WSJ: Anthropic IPO investors push for lower $1.5 trillion valuation after tech selloff

The push for a lower valuation shows how quickly last week’s (and Monday's!) tech selloff has fed into the AI funding pipeline. Anthropic’s listing is effectively becoming a referendum on investor appetite for AI exposure. A well-received debut would likely revive the queue of companies waiting to list and could steady sentiment toward AI-linked megacaps. A weak one would reinforce concerns about overexposure. The computing commitments disclosed in the filing also matter beyond the IPO, because they point to sustained long-term demand for data center capacity and chips, a supportive signal for cloud providers and semiconductor suppliers despite the recent rout.--- Last week’s tech rout has big investors talking Anthropic’s IPO valuation down toward $1.5 trillion, even as the company’s revenue keeps climbing sharply.Summary:Institutional investors have told Anthropic and its advisers its IPO valuation should be around $1.5 trillion to $1.6 trillion, according to people familiar with the matter, below figures near $2 trillion discussed in recent monthsInvestors cite choppy markets, concerns about overexposure to AI, political pushback against data centers and uncertainty over when hyperscalers will turn AI spending into profitAnthropic has not finalized a valuation target or the number of shares it will sell; a roadshow could start as soon as next week, with a debut targeted for the week before ThanksgivingAn updated filing showed quarterly revenue of $17 billion for the three months to September 30, up from about $11.6 billion in the prior quarter, partly offset by about $600 million in price reductionsAnthropic disclosed purchase commitments and leases totalling around $895 billion, with nearly $450 billion expected before the end of 2030Big investors lining up for Anthropic’s initial public offering are pushing for a valuation of around $1.5 trillion to $1.6 trillion, the Wall Street Journal (gated) reported. That is well short of the roughly $2 trillion figure that had circulated in recent months, as last week’s selloff in technology stocks weighs on appetite for AI exposure.According to the Journal, which cited people familiar with the matter, institutional investors have given that guidance to Anthropic and its advisers over the past several days. Reuters had earlier reported that some investors were already suggesting a valuation closer to $1.5 trillion after the company’s investor day last month. That was before double-digit declines last week in stocks such as Intel and Alphabet following disappointing earnings.Investors are pointing to a range of concerns. These include volatile markets, worries about holding too much AI exposure, political opposition to new data centers and doubts over how soon hyperscalers such as Amazon and Meta Platforms can generate profits from their AI investment. Anthropic has not settled on a valuation target or on how many shares it will offer.Some investors expect Chief Financial Officer Krishna Rao to price the deal conservatively, favoring a strong first-day gain for buyers, the Journal reported. Some believe a debut near $1.5 trillion could rise toward $2 trillion by the end of the first session. SpaceX gained 30% on its first trading day in June, before concerns about AI spread more widely.Anthropic could begin its investor roadshow as soon as next week, with the listing on track for the week before Thanksgiving. Unlike SpaceX, which named a single price, Anthropic is expected to propose a price range.An updated filing on Monday showed Anthropic’s revenue reached $17 billion in the quarter to September 30, up from about $11.6 billion in the previous quarter. Around $600 million in price reductions, from new model versions and contractual discounts, partly offset that growth. The company also disclosed computing purchase commitments and lease agreements totalling around $895 billion. Nearly $450 billion of that is expected before the end of 2030, and most of the remainder between 2031 and 2045.The outcome matters beyond Anthropic. Other companies considering listings are waiting to see how the debut performs, and a smooth offering could open the way for a wave of new issues early next year.  This article was written by Eamonn Sheridan at investinglive.com.