Anthropic IPO could give AI stocks a needed spark
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Anthropic shares are set to begin trading next week, just as AI investors are needing a feel-good spark.
Why it matters: With Nvidia shares sliding over questions about its leadership, Anthropic is emerging as a potential AI market savior.
Driving the news: Anthropic said on Tuesday that it will seek to raise up to $62.5 billion in its IPO at a market cap that could top $1 trillion.
- That's smaller than expected, even when considering that its fully diluted value would grow to $1.4 trillion if stock options are exercised and underwriters buy additional shares.
- But that may be just what the doctor ordered — if shares are priced low enough to support a strong secondary showing:
What they're saying: "A successful I.P.O. is arguably required to validate the valuations of stocks in the AI ecosystem," Craig Coben, a former top banker at Bank of America, told The New York Times.
The big picture: Nvidia is the closest thing the AI trade has to a single-company proxy.
- It supplies the chips and computing infrastructure powering much of the AI boom, and its influential CEO, Jensen Huang, has been the industry's biggest cheerleader and a reassuring voice for investors, with a knack for calming jitters whenever confidence in the AI boom wavers.
- But now it's Nvidia, and Huang himself, that's causing the jitters. The company's stock has fallen 27% since Oct. 9, the day the New York Times first reported Huang's affair with a suspected Chinese spy.
The other side: Anthropic's technology has more of a popular wow factor than does Nvidia's sophisticated chips, and may be able to win over an electorate that has lately been suspicious of AI.
- And as a public company, Anthropic's fortunes will affect the many Americans who are invested in the stock market through their 401(k)s.
What we're watching: Anthropic CEO Dario Amodei will become more of the face of AI after the IPO. Yes, he oozes confidence in AI's ability to transform the world, but he's equally vocal about its risks to humanity.
- Will that messaging help or hurt AI's cause? It has drawn criticism from other executives, including Huang.
The bottom line: Nvidia has shed more market value over the past month than Anthropic is even seeking in its IPO valuation.
- Now, Anthropic is stepping out with a chance to inject some feel-good vibes and reshape the AI market.
