AMD Committed Up to $5 Billion to Anthropic, and Anthropic's IPO Prospectus Is Reportedly Days Away

When Advanced Micro Devices (NASDAQ:AMD) announced its Anthropic partnership in late July, two commitments stood out. Anthropic agreed to deploy up to 2 gigawatts of AMD Instinct MI450 series graphics processing units (GPUs), with deployment of the first gigawatt set to begin in the first half of 2027. And AMD committed to invest up to $5 billion in the artificial intelligence (AI) company behind the Claude models.

The second commitment is about to get easier to measure. Anthropic plans to publish its initial public offering (IPO) prospectus after the Labor Day holiday on Monday, with a listing as soon as late September or early October, The Information reported late last month.

What does AMD hold today, then? Not a stake, at least not yet.

Image source: AMD.

Conditions attached

AMD's press release put it carefully: The company "has committed to make a strategic equity investment of up to $5 billion in Anthropic in the future."

AMD's early August quarterly filing added structure. It describes investment commitments of up to $5 billion entered after the quarter ended, "subject to certain contingencies," with the money expected to go out through fiscal year 2028.

Neither company has said what the contingencies are. And no valuation for the investment has been disclosed.

That shape has become standard among Anthropic's backers. Alphabet agreed in April to invest up to $40 billion -- $10 billion immediately, the remaining $30 billion contingent on performance milestones.

For scale, AMD held $1.7 billion of investments in private companies at the end of the second quarter. This one commitment could grow to nearly triple that.

What would a listing change?

Anthropic itself has confirmed very little. The only filing on record is a confidential draft registration statement submitted in June.

However, the reported figures are staggering. CNBC has reported that Anthropic is valued at close to $1 trillion in the private markets, and that investors project it could float at about a $2 trillion valuation. The growth underneath, I think, explains the excitement. Anthropic's annualized revenue run rate (a full-year projection of its recent revenue pace) topped $30 billion in April and passed $65 billion by the end of July. The company has reportedly raised at least $130 billion, and its offering is expected to surpass the June IPO of SpaceX, which raised about $86 billion, the largest on record.

Every one of those figures is reported, not filed. And at the reported valuations, AMD's up-to-$5 billion would buy no more than about half of 1% of the company.

Still, a listing would give whatever stake AMD may eventually hold a daily price that flows straight into its reported results. The company ended the second quarter with $425 million of net unrealized gains on marketable equity securities, mostly from holdings that went public during the quarter.

AMD is helping finance a customer

The part I'd watch most closely isn't the stake at all. AMD has committed money to a company that agreed to deploy its chips. AMD's OpenAI arrangement runs in the opposite direction. That deal handed OpenAI a warrant for up to 160 million AMD shares, vesting as deployment and stock-price milestones are hit.

Showing what those deals feed, AMD's data center segment revenue more than doubled year over year to $6.7 billion in the second quarter, or 58% of record companywide revenue of $11.5 billion, up 50% year over year. Management guided third-quarter revenue to about $13 billion, up about 41%. That guided rate marks a deceleration, at a much larger scale.

When a customer AMD helps finance commits to up to 2 gigawatts of deployments, some of the dollars moving through the system could be AMD's own. In effect, a slice of the industry's demand could end up self-financed.

That, I'd argue, is the strongest reason the IPO matters to AMD shareholders. An offering that surpasses SpaceX's could pay for a chunk of the buildout with public investors' money instead of suppliers' commitments. Even more, a public Anthropic would have to show, quarter after quarter, how much revenue it's actually producing.

In short, the two commitments aren't equal. The up-to-$5 billion investment is conditional, unpriced, and small next to Anthropic's reported valuations. The deployments are what can become revenue, and they aren't set to begin until 2027.

Meanwhile, AMD shares trade near $474 as of this writing (about 19% below their 52-week high), at about 30 times next year's expected earnings -- a price with a lot of chip demand already baked in. I think the Anthropic deal makes that demand more likely to show up on schedule. But what AMD holds from it today is still a promise.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Alphabet. The Motley Fool has a disclosure policy.