Anthropic’s blockbuster initial public offering (IPO) is set to give the company a valuation of up to $1.4 trillion US, slightly lower than some investors’ expectations amid a recent cooling in investor appetite for AI, setting up a defining test of Wall Street’s faith in the boom that it helped ignite.
The AI lab best known for its Claude chatbot, along with some of its investors, is aiming to raise up to $64.4 billion US by selling 825 million shares in the IPO priced up to $78 US per share.
Anthropic will also raise $26 billion US via a separate private placement deal with cornerstone investors such as Alphabet’s Google, Nvidia and Advanced Micro Devices.
The company is launching the roadshow for a historic share sale that is expected to set a benchmark for the sector following years of hype that fuelled a massive influx of capital into AI companies.
“What we are seeing is essentially a reassessment of Anthropic’s value in a more challenging AI environment,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank in Geneva. “The company continues to post impressive growth, but investors are increasingly focused on the cost of generating that growth.”
At the top of the price range, Anthropic would be valued at about $1.4 trillion US on a fully diluted basis, which includes securities such as stock options and restricted stock. On a non-diluted basis, excluding those securities, the company’s market value would be about $1 trillion.
Hours before Anthropic filed an updated prospectus with the U.S. Securities and Exchange Commission (SEC) on Tuesday, details of its IPO, including the proposed price range, were briefly circulated to investment banks late on Monday shortly before being retracted, according to emails seen by Reuters.
The preliminary terms showed Anthropic planned to sell about 867 million shares at up to $80 US apiece in an offering that could raise as much as $69.3 billion US, including shares sold by existing shareholders.
The prospectus ultimately filed with the SEC contained different terms, with Anthropic setting a lower price range and targeting reduced proceeds.
Big spend concerns
Nvidia joined the deal amid an FBI probe into its CEO Jensen Huang’s affair with a Chinese woman alleged to be a spy for Beijing, which has also triggered an internal investigation.
Investors had previously discussed a valuation of as much as $2 trillion US, but expectations have since come down given the company’s substantial infrastructure commitments and the recent volatility in AI-related stocks, with the $1.5 trillion US figure viewed as the high end of the range, Reuters previously reported.
“The shift from a $2 trillion US valuation to today’s level reflects a change in focus from revenue growth alone to the significant financial commitments and spending required to sustain it,” Ozkardeskaya said.
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Investors are also closely watching Anthropic’s IPO for clues about rival OpenAI, which is seeking to raise $30 billion US in what is expected to be its final private funding round before a potential IPO early next year. OpenAI recently secured $11 billion US at a $1.25 trillion US valuation, below the $1.5 trillion it had initially sought.
The second half of the year has brought a reckoning for the AI boom, as investors question whether returns will justify the massive spending and mounting debt costs in an elevated interest-rate environment. Concerns are also rising over the sustainability of the investment cycle, with questions around circular financing arrangements, the risk of infrastructure overcapacity and how quickly companies can turn their AI investments into revenue.
The Nasdaq notched its deepest one-day drop in 19 months on Thursday, wiping out trillions in market value on fears of more AI scrutiny, particularly on data center construction, after Democrats’ massive gains in the U.S. midterm elections.
‘Harmful actions’
Despite the midterms being widely viewed as a rebuff to a White House that has aggressively supported the AI build-out and opposed regulations, Anthropic adopted U.S. President Donald Trump’s preferred name for the new technology, “Super Intelligence,” at several points in its IPO filing.
Its filing spoke of a vision to “bring forth an age of miracles,” even as it warned of existential risks to humanity, laying bare the extraordinary promise and profound uncertainties at the heart of the AI boom.
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The prospectus outlined a range of risks facing both the company and the technology, warning that competitors could gain an edge by developing models faster and that advances in AI could outpace Anthropic’s ability to put adequate safety and security measures in place.
“Our models have in the past behaved, and may in the future behave, in unintended, misaligned, or autonomous ways, including by taking harmful actions that no user or third party directed, which could adversely affect our reputation and brand, business, financial condition, and results of operations,” Anthropic warned in its latest prospectus.
The warnings come amid a growing number of incidents involving “rogue” AI agents that have escaped sandboxed environments and breached private company systems, alongside concerns that increasingly capable AI tools could be used by hackers to penetrate protected networks.
Growth comes with risks
Greater oversight and potential regulatory hurdles could complicate the infrastructure buildout underpinning the AI boom. But Anthropic’s growth has so far defied those concerns, propelled by surging demand for its products, particularly its viral Claude models.
Anthropic’s run-rate revenue was roughly $81 billion US as of Oct. 31, up $10 billion US from Sept. 30, according to the IPO filing.
Anthropic’s net loss narrowed in the third quarter as revenue jumped 47 per cent from a quarter earlier to $16.96 billion US, though the pace of growth slowed. It had surged 144 per cent in the prior quarter.
The company attributed the breakneck growth to the rapid adoption of Claude, including specialized products targeting industries such as health care, financial services and legal services.
A smartphone is seen displaying the logos of US artificial intelligence company Anthropic and its Claude AI assistant. Anthropic’s blockbuster initial public offering is set to give the company a valuation of up to $1.4 trillion US. (Imen Ben Youssef/Hans Lucas/AFP/Getty Images)
Anthropic’s ambitions also come with enormous infrastructure costs. The company has nearly $900 billion US in computing commitments with partners, including Amazon and Alphabet’s Google, highlighting how its rapid growth depends on securing vast amounts of future computing capacity, some of which relies on financing beyond the company’s control.
The listing move follows Elon Musk’s SpaceX raising $75 billion US in the world’s largest IPO in June, at a valuation of nearly $1.75 trillion US, excluding additional shares purchased by underwriters through the greenshoe option.
Together with investments from cornerstones, which include Broadcom, Micron Technology, Microsoft and TSMC, the Anthropic share offering will raise a total of up to $90.4 billion US.
Certain Anthropic board members and entities affiliated or associated with them have indicated interest in buying up to $303 million US of shares from the offering.
Anthropic, locked in a fierce battle for market share with rival OpenAI, was last valued at $965 billion US in a private funding round. The company’s prominent investors include Altimeter Capital, Dragoneer, Greenoaks and Sequoia Capital.
Anthropic, led by CEO Dario Amodei, was founded in 2021 by a group of researchers who left OpenAI following disagreements over governance and AI safety.
The shares are expected to trade on the Nasdaq under the ticker symbol ANT after the IPO closes, which would make Anthropic one of the few major companies to go public this fall as higher borrowing costs, geopolitical turmoil and rising bond yields weigh on the IPO market.
Goldman Sachs and Morgan Stanley are leading the syndicate of investment banks underwriting the offering.