Anthropic targets valuation of up to $1.4 trillion for blockbuster IPO

Anthropic on Tuesday set a price range for its initial public offering, valuing the company at more than $1 trillion, in a sign that investor demand for the fast-growing but money-losing darlings of the artificial intelligence boom remains robust.

The range, of $70 to $78 per share, would make Anthropic worth $1.26 trillion to $1.41 trillion, when all shares are counted, a staggering sum for a 5-year-old company. That was lower than a $2 trillion valuation that bankers had floated this summer but still higher than the company’s private valuation of $900 billion.

Seven of the tech industry’s biggest players, including Google, Nvidia and Microsoft, have signed up to invest a total of $26 billion in the offering. Along with the other shares Anthropic plans to sell, the company could raise up to $100 billion at the highest end of its ambitions.

That would make it the largest IPO in history, topping Elon Musk’s SpaceX, which raised $86 billion when it went public in June, at a $1.77 trillion valuation.

“Everyone has an interest in making this a success,” said Craig Coben, a former global head of equity capital markets at Bank of America. “A successful IPO is arguably required to validate the valuations of stocks in the AI ecosystem,” he added, describing Anthropic’s offering as “too crucial to fail.”

Anthropic’s preliminary pricing comes at a tense moment for the stock market, with wild swings after the midterm elections, in which voters overwhelmingly voted against data centers and the tech industry’s favored politicians. The revelation that Jensen Huang, CEO of AI chipmaker Nvidia, had an affair with a woman who U.S. intelligence determined to be Chinese spy, has added to the anxiety.

Investors are already skittish because of concerns that the build-out of AI is increasingly funded by debt and worries about the poor performance of companies that went public this year. Consequently, a number of firms have recently delayed their planned offerings, rather than face a cut to their valuations.

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Still, many of Anthropic’s investors and bankers say the company’s size, importance and the unique role it plays in the future of AI may allow it to push through any market jitters. A number of its investors, including Fidelity Investments and T. Rowe Price, are typically among the biggest buyers in public offerings, providing a built-in support base.

Goldman Sachs and Morgan Stanley are underwriting the listing.

Anthropic, which has generally taken a conservative approach to its valuation, set its preliminary price range as it kicks off its pitch to Wall Street investors in what is known as a roadshow. Anthropic expects to finalize the price of its shares next Wednesday, which will then begin trading Thursday on the Nasdaq under the ticker symbol ANT. Bankers typically deem an offering successful if its shares gradually rise once the company goes public.

Anthropic executives will now spend the next week drumming up interest from investors, probably answering questions about how much they are spending on computing power and how they are fending off competition from cheaper models in China.

On Tuesday, Morgan Stanley will host a meeting for investors with Anthropic’s chief financial officer, Krishna Rao. On Friday, JPMorgan Chase will host a fireside chat with its CEO, Jamie Dimon, and Anthropic’s CEO, Dario Amodei. Next week, Rao and Daniela Amodei, Anthropic’s president and Dario Amodei’s sister, will meet with investors at Goldman Sachs.

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Anthropic will also aim to sell about 20% of its shares to individual investors, it said in a filing Tuesday. Individual investors made up about 22.5% of SpaceX’s IPO, though the company originally targeted around 30%.

As individual investors increasingly make up a larger portion of the stock market, they have also played an increasingly important role in public offerings. Often, many of these investors are wealthy individuals who are clients of the banks leading these deals. Like SpaceX, Anthropic has also brought on a number of brokers to sell its shares to individual investors, including Charles Schwab, Robinhood and SoFi.

Anthropic’s listing will be the first time that public market investors have the chance to invest in a “frontier lab,” or an AI company that develops large language models that can generate text and other media on their own. SpaceX’s offering included xAI, a competing frontier lab, but it was attached to a larger operation that encompassed satellite internet, rockets and social media. OpenAI, a frontier lab that kicked off the AI boom with the 2022 debut of its ChatGPT chatbot, is expected to go public next year.

Since going public in June, SpaceX’s stock has seesawed around its IPO price of $135 a share. The company briefly surpassed a $2.5 trillion valuation, but has since dropped below $2 trillion as investors have raised questions about the growth potential of AI companies and scrutiny of Musk’s companies after the Democrats take control of Congress. SpaceX’s stock is down more than 37% from the peak it reached in June.

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Until now, Anthropic has relied on private investors to fund its growth. It raised roughly $130 billion from a wide range of backers, including traditional venture capital firms, big tech companies, hedge funds, Wall Street banks, international conglomerates and Middle Eastern sovereign wealth funds.

The company’s revenue surged from $41 million in 2023 to $33 billion in the first nine months of this year, a feat that investors say has no modern precedent. To support its growth, Anthropic has struck deals with competitors, including Google and SpaceX, for the cloud computing infrastructure needed to run its AI models. It is on the hook for as much as $895.4 billion by 2045. But the company has posted narrowing operating losses; it lost $8 billion last year and $1.3 billion in the first nine months of this year.

The company’s founders have promoted the promise and peril of AI to investors, calling it one of the most consequential technologies in human history.

Founded in 2021 by former employees of OpenAI including Amodei and his sister, Anthropic distinguished itself with a focus on AI safety. It is a public benefit corporation, meaning it puts a priority on social responsibility alongside profits.

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Initially, venture capital investors shunned the company, and its funding came from effective altruists and leaders of the AI safety movement, including Dustin Moskovitz, a co-founder of Facebook; Jaan Tallinn, an Estonian entrepreneur; and Sam Bankman-Fried, the disgraced founder of the bankrupt FTX crypto exchange.

(The New York Times has sued OpenAI and Microsoft, claiming copyright infringement of news content related to AI systems. The two companies have denied those claims.)

As Claude became popular among businesses, Anthropic attracted venture funding from Spark Capital and Menlo Ventures. Its coding tool, Claude Code, took off last year, trouncing competitors and bringing more interest from investors.

Anthropic has tussled with the U.S. government. The company refused to let its software be used for autonomous weapons or certain kinds of domestic surveillance, which led the Defense Department to label it a supply chain risk. Anthropic has also tried limiting access to its models that are very good at identifying software vulnerabilities.

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Its IPO is likely to spread cash around San Francisco. Its seven founders, including the Amodei siblings, have pledged to donate 80% of their holdings to charity. Each founder owns a little under 2% of the company, stakes worth tens of billions of dollars each.