Anthropic IPO odds drop as AI stocks slide following midterm elections

Shifting IPO Expectations

The likelihood of Anthropic going public appears to be cooling as the market reacts to recent political shifts. According to reports from CNBC, the prediction market Kalshi saw a significant drop in the odds of the company announcing an initial public offering (IPO) before the end of the year.

In just one week, the probability of a December announcement fell from over 85% to 57%. This suggests that the timeline for the AI company's transition to a public entity is becoming less certain for investors and observers alike.

The contract on Kalshi is designed to be verified by news outlets once an official announcement is made. While the company confidentially filed its IPO prospectus with the Securities and Exchange Commission in June, the current market sentiment suggests a possible delay.

The Impact of Election Results

The decline in IPO odds coincides with a period of significant political change in the United States. Democrats gained control of Congress and several key governorships, leading to concerns about how these new leaders might approach the AI industry.

Investors are particularly worried that Democratic victories could lead to stricter oversight on the physical infrastructure required for AI. Specifically, there is a fear that new policies might slow down the construction of large-scale data centers, which are essential for training and running powerful models.

This shift in power has made the bet on AI less attractive to some market participants. The uncertainty regarding future regulations and the pace of infrastructure growth is creating a more cautious environment for high-growth tech companies.

Data Center Regulatory Hurdles

Specific examples of this regulatory concern are already emerging from state-level politics. For instance, the Democratic governor-elect of Texas, Gina Hinojosa, has already signaled a desire to implement tighter protocols regarding data center buildouts in her state.

During her campaign, Hinojosa stated that the state needs to stop current practices until protections are in place. She told CNN that the goal is to establish laws that specifically protect Texans from the impacts of rapid industrial expansion.

For companies like Anthropic, these types of state-level hurdles can create significant logistical challenges. If multiple states adopt similar restrictive protocols, the speed at which AI companies can scale their hardware capacity may be hampered.

A Correction in AI Stocks

The broader market has felt the weight of these concerns, with several major AI-related stocks experiencing sharp declines. The Nasdaq Composite recently closed more than 10% below its most recent high, a move that Wall Street typically views as a benchmark for a market correction.

Other major indices also saw significant pullbacks during this period. The S&P 500 lost 4.4% while the Dow Jones Industrial Average fell by more than 1,800 points, representing a 3.4% drop. These numbers highlight a period of high volatility for the technology sector.

Despite these broad losses, some individual stocks attempted to rebound on Friday. For example, shares of Nvidia and Micron Technology both gained about 4% after suffering heavy losses earlier in the week. However, these gains may not be enough to offset the steep losses recorded over the past several days.

What to Watch Next

The next few months will be critical for determining whether these market jitters are temporary or a sign of a longer trend. Investors will be looking for clarity on how the new Democratic leadership in Congress will approach the regulation of AI infrastructure and data center construction.

The trajectory of Anthropic's IPO will likely depend on whether the company can navigate these new regulatory hurdles while maintaining its growth pace. If construction delays become widespread, it could force the company to adjust its financial planning and public offering timeline.

Market participants will also be watching the performance of other key players like CoreWeave and Nvidia. Their ability to maintain momentum despite the current correction will provide clues about the long-term viability of the AI hardware and infrastructure boom.