GES

Anthropic, the creator of the popular AI chatbot Claude, is preparing for an initial public offering (IPO) that could come as soon as November. The listing faces some major headwinds, however, as concerns about the artificial intelligence industry persist.

Anthropic IPO Comes as AI Companies Plunge

Anthropic’s upcoming IPO comes at a time when most AI stocks have plunged. In Hong Kong, shares of Z.ai and MiniMax have dropped more than 80% from their all-time highs. Both companies are comparable to Anthropic because their businesses focus on building AI models.

The same trend is happening in the United States, where top AI companies are falling. This includes popular names like Nvidia (NASDAQ:NVDA), Micron (NASDAQ:MU), Alphabet (NASDAQ:GOOG), and SanDisk (NASDAQ:SNDK).

Most importantly, SpaceX (NASDAQ:SPCX), which went public in June, has slumped by 40% from its peak, erasing billions of dollars in value. SpaceX is a big player in the AI space, thanks to its ownership of Grok and its data center leasing business.

Therefore, there is a risk that Anthropic’s stock will also drop, especially if the IPO happens in this environment. Indeed, most Polymarket traders see the company’s valuation at $1.5 trillion in December. 

Historically, companies tend to list when the markets are booming as that normally increases the value of their shares. SpaceX’s IPO in June happened as the S&P 500 and Nasdaq 100 indices were hovering near their all-time highs. 

Investors are Pushing Back Against AI Valuations

Anthropic’s IPO is also coming as investors continue pushing back against the hefty AI valuations. For example, Firmus, an Nvidia (NASDAQ:NVDA) backed data center company, recently ended its IPO process as investors pushed back against the $30 billion valuation.

Nscale, another Nvidia-backed data center company, is considering slashing its hefty $33 billion valuation as investors push back. Besides, shares of other top neocloud companies like CoreWeave, Nebius, and IREN have all plunged. 

Concerns of Anthropic’s valuation rose after it published its prospectus, which revealed the magnitude of its spending. It made $16.8 billion in revenue in the year’s first half, but lost $80 billion. The company plans to keep spending in the coming years. 

At the same time, Blackstone (NYSE:BX) has warned that the company may struggle to get an investment-grade rating after its IPO. Such a move will dramatically raise its borrowing costs over time. 

In another sign that investors are pushing back, OpenAI raised $11 billion from investors, much lower than the $30 billion it was seeking. 

As such, there is a real risk that the company may decide to pause its IPO until market conditions improve.

Image: Shutterstock