, generative AI applications that run on the Amazon cloud, and selling AI applications. It already has support from industry heavyweights such as Google and Salesforce Ventures.

Amazon was up aℱbout 1% in early trading on Monday.