Wall Street is growing cautious about the valuation of AI company Anthropic as it prepares for its upcoming initial public offering. Key investors have reportedly advised the San Francisco-based firm to aim for a valuation between $1.5 trillion and $1.6 trillion, a reduction from the $2 trillion figure that had been discussed in recent months.
These calls for a more conservative valuation come as Anthropic disclosed a net loss exceeding $20 billion in the third quarter, according to an updated filing. The company also reported roughly $895.4 billion in spending commitments through purchase agreements and leases. Anthropic attributed the increased expenses to its growing compute and infrastructure capacity.
The demand for a recalibrated valuation reflects broader investor concerns about the AI sector. AI-focused tech stocks have experienced significant declines recently, fueled by worries over the substantial capital being invested in AI infrastructure and the ability of major tech companies to translate these investments into profits. Recent earnings reports from giants like Alphabet and Amazon have shown slower growth and revenue that fell short of analyst expectations, partly attributed to AI integration.
Last week's double-digit stock drops in major tech firms like Intel and Alphabet have further contributed to a cooling sentiment around high valuations in the AI space. Investors are reportedly hopeful that Anthropic's Chief Financial Officer, Krishna Rao, will adopt a conservative approach to the IPO pricing.
While Anthropic has not yet finalized its valuation target or the number of shares to be offered, the company is expected to begin its investor roadshow soon, with its market debut anticipated the week before Thanksgiving. A more moderate valuation could provide new shareholders with a better opportunity for immediate gains on their investment. The successful listing of Anthropic could potentially pave the way for a surge of other IPOs in early 2027.
Despite these valuation concerns, Anthropic continues to experience rapid growth. Its revenue reached $17 billion in the third quarter, an increase from $11.6 billion in the previous quarter. However, this growth was partially offset by price cuts for new model versions and contractual discounts amounting to $600 million.