Wall Street is getting skittish about Anthropic’s eye-watering valuation – with key investors pushing the artificial-intelligence giant to temper its expectations ahead of its blockbuster stock-market listing, expected in the coming weeks.
Institutional investors have told the San Francisco-based Claude chatbot maker and its advisers that shooting for a valuation of roughly $1.5 trillion to $1.6 trillion would be more realistic than the $2 trillion that has been pegged to the company in recent months, the Wall Street Journal reported Tuesday.
The calls for a recalibration come as Anthropic marked a net loss of over $20 billion in the third quarter, according to an updated filing Monday. The company disclosed roughly $895.4 billion in spending commitments through purchase agreements and leases.
“As our compute and infrastructure capacity grows, the associated compute and infrastructure expenses have increased,” Anthropic said in the filing.
The proposed valuation pullback for the Dario Amodei-led company is the latest signal that investors are getting cold feet about the AI trade – as AI heavy tech stocks have been hammered in recent weeks and concerns mount over the torrent of capital companies are pouring into AI infrastructure.
Investors have expressed concern in the ability of tech giants, like Amazon and Meta, to quickly turn massive AI investments into profits.
In recent earnings reports, Alphabet notched slower growth in Google’s search-advertising business, attributed in part to queries made through its AI feature. Amazon’s revenue failed to meet analyst expectations and Intel cautioned a lengthy slowdown in personal-computer sales.
Last week’s double-digit stock drops of tech giants including Intel and Alphabet has contributed to the weakening sentiment about Anthropic’s valuation, according to the Journal.
Investors are hopeful that Anthropic’s Chief Financial Officer Krishna Rao will resist the urge to advocate for an overly aggressive IPO price and take a conservative approach, instead, according to the Journal.
Aiming for a lower valuation could give new Anthropic shareholders a better chance to score a first-day pop in the stock.
In June, Elon Musk’s SpaceX jumped 30% on its first day of trading – but that was before market-wide investor concerns over AI had fully taken hold.
Anthropic hasn’t settled on a valuation target or decided how many shares it will offer in the listing. Anthropic is expected to begin pitching its public offering to investors as soon as next week, and its market debut appears to still be on track for the week before Thanksgiving.
While SpaceX bucked normal IPO procedure by setting a single IPO price when it began its roadshow, Anthropic will likely follow the more traditional playbook by offering investors a price range, per the report.
Other companies that are mulling potential IPOs are watching Anthropic’s public listing closely – with analysts predicting that a smooth Anthropic listing could spur a flood of additional IPOs early next year.
Despite the AI jitters, Anthropic is growing quickly, its latest financial disclosures show.
Revenue hit $17 billion in the three months ended Sept. 30, up from $11.6 billion in the previous quarter, according to the Monday filing.
However, the growth was offset in part by $600 million in price cuts for new model versions and contractual discounts.