Anchor text is the clickable text inside a hyperlink — what users see and click. Google uses anchor text on inbound links as a strong signal about what the destination page is about. After the title tag, anchor text on a page's backlinks is the most predictive single feature of what that page will rank for.
Anchor text comes in four common forms. (1) Exact-match — the link text is the target keyword exactly ("free SEO audit"). (2) Partial-match — includes the keyword among other words ("the best free SEO audit tools"). (3) Branded — uses the brand name ("SeoChatAI"). (4) Generic — uses non-descriptive text ("click here", "read more").
For classic SEO, Google penalizes anchor-text profiles that look manipulated — too high a ratio of exact-match anchors signals link-building rather than natural earned links. A healthy profile has 40-60% branded anchors, 10-20% exact-match, the rest mixed partial and generic.
For AEO, anchor text affects which queries you appear for in AI-citation candidates. Pages linked with anchor "what is AEO" become candidates for the AI Overview on that query; pages linked with anchor "click here" are not. Use descriptive anchor text on your own internal links — generic anchors leak intent signal.