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Anthropic has pipped OpenAI to filing for an IPO, marking a milestone in AI as the two rivals shift from startups to public companies that need to answer to shareholders.
Anthropic revealed few details about its plans and its filing with the US SEC was confidential. “This gives us the option to go public after the SEC completes its review,” it said of its filing. “The proposed initial public offering will depend on market conditions and other factors. The number of shares to be offered and the price have not yet been set.”
In short, maybe we’ll IPO, maybe we won’t, we’ll let you know. (The IPO is widely expected to happen this fall, regardless of vague blog posts.)
What we do know is the current valuation of the AI developer: $965bn. That’s according to its most recent funding round, announced last week, which raised $65bn.
Both of those announcements put OpenAI further on the back foot. The rival AI firm was valued at $852bn in March – hey, maybe it’s caught up by now – and raises expectations that ChatGPT maker is set to file for its own IPO. (It continues to say it’ll do so when it makes sense.)
Perhaps not everything needs to be a race. Indeed, Harrison Rolfes, Senior Analyst at PitchBook, told Reuters: “The unconventional read is that OpenAI got the better end of this: Anthropic just volunteered to absorb all the disclosure risk first, and OpenAI now has a free option to watch how institutional investors react to audited frontier AI financials before committing to its own price.”
We’ve seen the impact of AI on public companies that supply to AI makers; Nvidia is now the world’s most valuable company, worth more than five times Anthropic. But it also makes a physical product that’s in extremely high demand.
Google and Microsoft are also at the coal face when it comes to AI, and both are publicly traded. Microsoft’s stock price – despite considerable push back on its AI plans – has doubled since just before ChatGPT was released publicly. Google’s has leapt by 260%.
And that’s good news for Alphabet-owner Google, as it’s announced it will sell off $80bn in stock to further fund its AI efforts, largely to pay for compute infrastructure.
“AI is driving an expansionary moment for Alphabet,” the company said in a statement. “The company is experiencing strong demand for its AI solutions and services from enterprises and consumers, at levels that are exceeding the company’s available supply.
“By scaling its investments, the company seeks to expand its foundational infrastructure to support the significant growth opportunity ahead.”
The question remains what shareholders will think of all this spending without the revenue to show for it. Jim Reid, a Market Strategist at Deutsche Bank, told The Guardian that Alphabet’s sell-off was reminding investors of how much money was being spent on AI: “Funding of the AI [capital expenditure] boom is becoming an increasingly key topic for markets.”
As startups, Anthropic and OpenAI have spent heavily while making back just a small slice of revenue. Well, small comparatively. OpenAI claims to be making $2bn a month in revenue now, but that’s versus heavy costs and may be falling short of internal targets.
Anthropic may have timed its IPO to meet that concern. Reports suggest its revenue is set to double to $10.9bn in the second quarter, letting it post operating profit, for the first time, of $559m. Of course, as a privately held company, the company isn’t required to share such data; post IPO, that changes.
Beyond that, both Anthropic and OpenAI have been able to push the envelope when it comes to corporate behaviour – internal battles over restructuring, picking fights with the US military – but having a board and shareholders to answer to may put an end to pulling out of massive government contracts over ethics, for example.
That raises questions about why Anthropic would even go public, not least given it’s making a profit and can still pull together $65bn funding rounds. Going public lets Anthropic access more cash, but it also lets staff and investors and founders cash out, while also making it easier to attract talent – stock options are a bigger draw when they’re liquid.
There’s also a suggestion that Anthropic wants to IPO ahead of rivals like OpenAI in order to set a benchmark valuation for others to compete against.
There’s another possible reason: the bottom is about to fall out of AI, and companies want to cash out while they still can. (Anthropic gives off a vibe of true believers, though this may be true for some of its investors.)
Those with equity can start shopping for yachts. Those with money can consider whether it’s worth jumping on the AI bandwagon now. And the rest of us can save the date for Anthropic’s first round of results, which will finally put some hard figures to AI as a business.
Regardless of which pile you fall in, this marks a milestone for AI. But what comes next remains to be seem be it the collapse of the hype-fuelled boom, calming down into a steadier mature business, or new heights of spending silliness.
