Anthropic's $1.4 trillion IPO bid sets up high-stakes test for AI market
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Nov 10 : Anthropic's blockbuster IPO is set to give the company a valuation of up to $1.4 trillion, marking a defining test of investor confidence in the AI boom it helped ignite.
Reuters exclusively reported on Tuesday that Anthropic and some of its investors aim to sell shares in an indicative price band of between $70 and $78 per share.
The company is launching the roadshow for a historic share sale that is expected to set a benchmark for the sector, following years of hype that fueled a massive influx of capital into AI companies.
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ART HOGAN, CHIEF MARKET STRATEGIST AT B RILEY WEALTH, NEW YORK
"Anthropic is very well anticipated and the more we learn about it, the more we'll likely see it as a positive catalyst getting done this year. You just have to look at their revenue growth and what they've been able to do over the course of the last year. So the story is all about their revenue growth, very much like the SpaceX IPO was.
I think the fact that it will be now publicly traded, we'll have more information on a regular basis about how they're actually doing and you know, how long it will take to turn that revenue growth into earnings growth."
MICHAEL FIELD, CHIEF EQUITY STRATEGIST, MORNINGSTAR, AMSTERDAM
"It's an attractive offering, ultimately. I think that's going to be reflected in investor demand. Maybe the timing has actually worked out pretty okay for this. The valuation that they were looking for has fallen. Initially, we're talking $1.5 trillion to $2 trillion, and then $1 trillion to $1.5 trillion, and now it's just over $1 trillion."
A key number for them is that trillion figure. If they couldn't get it away for that, then they might hold off. But ultimately, in their mind, if they can get the first batch off at a trillion, then that's enough for them to get the ball rolling on this."
PATRICK ARMSTRONG, CHIEF INVESTMENT OFFICER, PLURIMI WEALTH, LONDON
"Anthropic has swung back to a loss, and it is not going public in as hot a market as it would have been if it had done so in the summer. I do not think the price it gets, or the implied market value, will drive the AI trade. But if it has a very disappointing IPO, that would take further wind out of the sails of the AI market. You have hyperscalers with negative free cash flow, and data-center demand is being questioned because of politics."
Valuation for companies like this is more art than science. There are comparison points such as SpaceX, which has a significant AI component, and the hyperscalers, which have embedded AI and cloud-computing businesses. But it is still a leap of faith, because the company is years away from meaningful free cash flow, even in more optimistic scenarios."
LUKAS MUEHLBAUER, ASSOCIATE, IPOX SCHUSTER, EDINBURGH
"The latest growth figures justify taking a trillion-dollar valuation seriously, however, being the first major pure-play AI lab to go public, there aren't really any direct peers to compare against.
The most important factor in valuing Anthropic is the cash it can ultimately generate from customers after funding model development and computing infrastructure. The key questions are how durable customer spending is and whether the economics of providing inference improve over time. Customer retention and the spending required to maintain a technological lead are particularly important."
FIONA CINCOTTA, SENIOR MARKET ANALYST, CITY INDEX, LONDON
"It's a little bit lower than an initial expectation around the 69 billion that was sent out earlier this morning, but that was then considered inaccurate.
And I think given the volatility, concerns towards AI that we've seen in sort of particularly last week. This is actually fairly bullish and it's showing that they are still sort of upbeat about the outlook as far as AI is concerned and that obviously that they think that the demand is going to be there."
IPEK OZKARDESKAYA, SENIOR ANALYST AT SWISSQUOTE BANK, GENEVA, SWITZERLAND
"What we are seeing is essentially a reassessment of Anthropic's value in a more challenging AI environment. The company continues to post impressive growth, but investors are increasingly focused on the cost of generating that growth. The shift from a $2 trillion valuation to today's level reflects a change in focus from revenue growth alone to the significant financial commitments and spending required to sustain it."
The timing of the IPO is notable because investors have become much more focused on the costs of the AI buildout than they were over the past few years. Political and regulatory uncertainties, along with a higher interest-rate environment, have also raised questions about future AI spending. As a result, many investors see Anthropic's IPO as an important test of appetite for AI-related investments."
MICHAEL BAKER, HEAD OF UK PREMIUM CLIENTS AT CAPITAL.COM, LONDON
"You've got to build a sustainable client base that is willing to pay those sizeable bills, both on the consumer side and among businesses, that's what Anthropic will have to sustain. At the same time, it has to keep up with the costs of chips and data centers while continuing to offer competitive models and outperform major Chinese rivals."
It's a huge valuation, and I think it will take a lot to convince investors that it represents a fair price."
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