Amazon Unveils New Alexa Powered by Anthropic’s Claude AI
Introduction
Amazon (AMZN) is set to introduce a revamped version of its voice assistant, Alexa, in October, just in time for the U.S. holiday season. This new version, internally referred to as “Remarkable Alexa,” will be powered primarily by Anthropic’s Claude artificial intelligence (AI) models, marking a significant shift from Amazon’s previous reliance on its own AI technology.
Advanced Capabilities
The new “Remarkable” Alexa will leverage advanced generative AI to handle more complex queries, representing a substantial upgrade from its current functionalities. Users can expect a more responsive and intelligent assistant capable of performing a wider array of tasks.
Subscription Model
Amazon plans to offer this upgraded version of Alexa for a subscription fee ranging between $5 and $10 per month. Despite this new paid tier, the traditional “Classic” Alexa will remain available free of charge.
Preview and Release
This new Alexa iteration is anticipated to be previewed at Amazon’s annual devices and services event in September, ahead of its official October release. The upgrade is seen as a crucial move for Amazon, particularly as the Alexa business has faced challenges in generating significant revenue despite selling 500 million Alexa-enabled devices. Details on the number of active users remain undisclosed.
Background and Development
Amazon’s initial attempts to develop a new version of Alexa using in-house AI encountered significant issues, including delays of six to seven seconds in responding to user prompts. Frustrated by these shortcomings, Amazon turned to Claude, an AI chatbot developed by the startup Anthropic, which demonstrated superior performance compared to Amazon’s own models.
Investment in Anthropic
Last year, Amazon announced a $4 billion investment in Anthropic, promising early access to the startup’s cutting-edge technology for its customers. While it remains unclear whether Amazon will incur additional costs for integrating Claude into Alexa, this collaboration underscores Amazon’s commitment to enhancing its AI capabilities. Notably, Alphabet’s Google (GOOGL) has also invested $2 billion into Anthropic.
Market Impact
Analysts remain optimistic about Amazon’s stock, with a Strong Buy consensus rating supported by 41 Buys and one Hold. Over the past year, Amazon’s stock has increased by more than 25%, and the average AMZN price target of $222.18 suggests an upside potential of 26.8% from current levels.
