Anthropic IPO: What should investors consider when valuing the AI company? Aswath Damodaran explains

Aswath Damodaran, a valuation expert, warns investors that Anthropic's anticipated IPO will challenge their ability to value a rapidly growing AI company with significant revenues and substantial losses. Anthropic is expected to launch its shares in late November after filing with the SEC in June. The company generated $16.3 billion in revenue during the first half of 2026 while recording a net loss of over $80 billion, a gap between net loss and adjusted profitability that will be crucial for investors.

Damodaran suggests that IPOs often become priced by metrics reflecting market excitement, especially for young, rapidly growing businesses with large losses. He explains that his method is rooted in the corporate life cycle, examining how financial metrics evolve as companies mature. He notes that valuing Anthropic and OpenAI is difficult due to their high revenue growth, large operating losses, and negative cash flows, mainly driven by compute costs.

Damodaran argues that valuing these companies requires assumptions about future business prospects, including market size, profit margins, and reinvestment needs, with limited historical or comparative data. He cautions investors against relying on venture capital valuations, as these often reflect expectations for an IPO price adjusted for downside risk.