AI giant Anthropic announced earlier this year its decision to drop a splashy initial public offering, and multiple reports have the widely anticipated market debut scheduled for before Thanksgiving. But according to a series of reports this week, the IPO, which would be the first market debut of a frontier lab purely focused on AI, is sparking less excitement and more worry than previously anticipated.
First on the list of unsettled parties is the market. Investors were allegedly let down by Anthropic’s revenue growth.
On Wednesday night, Anthropic gathered a group of investors for a closed-door presentation, the Financial Times reports. The presentation included some eye-popping financial metrics that would be a reason for celebration for the average company: Anthropic was allegedly profitable on an adjusted basis in the last quarter, and revenue was up more than $5 billion to reach $16.8 billion.
The billions in revenue growth still came in below expectations, the FT reports, as investors in attendance were unhappy that the pace of growth was slowing. Anthropic’s revenue allegedly more than doubled between the first and second quarter, dwarfing the 45% growth notched from the second to third quarter. In response to the figures, some investors are considering lowering Anthropic’s valuation by roughly half a trillion dollars, Reuters reports.
Anthropic earned these lofty financial expectations due to its position as one of the key drivers of AI hype. As a leading frontier AI lab, Anthropic reportedly plans to spend more than half a trillion over the next decade on AI infrastructure, a figure that includes multibillion-dollar deals with tech giants like Amazon, Microsoft and Google. That’s a hefty financial commitment, and it’s going to need strong, sustainable, and demonstrable revenue growth to deliver. If somehow Anthropic can’t deliver, then it could trigger a domino effect across the tightly wound, and some say circular, network of AI industry dealmaking, leading to a feared AI bubble burst.
Some investors are increasingly certain that a bubble burst is nigh. Investor Michael Burry, who is famous for predicting the 2008 housing market crash, indicated in a note last month that he is expecting an AI bubble burst to unfold within the next year. Many factors go into those calculations, such as the industry’s worrying reliance on debt, but Anthropic’s financial health and the market reaction to its IPO will surely be one of the deciding elements.
Still, the AI giant’s IPO is positioned to draw an eager crowd of retail investors, if not on financials, then at least on hype. But politicians are also nervous about a rush to market for Anthropic.
On Thursday, New York City comptroller Mark Levine said that he sent a letter to Anthropic CEO Dario Amodei asking the AI giant to delay its IPO. Levine urged the AI giant to prioritize its development of safety guardrails instead.
“By their own admission, they are building a technology which poses an existential risk,” Levine told CNBC on air, referencing Amodei’s letter from last month which claimed that the unchecked pace of AI development could lead to catastrophic outcomes.
“[The IPO] will undoubtedly distract them from the safety work. Once they are then public, they are going to have new pressures on growth and profits that are going to push against the safety work,” Levine said. “We have skin in this game, the New York City pension funds.”
Levine said that the New York City pension funds are exposed to Anthropic, and he wants “transparency” and “confidence before this is a publicly listed company.”
“The ultimate catastrophe would be that they go public and then have an unprecedented safety crisis,” Levine said. “That would tank their stock and reverberate through the market.”
OpenAI CEO Sam Altman said last month that he was postponing his company’s equally buzzy IPO to deal with the safety and alignment concerns as a private company.
“I actually think that, given everything happening with safety, this would right now be an ill-advised moment to go public, and we don’t feel pressure on that,” Altman told Fortune. “We need to be able to make decisions that are not obviously in the interest of our business and our shareholders, for the responsibility of fulfilling our mission and what that’s going to require.”
