Anthropic to press ahead with IPO targeting $1.5tn valuation

Claude-maker intends to list before Thanksgiving despite brutal tech rout

Anthropic is pressing on with its high-stakes IPO even as a brutal tech rout convulses markets, with the Claude maker prepared to accept a valuation well below the $2tn that had been hoped for by its most bullish investors.

The AI start-up is continuing with plans to list before the US Thanksgiving holiday this month, according to multiple investors in the group, who said it is expecting to raise $80bn-$100bn at a valuation of between $1.25-1.75tn.

That is a step up from Anthropic's current $965bn valuation but would be some way short of the doubled price tag that investors had anticipated as recently as a month ago.

"My view is they will price it very conservatively, call it $1.5tn, and go up from there," said one large investor in the company. Others involved in the deal anticipated a lower valuation of around $1.3tn.

The scaled-back expectations are part of a wider reckoning across the tech sector amid worries about rising borrowing costs and AI companies' runaway spending plans. Such concerns have prompted investors to sell off AI-linked stocks, while lenders have backed away from high-risk projects.

Democrats' sweep of the US midterm elections this week, in part on promises to impede the construction of data centres, has dramatically accelerated the sell-off.

US stocks shed $3.2tn in a day of chaotic trading on Thursday, with the tech-heavy Nasdaq 100 plunging 6.4 per cent on worries about a slowdown in the AI infrastructure boom. The Nasdaq regained some of its losses on Friday.

"AI stocks are being sold, which makes it harder for Anthropic to [go] public, which means less money for capex, which leads to additional selling," said analysts at market research group Vital Knowledge.

Rival AI lab OpenAI has struggled to complete its own private funding round, slashing the valuation it is seeking from $1.4tn to $1.25tn and the size of the round from $30bn to $20bn.

Rampant enthusiasm for AI companies, which has propelled US equity markets to new heights over the past three years, is ebbing away, creating challenging conditions for Anthropic's IPO.

The odds of Anthropic delaying the IPO have risen on prediction markets. But according to more than half a dozen Anthropic investors, the company still intends to go public, even if chief executive Dario Amodei has to accept a price cut to do so.

"It's just one milestone along the way," said one early Anthropic backer. "They should treat it like every other fundraise: a means to an end."

The person added: "If [public market investors] are not seeing the narrative at this point, they are failing a basic IQ test. The next Google is dancing naked in front of you. If you can't see the value of it, you don't deserve to make money."

Anthropic released its financial data for the third quarter earlier this week, revealing revenue growth that had slowed but still jumped almost 50 per cent to around $17bn. It plans to spend $900bn on computing power and infrastructure over the coming years.

The company omitted its latest annualised revenue run rate, which extrapolates recent performance and expectations about the sustainability of customer contracts, from its prospectus. But that figure is now around $81bn, up from around $65bn at the end of July, according to a number of people with knowledge of the matter.

That figure will buoy investors who have been anxious to see whether Anthropic could continue growing, amid rising competition from OpenAI and Chinese rivals. The Wall Street Journal earlier reported that annualised revenue had surpassed $80bn.

JPMorgan is set to host prospective Anthropic investors for an "information session" on November 13.

Anthropic's backers are hopeful that its IPO will be propelled by so-called forced buyers, including index funds and large asset managers, which do not currently own any of the stock but will in effect be obliged to do so shortly after the company is public.

The largest ever listing was Elon Musk's SpaceX, which went public at a $1.78tn valuation in June this year. Amodei has little interest in outdoing Musk, according to multiple people familiar with his thinking.

"They don't care about being bigger than SpaceX, or maximising the IPO," said one investor. "They're donating the majority of their economics to charity anyway," in a reference to the seven Anthropic co-founders' pledge to give 80 per cent of their personal equity in the company to charitable causes.

However, Anthropic's enormous spending commitments mean it is under pressure to raise more money. The group has close to $150bn in cash and liquid investments on its balance sheet and aims to raise a large enough sum that it never has to sell equity again, according to multiple people familiar with the group's approach.

"Public markets are highly averse to dilution," said another large investor. "When you are taking a company public, that should be the last time you tap equity capital markets. But it opens the window for debt."