Key Points
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Anthropic had around $132 billion in cash and short-term investments on Sept. 30.
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The company’s commitment to spend with Google climbed to at least around $121.3 billion.
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Google Cloud’s revenue backlog hit $560.8 billion on Sept. 30.
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Anthropic, the artificial intelligence (AI) company behind Claude, updated its initial public offering (IPO) filing on Monday, Nov. 2, adding its third-quarter results. On Sept. 30, it had $95.6 billion in cash and cash equivalents and $36.3 billion in short-term investments — around $132 billion combined, near its total at the end of June.
Against this, Anthropic has signed purchase commitments and leases worth about $895.4 billion, almost all for compute and infrastructure. The first filing, on Oct. 26, left that figure blank.
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And one of the largest parts goes to Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG). Anthropic now says it committed to spend at least about $121.3 billion with Google between April 2026 and July 2033, no matter how much it uses. Last week’s filing had that number at about $114.5 billion.
With Alphabet shares near $283 as I write, is this durable revenue for Google Cloud, or a bet on a customer that lost money from operations last quarter? I think it’s mainly the former over the next couple of years.
Image source: Getty Images.
Anthropic is a big part of Google Cloud’s backlog
Google Cloud’s revenue backlog (contracted revenue not yet recognized) hit $560.8 billion on Sept. 30. Three months earlier, it stood at $513.9 billion. And a year before, Alphabet’s total backlog, mainly Google Cloud, was just $157.7 billion, under an older count that left out contracts for a year or less. But growth has slowed lately, with around $47 billion added in the third quarter versus almost $52 billion in the second.
Anthropic’s $121.3 billion minimum equals around 22% of that cloud backlog. Alphabet doesn’t say how much of the number comes from Anthropic, and some of the minimum has probably been spent since April. But it’s a big share tied to one customer.
Spread across a bit more than seven years, the minimum averages around $16.5 billion a year. Google Cloud’s third-quarter revenue climbed 103% year over year to $30.7 billion, a rate of around $123 billion a year. This puts Anthropic’s average minimum at about 13% of the cloud unit’s current sales — important, but not the whole business.
Anthropic also estimates it could spend another $125 billion to $150 billion on Google’s custom AI chips, though some of that might go through third-party providers rather than Google.
Can Anthropic pay?
For the next year, Anthropic looks able to pay. Around $69.8 billion of its commitments are due in the 12 months after Sept. 30. Its cash and investments cover it almost twice, not counting $14.8 billion of credit it hasn’t tapped or any proceeds from its IPO.
The business is helping. Third-quarter revenue climbed around 47% from the second quarter to about $17.0 billion, more than 12 times its revenue for the year-ago quarter. Multiply that by four, and it’s close to what comes due in the next 12 months.
Operating cash flow for the first nine months of 2026 was a positive $6.6 billion, versus negative $2.0 billion for the same period of 2025.
But growth cooled from the second quarter’s 144% sequential jump. Anthropic had a third-quarter operating loss of $567 million, which included around $2.0 billion of non-cash charitable contributions. A year before, it lost $3.1 billion.
Still, compute and infrastructure costs rose back to 58% of revenue in the third quarter, against 48% in the second, but they were 148% of revenue a year ago.
Later on, the bills get far bigger. Around $447.5 billion of the commitments are expected before the end of 2030 — about $105 billion a year, well over Anthropic’s current revenue pace.
“We must grow our customer base and expand revenue rapidly in order to generate the cash flows necessary to satisfy these commitments,” Anthropic wrote in the filing.
If Anthropic spends less than its minimum, it must pay Google the difference. Of course, that payment only helps Google if Anthropic has the cash. And Google has agreed to provide up to $20 billion of financing, in convertible notes or stock, subject to conditions, so part of what Anthropic pays Google might come from Google itself.
Alphabet stock still looks reasonably priced
Alphabet doesn’t need Anthropic to work out perfectly for its stock to make sense. Shares trade at around 19 times expected 2027 earnings, about 31% under their 52-week high. And Google Cloud earned $11.1 billion of operating income in the third quarter, around three times the $3.6 billion it made a year before.
Does the amended filing change my take on Alphabet? Not much. But I’d treat the next few years of the Google commitment as solid revenue and the later years as a bet on Anthropic’s growth.
Overall, I think Alphabet stock is still worth a look at this price.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
