Major investors are skeptical Anthropic IPO can achieve $1.5 trillion valuation

Summary

The artificial-intelligence giant could need to set a significantly lower-than-expected valuation, investors say.

Major investors are increasingly skeptical Anthropic's blockbuster initial public offering can proceed at the expected valuation of $1.5 trillion after a deep market selloff tied to the unwinding of AI-related bets, according to people familiar with the matter.

Anthropic is aiming to stage the IPO the week before Thanksgiving and has been expected to raise up to $100 billion in an offering that could value the company at around $1.5 trillion.

But three major investors who plan to participate in the IPO say the valuation will likely need to come down, with one saying it could be closer to $1 trillion.

Even if the market bounces back, another said it could be a challenge to convince institutional investors who have just been burned in the recent selloff to take a big risk on the AI sector again. That investor wondered if Anthropic could potentially delay its offering.

Another option is the company could raise less money than anticipated. It had $146.6 billion cash on hand as of Sept. 30.

Investors had been eagerly anticipating the offering for months, with many saying they viewed Anthropic as a "must-own" name, even as other AI-related stocks wobbled.

Anthropic's plans have major implications for the broader market and economy, given both the scale of its planned offering and the interconnectedness of its business with some of the biggest names in technology including Google, Amazon and Nvidia.

Anthropic executives and its advisers are expected to meet in the next few days to discuss its IPO plans. They have avoided committing to specific plans throughout the process to maintain optionality, some of the people familiar with the matter said.

Anthropic had been poised to break records previously set by SpaceX's offering in June and stage what would be the largest offering of all time. But investors revolted against AI bets this week, with companies in the Nasdaq composite shedding $2.5 trillion of value Thursday, two days after the midterm elections swept a bloc of AI skeptics into power and passed moratoriums that could slow America's data center development.

Even before Thursday's rout, investor enthusiasm had been waning for AI names. Anthropic rival OpenAI has raised less than half of the $30 billion it had initially targeted for its latest funding round, the Journal reported. The company so far has received $11 billion at a valuation of $1.25 trillion, a lower valuation than it initially targeted.