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.
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.
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…
