Anthropic targets a valuation of up to $1.4 trillion in its IPO

Anthropic expects to raise up to $64.4 billion in its initial public offering and reach a valuation of up to $1.4 trillion. That is below the $2 trillion the company, developer of the Claude chatbot, had previously targeted: investor appetite for AI companies has cooled amid doubts about whether infrastructure spending will pay off. Anthropic plans to raise another $26 billion separately from major investors, including Alphabet and Nvidia. Trading in the shares could begin as soon as next week.

Offering details

According to documents filed with the US regulator on Tuesday, Anthropic plans to sell 825 million shares at up to $78 apiece. Under that scenario, the company would raise up to $64.4 billion and reach a valuation of up to $1.4 trillion. Anthropic also intends to raise $26 billion in a private placement for key investors, including Google parent Alphabet and chipmaker Nvidia.

It had previously been widely reported that Anthropic was targeting a $2 trillion valuation in its Wall Street IPO. The largest listing to date remains Elon Musk’s SpaceX, which entered the US stock market at a valuation of $1.78 trillion. Its assets include a rocket-launch business and the social platform X; the company is now worth just under $2 trillion.

Investors reassess valuations

Doubts about the AI boom intensified after last week’s US midterm elections, in which opponents of data centers won. Investors are also concerned about whether companies can quickly recoup their AI infrastructure spending — or whether they can recoup it at all.

Brian Hopkins, lead analyst at Forrester Research, says the elections gave the market a reason to adjust valuations for companies already facing concerns about the financial sustainability of investment in AI infrastructure. The results heightened those doubts, he says, and Anthropic’s valuation was lowered from the expected $2 trillion.

The sector is also under pressure from a scandal involving allegations of Chinese espionage that has affected Nvidia, one of the key companies for AI investors. So far, it has not affected other companies’ share prices, but Nvidia’s shares have been hit.

Anthropic’s revenue

In updated documents, the company said its annual revenue had reached $81 billion as of October 31. That is $10 billion more than a month earlier.

Dataist's take: Anthropic’s lower target valuation shows that investor expectations now depend not only on revenue growth but also on the prospects for recouping AI infrastructure spending. The company still expects to raise tens of billions of dollars, and its shares could begin trading as soon as next week.