Nvidia's $10 Billion Anthropic bet: What happens after Jensen Huang's exit?

Anthropic plans a massive IPO amid uncertainty after Nvidia CEO Jensen Huang's resignation. Nvidia's $10B investment and the AI market's stability are now under scrutiny ahead of Anthropic's stock debut.

The timing could not be more difficult for Anthropic. The company behind the Claude chatbot is expected to go public on Wednesday or Thursday next week. Its listing was already being closely watched as a test of whether investors are still willing to put billions of dollars into artificial intelligence (AI).

The latest developments at Nvidia have now raised questions about whether the chipmaker's troubles could affect Anthropic's IPO, its business partnerships and investor confidence in the wider AI industry.

Nvidia's $10 billion commitment to Anthropic: Will the deal go ahead?

Nvidia is among the most important business partners of Anthropic and has a major role in its upcoming IPO.

According to Anthropic's filings, Nvidia has agreed to buy around $10 billion worth of shares as part of a $26 billion private placement taking place alongside the public offering.

The relationship between the two companies goes beyond this investment. Anthropic has committed to spending tens of billions of dollars to secure access to Nvidia's most advanced chips, which are used to develop and run its AI models.

Investors and analysts told Fortune that they do not expect the developments at Nvidia to directly hurt Anthropic's business. However, they believe the situation could create fresh doubts about the wider AI industry.

Will Nvidia's leadership crisis affect Anthropic's IPO?

Speaking to Fortune, Jay Goldberg, an analyst at Seaport Research Partners, said he does not expect Huang's exit to derail Anthropic's IPO.

"They're going to go public right in the face of Nvidia's earnings call, and I don't think that derails it," he said. However, Goldberg believes the bigger challenge could emerge after Anthropic becomes a publicly traded company.

"At the very least it will create this narrative of, 'Can the AI narrative maintain? Can we keep doing this?'" he said.

"They'll get much tougher questions."

Despite its close relationship with Nvidia, Anthropic has access to chips from several other companies. This could help it avoid becoming too dependent on one supplier.

The company runs some of its AI models on Google's Tensor Processing Units (TPUs), Amazon's Trainium chips and graphics processing units (GPUs) from AMD, apart from Nvidia's hardware.

Anthropic has also reportedly explored the possibility of developing its own chips.

Analysts believe Anthropic remains in a strong position despite the uncertainty surrounding Nvidia. They also expect Nvidia's $10 billion investment commitment to remain intact, although companies relying on Nvidia for financial support could face difficulties.

In a statement to Fortune, Karl Alomar, a partner at venture capital firm M13, said he did not believe the latest developments had changed Anthropic's business position.

"From where I stand, Anthropic is still in as good, as strong a position as it was before this news came out," he said. "Anthropic's numbers are fantastic, and they've clearly shown that they have excess capacity for what they need. They haven't spent that much money."

Why did Jensen Huang leave Nvidia?

Huang, who led Nvidia for years and helped turn it into one of the world's most powerful technology companies, resigned on Thursday following reports alleging that he had two extramarital affairs.

One of the alleged relationships was with a customer suspected by US intelligence agencies of being a Chinese intelligence asset. The other was reportedly with an Nvidia executive who reported directly to him.

Before the controversy, Huang had told Fortune that Nvidia "could be of great service" to China.

His departure comes just days before Nvidia is due to announce its quarterly earnings. It will be the company's first earnings announcement without Huang at the helm.

Why Anthropic's IPO matters to the entire AI industry

Anthropic's upcoming listing is important not just for the company but also for the hundreds of investors who have put money into the AI industry.

Anthropic and its rival OpenAI have raised so much capital that almost every major venture capital firm in Silicon Valley owns a stake in them. Their presence in private markets has become similar to that of an index fund, with a large number of investors holding a share of their growth.

This makes Anthropic's IPO a major event for more than 400 investors who have backed the company.

A successful listing could strengthen confidence in the AI boom and show that investors are still willing to put large amounts of money into the sector.

However, if the IPO fails or is postponed indefinitely, it could send a strong warning that the AI bubble may be close to bursting.

There are also differences between Anthropic and Nvidia when it comes to their approach to China and AI regulation. Amodei's support for tighter chip export controls has put him at odds with Huang, while their views on licensing rules for open-source AI models have also differed.

These disagreements could become more important as investors examine Anthropic's business relationships ahead of its listing.

Anthropic IPO could raise more than $100 billion

Despite the uncertainty surrounding the AI industry, Anthropic has received strong demand from investors during its IPO roadshow, according to the Financial Times.

The company could even push its valuation above $1.4 trillion, which was the upper end of the range mentioned in its filing on Tuesday morning.

If the listing goes ahead at that level, Anthropic could raise more than $100 billion in total.

The IPO itself could bring in as much as $64 billion, or more if investment bankers increase the share price. The company could raise nearly another $10 billion through a greenshoe option, which allows underwriters to sell additional shares if demand is strong.

Another $26 billion is expected to come through a private placement involving strategic partners, including Google, Nvidia and Microsoft.

A successful listing would be good news for banks, venture capital firms and private credit groups that have invested heavily in the AI industry.

The possibility of a higher valuation has already helped US technology stocks extend their recovery on Wednesday following last week's sell-off.

Craig Coben, writing for FT Alphaville, said the listing was also "too important to fail" for companies supplying Anthropic with chips, foundry capacity, cloud services and computing power.

A failed or delayed IPO could put pressure on their own valuations. Anthropic has committed to spending close to $900 billion on AI infrastructure in the coming years.

Even if Anthropic's IPO goes ahead successfully, investors will still question whether the company can make enough money to justify its high valuation. Heavy spending on AI models, computing power and data centres, along with competition from cash-rich tech giants, has raised doubts about whether the current AI investment boom can last. While the listing is expected to proceed despite the uncertainty around Nvidia, Jensen Huang's departure has added to investor concerns. As one investor told the Financial Times, "A weekend is an eternity in this market."