Amazon Reportedly Nearing $5.5 Billion Deal for Israeli AI Startup Descartes
Translated & summarized from Calcalist by baba
Amazon is reportedly close to acquiring Israeli AI startup Descartes for $5.5 billion, following failed deals with Anthropic and Nvidia. The company, co-founded by Moshe Shilo, has developed technology to enhance AI chip performance, a key area for Amazon's chip development strategy. This deal, if finalized, would represent a significant exit for Descartes, which has raised $450 million and was named the most promising Israeli startup for 2025.
The story in 5 lines · by baba
- Amazon is nearing a $5.5 billion deal to acquire Israeli AI startup Descartes.
- The acquisition follows failed negotiations with AI giants Anthropic and Nvidia.
- Descartes' technology enhances AI chip performance, aligning with Amazon's chip development goals.
- The deal represents a significant premium over Descartes' last funding round valuation.
- This potential acquisition echoes Amazon's past success with Israeli chip company Annapurna Labs.
Israeli AI startup Descartes, co-founded by Moshe Shilo, is reportedly in advanced talks to be acquired by Amazon for $5.5 billion. This potential deal follows earlier setbacks, including a failed acquisition by Anthropic after due diligence and a subsequent refusal by Nvidia to re-enter negotiations. Descartes had initially explained the Anthropic deal's collapse as a refusal to relocate to the U.S., a reason not widely accepted.
The proposed valuation of $5.5 billion is lower than Anthropic's earlier offer and the $7 billion figure reported by the Wall Street Journal, but still represents a significant premium over Descartes' last funding round valuation of $4 billion. The company, only three years old, has achieved this valuation despite not having a finalized product or business model, generating tens of millions in revenue primarily from projects.
Amazon's interest is reportedly driven by Descartes' technology, which enhances AI chip performance. Descartes has been a close partner of Amazon since its inception, developing technology that Amazon needs as it seeks to reduce its reliance on Nvidia by developing its own chips, such as the Trainium. Descartes' AI models have shown better performance on Amazon's chips than on Nvidia's GPUs, strengthening the potential synergy.
This potential acquisition mirrors Amazon's successful 2015 purchase of Israeli chip company Annapurna Labs for $350 million, which became the foundation for Amazon's custom chip development. Amazon is known for acquiring smaller, less expensive companies, and the focus may be on Descartes' highly regarded team of fewer than 100 employees, rather than just its products. Descartes' secondary product, software that optimizes AI chip utilization and reduces computing costs, is seen as particularly attractive.
Descartes, which has raised $450 million to date, was recognized as the most promising Israeli startup for 2025. The founders, including Moshe Shilo, expressed ambitions to become an AI giant like Google or Apple. While this acquisition would be a significant exit for Descartes, it is viewed as another impressive achievement within Israel's thriving tech ecosystem, rather than a landmark event that places Israel on the AI map.
Mentioned
