Anthropic’s $1.4 trillion IPO

The artificial intelligence (AI) boom is heading for another major test on Wall Street as Anthropic, the parent company of Claude, prepares for a mega IPO targeting a valuation of $1.4 trillion.Backed by technology giants such as Amazon, Google, Nvidia and AMD, the company has seen its valuation climb rapidly. Its proposed listing will test whether public market investors share the enthusiasm that has fuelled massive investments in AI, particularly as questions grow over how quickly companies can turn their spending into profits.The shares are expected to begin trading on the Nasdaq Global Select Market on November 19 under the ticker symbol ANT, Reuters reported.Here’s what investors need to know about the proposed listing, the company’s backers, its growth prospects and the risks surrounding the AI boom.

Anthropic IPO: Valuation, price band, issue size and listing date

Anthropic is targeting a valuation of up to $1.4 trillion, with reports suggesting its bankers are preparing to increase the figure to $1.5 trillion or more.The company plans to sell 825 million shares at $70-78 apiece, with the IPO expected to raise up to $64.4 billion. A separate private placement with cornerstone investors could bring in another $26 billion, taking the potential fundraising to $90.4 billion.At the top end of the proposed price range, Anthropic would be valued at around $1.4 trillion on a fully diluted basis. This includes securities such as stock options and restricted stock. Excluding these, its valuation would be close to $1 trillion.If the offering is priced at the midpoint of the proposed range, it could raise more than $61 billion.The initial terms circulated to investment banks had suggested that the IPO could raise as much as $69.3 billion. However, the updated prospectus filed with the US Securities and Exchange Commission contained a lower price range and a reduced fundraising target.The shares are expected to list on the Nasdaq Global Select Market on November 19 under the ticker symbol ANT.

Biggest techs backing Anthropic

Anthropic has attracted some of the biggest names in technology and finance, both as long-term investors and participants in its upcoming private placement.Some of its key technology backers include:

Beyond technology companies, Anthropic has received substantial backing from venture capital firms and institutional investors across multiple funding rounds. These include Spark Capital, Lightspeed Venture Partners, Fidelity Management & Research, Salesforce Ventures, ICONIQ, GIC, Coatue Management, D1 Capital Partners, Sequoia Capital, Altimeter Capital and Menlo Ventures.Among individual investors, Skype co-founder Jaan Tallinn led Anthropic’s first institutional funding round, a $124 million Series A in 2021. Former Google chief executive Eric Schmidt has also personally backed the company.

Anthropic’s financial portfolio

Anthropic’s proposed listing could rank among the biggest IPOs ever, although it is expected to fall short of the $86 billion raised by SpaceX in June at a valuation of nearly $1.75 trillion.The company was last valued at $965 billion in a private funding round. Its proposed IPO valuation of up to $1.4 trillion would mark a significant jump.Its valuation is being supported by rapid growth in demand for its products, particularly its Claude models.According to its IPO filing, the company’s run-rate revenue stood at roughly $81 billion as of October 31, up $10 billion from September 30.A regulatory filing last month showed that Anthropic generated more than $16 billion in revenue during the first half of the year, around 14 times its revenue in the corresponding period last year.However, the company has yet to turn a profit.Its expansion also requires enormous computing capacity. Anthropic has nearly $900 billion in computing commitments with partners, including Amazon and Google’s parent Alphabet.The IPO could provide the company with significant funds to accelerate its expansion and potentially add billions of dollars to the fortunes of chief executive Dario Amodei and his sister and co-founder Daniela Amodei.Anthropic was founded in 2021 by former OpenAI leaders and is headed by Dario Amodei. Goldman Sachs and Morgan Stanley are the lead underwriters for the offering.

Anthropic and AI risks — What experts are saying

Despite strong demand for AI, investors are questioning whether heavy spending on models, data centres and computing infrastructure will generate adequate returns. Anthropic, OpenAI and SpaceX’s AI division have all lost more money than they have made, while elevated borrowing costs and regulatory concerns have added to market uncertainty. A recent Wall Street sell-off also hit stocks linked to AI infrastructure.Anthropic’s IPO prospectus flags the technology’s potential risks, including faster-moving competitors and safety measures failing to keep pace with AI advances. CEO Dario Amodei has called for slower development, warning in September that AI agents could take over the entire internet within six to 12 months without stronger safeguards.The proposed valuation has also drawn scrutiny from experts. “Anthropic could become an exceptionally successful company, but at this valuation, much of that success is already reflected in the price,” Varun Datta, venture capitalist and founder of Truth Ventures told Reuters.Jeff Zell, senior research analyst at IPO Boutique, said the pricing could leave room for investors to bid up the shares. “By seeking a valuation close to 20% below ‘market expectations’, this allows investors to ‘bid up’ the IPO rather than facing a take-it-or-leave-it scenario like SpaceX took,” he said.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)