On Monday, Anthropic filed to go public into a market that is turning against AI.
Since September, seven data center companies have pulled, postponed, or cut the price of their IPOs.
Apollo’s chief economist, Torsten Slok, wrote this weekend that AI has delivered “zero financial payoff” to companies outside tech.
Elon Musk warned that more than 200 neoclouds could see “guppy-level death and consolidation.”
Over the past month, data center providers CoreWeave and Nebius have lost almost 30% of their value.
I had expected Anthropic to delay its listing. The company’s CEO, Dario Amodei, would tell investors that Anthropic was delaying its IPO to focus on safety. He would say something about creating AI that benefits all of humanity. The real reason would be market conditions. Instead, Anthropic filed.
Why?
My guess: Anthropic is going public now because its business may never look this good again.
Anthropic’s S-1 shows the company at its strongest point. Revenue grew 3x faster than costs in the first half of the year. The firm posted its first operating profit in the second quarter. It holds $112.4 billion of cash against $6.2 billion of debt.
But all of that is changing. Revenue growth is slowing. The big three cloud platforms through which Anthropic gets nearly half of its revenue are charging increasingly onerous fees, which will erode operating margins. And it has signed close to $1 trillion in compute deals, most of which haven’t yet reached Anthropic’s balance sheet or income statement.
S-1s are legal disclosures, but they’re also marketing documents, and every company paints a flattering self-portrait. Anthropic’s problem is that it’s changing so fast its portrait will be abstract by next year.
There’s an old proverb: no time like the present, a thousand unforeseen circumstances may interrupt you at a future time. For Anthropic, many of those events are already in the footnotes. They won’t stay there for long.
To explain how I got here, let’s take a look at the S-1 in three parts: the good, the bad, and the ugly.