Anthropic launches IPO, seen as a bellwether for gauging the health of the AI market

Anthropic and its top rival OpenAI sit at the apex of an entire vast ecosystem chain of partnerships and suppliers: compute infrastructure providers, chipmakers, energy companies, and a host of AI startups have all invested heavily over the past four years, betting that demand for AI products will keep rising.

Anthropic's listing will, for the first time, give the market a deep look at the core business fundamentals underpinning the AI boom, testing whether this upcycle can be sustained. The market needs answers: can robust demand for AI services continue to support the massive spending on chips, data centers and other infrastructure? Or will Anthropic's results prove that AI growth has a ceiling?

"For the entire market, it is the bellwether," said Umesh Padval, an investor at Seligman Ventures with nearly 40 years of experience in the tech industry.

If Anthropic's listing performance falls short of expectations, it will hit investor confidence and trigger broad selling, and the market will begin to question how much longer the AI boom can last. If the IPO closes smoothly, it could lift the broader market and open the listing channel for more AI companies.

Stock market sentiment was already tense, with tech stocks broadly weaker this month and AI chipmakers leading the decline. The Philadelphia Semiconductor Index has fallen 26% from its June high and has entered a bear market (a decline of 20% or more from a recent high, representing a marked rise in investor panic).

Over the past two weeks, Microsoft canceled its partnership with data center provider Nscale. A report by research firm Gartner predicts that 80% of new cloud providers (neoclouds) supplying compute and data resources to AI companies may go out of business. Billionaire Ken Griffin, founder of hedge fund Citadel, said outright that investors in the AI sector are "almost certainly in a bubble."

A series of negative signals has intensified market concerns about massive AI infrastructure spending. Amazon, Meta, Google and Microsoft have all disclosed plans to spend a combined at least $740 billion this year on AI infrastructure such as data centers. According to PitchBook, which tracks investment and financing data, primary-market investors have injected $1.1 trillion into Anthropic, OpenAI and other AI companies since 2022.

As primary-market investment has swelled, the secondary market has become increasingly dependent on the AI sector. The top ten constituents of the S&P 500 have a combined market value of more than $1 trillion, eight of which are tech companies; the top ten weighted stocks account for more than 40% of the index's total weight, compared with less than 20% a decade ago.

Once Anthropic is included in the index, it is very likely to push out Berkshire Hathaway or Eli Lilly (the only two non-tech companies with trillion-dollar market values) and enter the top ten.

"Everyone is betting on this IPO. If it goes wrong, the whole market will be dragged down," said Brad Gastwirth, global head of research and market intelligence at supply chain services provider Circular Technology.

This month, Anthropic presented financial data and growth plans to investors at its San Francisco headquarters. Several data points looked impressive: third-quarter revenue was $16.8 billion, up 45% quarter over quarter. But investors noted that its second-quarter revenue growth had reached 141%, a marked slowdown.

How the market interprets this slowdown is crucial. If the slowdown is because OpenAI and low-cost open-source models have taken share, that would show overall demand for AI services remains solid; if the slowdown stems from a contraction in AI demand across the industry, the market reaction will be far more severe.

Anthropic declined to comment.

Over the past year, Anthropic has been Silicon Valley's hottest company. Its Claude Code product has completely changed how programmers write code, driving revenue to surge, and primary-market investors have pushed its valuation to $965 billion, surpassing OpenAI.

To meet AI business demand, Anthropic has signed hundreds of billions of dollars in long-term compute leasing agreements, procuring compute from Google, Amazon and Microsoft, while buying chips from Nvidia and renting data centers from companies such as Nscale. The vendors serving Anthropic, in turn, continue to spend heavily on their own upstream suppliers.

But this summer, some Anthropic customers began to feel that spending on tokens (the billing unit for AI processing and data generation) was too high and turned to lower-cost alternatives. Meta, one of Anthropic's largest customers, had originally expected to spend up to $10 billion a year on its technology, but later cut spending and switched to other AI models.

Some AI companies that listed this year have already seen their share prices weaken: Silicon Valley AI chipmaker Cerebras is down about 40% from its May offering price; AI infrastructure company Accelevation's current share price is about one-third below its September offering price of $18; Musk's SpaceX listed in June, and its share price has also fallen sharply from its high, though it remains about 9% above its offering price.

Against this backdrop, the IPO market as a whole has cooled. Holtec, which provides nuclear power support to the AI industry, withdrew its listing application last month; SB Energy, a data center company under SoftBank, a core OpenAI investor, and Aggreko, which provides supporting power supply for data centers, both postponed their listing plans.

"AI infrastructure is the core theme of this year's IPO market, and it is also the sector hit hardest in the selloff of recent weeks," said Matthew Kennedy, a senior strategist at Renaissance Capital, which tracks IPO activity.

Investment banks have warned companies that it is now difficult to obtain the valuations expected two months ago. Goldman Sachs CEO David Solomon said on the bank's earnings call this month that although the IPO window has not closed, companies seeking the valuations expected this summer will most likely have to wait.

"The market has clearly weakened in September," he said.

Anthropic's slowing revenue growth has deepened market doubts. The market had previously expected its IPO valuation to reach as high as $2 trillion, but amid faltering growth and a sluggish broader market, people familiar with the matter said some investors have begun discussing a valuation range of $1.5 trillion to $1.7 trillion.

AI industry executives are working to soothe market sentiment. Wei Che-Chia, CEO of chip giant TSMC, said this month that there is no ceiling to TSMC's profit growth.

Last weekend, concerns about AI spending continued to build, the broader market fell again, and the tech-heavy Nasdaq posted its largest single-day drop since June.