Anthropic faces valuation pressure ahead of massive IPO

A cooling market for AI

Anthropic is currently preparing for one of the largest initial public offerings in history. However, the path to its debut has become more complex as Wall Street reacts to a broader technology selloff. On November 5, the Nasdaq dropped 5.5% and Nvidia fell more than 9%.

These market movements have introduced significant skepticism regarding the high valuations of AI companies. Investors are beginning to question if the current prices reflect long-term reality or temporary hype. The timing of the IPO will serve as a major test of market confidence in the AI sector.

The broader selloff was triggered by concerns over the high costs of AI infrastructure and a tightening regulatory environment. These factors are forcing a re-evaluation of how much investors are willing to pay for AI growth. Anthropic's ability to navigate this shift will determine its success in the public markets.

Slowing growth and profit shifts

While Anthropic's business has shown remarkable speed, recent data suggests a cooling period. The company brought in $33.2 billion in earnings during the first three quarters of 2026, which was roughly 13 times what it earned in the previous year. Despite this, the market's estimated worth for the firm has decreased from $2 trillion to $1.5 trillion.

Analysis from BloFin Research highlights a significant slowdown in quarterly revenue growth, which dropped from 144% to 47%. Furthermore, the company's financial health has seen a notable shift in its operating results. It moved from a $974 million operating profit to a $567 million loss.

These figures indicate that while the company is still expanding, the pace of that expansion is decelerating. Investors are now looking closely at whether the company can maintain its momentum. The shift from profit to loss is a primary concern for those weighing the company's current worth.

The cost of computing power

A major hurdle for Anthropic is the massive amount of capital required to power its technology. The company has committed nearly $895 billion to future computing and infrastructure agreements. This heavy spending is necessary to maintain the high-performance capabilities of its models.

BloFin Research estimates that Anthropic has pledged at least $269 billion for cloud computing from the industry's leading providers. These relationships are vital for the company's operations but also represent a significant financial burden. The high cost of these services directly impacts the company's ability to turn a profit.

The market is currently reacting to these infrastructure costs with increased caution. Investors are trying to determine if the extraordinary spending required today will produce lasting returns in the future. The success of the IPO depends on whether the market believes these investments will eventually pay off.

Valuation vs. future projections

At a $1.5 trillion valuation, investors would be paying approximately 22 times Anthropic’s latest quarterly revenue annualized. This is considered a demanding price for a company that is still struggling to maintain consistent operating profits. Some prospective investors are even discussing lower valuations between $1.1 trillion and $1.3 trillion.

Anthropic projects that its annual revenue could reach between $190 billion and $200 billion by 2028. If the company meets these goals, its current valuation would appear much more reasonable to the public. However, the current price requires investors to pay for growth that has not yet happened.

The company's performance is also tied to several other tech stocks that provide infrastructure. Amazon, Google, and Microsoft provide the necessary computing power, while Nvidia benefits from the expanding demand for AI hardware. This interconnectedness means that any shift in confidence regarding AI infrastructure affects Anthropic's prospects.

Key questions for the IPO

As the IPO approaches, the market will focus on three primary questions regarding Anthropic's viability. First, it must be determined if the current revenue growth can justify such a high valuation. Second, investors want to see if profits can eventually keep pace with the rising costs of computing.

The third question concerns the final IPO price and whether it will reflect the market's growing caution. The company's fortunes are closely linked to the broader AI market and the success of its major cloud provider partnerships. These relationships help explain why infrastructure spending is such a critical metric for the company.

The upcoming debut will be a defining moment for the AI industry's financial standing. It will show whether Wall Street believes that the massive investment in AI will lead to sustainable business models. The results will likely set the tone for how other AI companies are valued in the coming years.