Anthropic targets $1 trillion IPO valuation in test of Wall Street's AI fervor

Anthropic is preparing for a landmark IPO that could raise up to $64.4 billion, aiming for a staggering $1.02 trillion valuation. The company is targeting an indicative price band of $70 to $78 per share. In addition to the IPO, Anthropic will also raise $26 billion through a private placement deal with major investors such as Alphabet’s Google, Nvidia, and Advanced Micro Devices.

The total potential funding from these deals amounts to up to $90.4 billion. The AI boom has faced growing concerns about returns and sustainability, with investors questioning whether the massive spending and mounting debt costs are justified, especially in the current high-interest-rate environment. Despite these concerns, Anthropic's growth has been fueled by soaring demand for its products, particularly its popular Claude models.

The company's third-quarter revenue grew 47% to $16.96 billion, though growth has slowed compared to previous quarters. However, Anthropic's net loss narrowed in the quarter, and its growth can be attributed to the rapid adoption of Claude across various industries, including healthcare, financial services, and legal services. The company has also committed to establishing a public benefit fund, holding 5% of its shares.

While Anthropic's ambitions come with significant infrastructure costs and the need to secure vast computing capacity from partners like Amazon and Google, the IPO could set a benchmark for the sector.