business

This could be the biggest investment bet in the history of global capitalism

This could be the biggest investment bet in the history of global capitalism

Anthropic looks set to surpass SpaceX's record-breaking IPO despite so far failing to produce an annual profit.

Anthropic is the next cab off the rank for mega-tech initial public offerings (IPOs), and is slated to surpass SpaceX as the biggest capital markets fundraising in history.

An IPO involves a company asking big financial institutions and "mum and dad" investors for cash via the stock exchange.

Elon Musk's SpaceX played this game in June, raising $US85.7 billion, with a listing price of $US135.

It hit the boards of the NASDAQ and subsequently shot up to $US161, with unprecedented investor interest pushing the company to a multi-trillion-dollar valuation.

Prominent US analyst Dan Ives, in an interview from New York, said history was about to repeat itself with the listing of Anthropic.

"If you think about SpaceX obviously being the biggest IPO that we've seen this year, and this is, it's groundbreaking," the partner at Yorkville Ives said.

Anthropic is a self-described AI safety and research company. Many Australians would be familiar with its Claude AI assistant product.

Locally, there's some healthy scepticism.

"Anthropic is trying to pull off a historic IPO right as the AI funding well is completely running dry," fund manager Roger Montgomer said.

When consumers spend on credit, it's often due to a lack of cash flow.

Companies are no different. They ask share investors (equity) and lenders (debt) for cash to operate.

The big difference is that firms will look to finance investments for future growth.

Investors, naturally, want to know they will not just get their money back but also have their investment grow over time.

This usually means the company needs to be generating a profit.

SpaceX was risky in that it was operating at a significant loss when it asked share investors for cash.

But it didn't matter. Elon Musk sold investors a dream, and the tech giant's Starlink operation acted as a much-needed cash cow for investors.

Anthropic is in a similar position, but its CEO Dario Amodei wants even more money.

The company is looking to raise about $US100 billion.

Analysts valued Anthropic earlier this year at $US2 trillion, but a recent financial results update showed the company revalued downwards to $US1.5 trillion.

There's no problem generating revenue — the company's third quarter revenue rose to $US16 billion.

"Anthropic's growth puts it in rarefied air," Betashares's head of investment strategy, Cameron Gleeson, said.

"Its annualised revenue run rate reportedly topped $US65 billion at the end of July, around seven times its level at the end of 2025, and many expect it to approach $US100 billion by year-end.

"It has overtaken OpenAI in business adoption, where much of the potential to monetise AI lies, and achieved this with a workforce of around 5,300."

Anthropic's costs are damaging its bottom line.

Like many big tech companies, Anthropic is building its business rapidly to meet expected demand.

It means building cloud computing infrastructure, AI training chips, and data centre capacity.

In the second quarter alone, it spent $US5.6 billion on computing power to run its Claude models.

Adding salt to a wound, the cost of debt, which big tech companies are increasingly chasing, is becoming more expensive as inflation bears down on the global economy and interest rates rise.

The fundamental problem is that if, for example, the demand SpaceX and Anthropic's products does not justify the spending being undertaken by these companies, the entire artificial intelligence trade is at risk of collapsing.

"[It's] basically playing chicken with a market where Elon Musk is warning that debt is impossible to get, over 200 over-leveraged neoclouds are going belly up, and [the failed] Firmus IPO," Roger Montgomery said.

In other words, the fund manager believes investors who want the huge artificial intelligence trade to keep going will invest in Anthropic or risk a Wall Street crash.

And while Wall Street's Dan Ives is confident the IPO will be a success, he says the company has not yet produced the sort of numbers that would justify its current valuation.

"For investors, they're going to basically need to look past this year," he said.

"I think Anthropic, being that they're the centrepiece of the AI revolution, you're going to see probably a strong appetite for this offering."

As with the SpaceX IPO, Australians will be able to apply for shares in Anthropic.

Macquarie Capital will act as sub-underwriter and Australian coordinator for the listing.

Dan Ives says it's up to investors to weigh up the risks.

"And there's a lot of opportunity and growth, but there's also risk."

You could argue this is modern capitalism's biggest ever test.

Massive AI tech companies have a spending addiction. They need the cash to invest to hyper-scale, to try and produce the amount of product or service necessary to meet forecast demand.

Now, having largely exhausted debt markets, they're looking to raise equity.

Simply put, if something disrupts this trade, there is no government on the planet, nor central bank, that could clean up the damage caused without major disruption to the global economy.

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