3 Historical Reasons I'll Be Completely Avoiding Anthropic's Upcoming and Potentially Record-Breaking IPO
Key Points
AI start-up Anthropic is expected to file its public prospectus after the Labor Day holiday and seek a valuation of around $2 trillion.
Tech-driven initial public offerings (IPOs) have often stumbled out of the starting gate.
Even with Anthropic delivering a small second-quarter profit, one valuation metric points to big trouble.
For more than three decades, game-changing technological innovations have endured bubble-bursting events.
- These 10 stocks could mint the next wave of millionaires ›
If you thought Elon Musk's Space Exploration Technologies (SpaceX) (NASDAQ:SPCX) was the stand-out initial public offering (IPO) of 2026, you might be sorely mistaken. Although SpaceX rewrote Wall Street's record books with its $1.77 trillion IPO, which raised a record $85.7 billion, including the underwriters' overallotment, artificial intelligence (AI) start-up Anthropic aims to knock SpaceX from its pedestal.
The developer of the increasingly popular Claude large language model has already confidentially filed the necessary paperwork to go public and is widely expected to publish its registration statement (i.e., prospectus) after the Labor Day holiday. It's believed that Anthropic is seeking a late-September or early-October listing and a staggering $2 trillion valuation.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
While there's little doubt that retail investors will be lining up for their chance to buy into this hypergrowth opportunity, I won't be one of them. I'll be completely avoiding Anthropic's potentially record-breaking IPO for three historical reasons.
1. Tech-driven IPOs often stumble out of the starting gate
To begin with, tech-focused IPOs have been retail investor traps, more often than not, over the last 14 years.
In early June, before SpaceX went public, Truist Financial (NYSE:TFC) published the performance of the last 30 major tech-driven IPOs since mid-2012. Truist found that the average tech-focused IPO endured a year-one maximum drawdown of 55%! For context, SpaceX's all-time high-to-record-low drawdown is 54% thus far.
Moral of the story - do NOT chase hot IPOs
— Puru Saxena (@saxena_puru) June 3, 2026
Year-1 average drawdown = 55%
Year-1 median drawdown = 54%
Table: Truist pic.twitter.com/xt864JD4Xh
Truist's data set exposes the emotional aspect of IPO investing and the unsustainable nature of IPO buzz. While Anthropic was able to generate a small adjusted profit in the second quarter on more than $11.5 billion in sales, according to Bloomberg News, Anthropic's AI infrastructure build-out will cost a proverbial arm and a leg in the coming years and weigh heavily on its profit potential.
2. Anthropic's valuation is historically unsustainable
To state the obvious, valuing public companies involves some subjectivity, and there isn't a one-size-fits-all approach. Nevertheless, one historically unblemished valuation metric suggests that retail investors who pile into Anthropic early will regret it.
Three decades of history have shown that companies at the forefront of game-changing technologies are unable to sustain price-to-sales (P/S) ratios above 30 for an extended period. If Anthropic goes public at a $2 trillion valuation, it would be trading at north of 30 times its annual run rate sales (through July) and well above 30 times its trailing-year sales.
Although progressively higher sales can reduce Anthropic's P/S ratio over time, a trailing 12-month P/S ratio that's well over 30 out of the gate can weigh on its shares.
Image source: Getty Images.
3. Game-changing technologies and bubble-bursting events go hand in hand
Lastly, next-big-thing technologies have a checkered past.
On the one hand, almost no one denies that artificial intelligence is a game-changing technology with multitrillion-dollar global potential. Anthropic's outsize revenue growth – sales surged more than 1,300% in the second quarter from the previous year -- offers insight into the scope of this addressable market.
However, every game-changing technology since, and including, the advent of the internet in the mid-1990s has navigated an early innings bubble-bursting event. These bubbles arise and burst because investors consistently overestimate the pace of adoption and optimization of new technologies. While the adoption rate of AI infrastructure and applications isn't in question, businesses are likely several years away from optimizing AI solutions to boost sales and profits.
If the AI bubble bursts, as history suggests it will, Anthropic won't have much of a foundation to lean on.
Where to invest $1,000 right now
When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 978%* — a market-crushing outperformance compared to 213% for the S&P 500.
They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.
See the stocks »
*Stock Advisor returns as of September 7, 2026.
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Truist Financial. The Motley Fool has a disclosure policy.
Recommended Articles
