Prediction: Anthropic's IPO Will Be a Big Winner for Alphabet and Amazon Investors

When SpaceX debuted in June, it became the largest IPO ever. However, that title does not look like it will last long, with Anthropic poised to top it with a valuation of $2 trillion.

In fact, it has been reported that Nvidia is negotiating with the frontier AI model company to become the IPO's lead investor, taking a $10 billion stake at a $2.3 trillion valuation. However, the two stocks set to benefit the most from an Anthropic IPO will be Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG).

While Nvidia is making a sizable bet on Anthropic, it is late to the game. A $10 billion investment at a $2.3 trillion valuation is less than a 0.5% stake in the frontier lab. According to PitchBook, around 300 institutional investors have already invested more than $130 billion in the company. However, the two that stand out are Amazon and Alphabet.

Image source: Getty Images

Early backers

Amazon was an early Anthropic backer and has invested $18 billion in the company, with an additional $15 billion in investments contingent on it hitting certain milestones. At the end of the second quarter, Amazon's investment was worth $190.4 billion, with Anthropic valued at $965 billion. That would represent an approximate 20% stake.

Alphabet, meanwhile, has also been a big investor in Anthropic. The search and cloud computing giant poured in $13.3 billion into the Claude model maker, with another $30 billion in commitments dependent on the company reaching certain commercial benchmarks. Alphabet revealed that at the end of Q2 that it had $124.3 billion worth of non-public equity securities, of which Anthropic likely made up the bulk. That would put its stake at nearly 13%.

That, in and of itself, will represent a huge payday for both Amazon and Alphabet when Anthropic IPOs. However, don't expect either company to sell its shares soon, as this is a strategic investment in one of the most important AI companies in the world.

Anthropic is growing rapidly, with it reportedly seeing its Q2 revenue increase 14-fold from $787 million a year ago to $11.5 billion. That was also more than double the revenue it reported in Q1. It also said its adjusted gross margins are above 80% when excluding the cut cloud partners receive for selling Claude and the cost of model training. It also recorded an adjusted operating profit in the quarter. With that type of growth, the stock could have more room once it goes public.

Huge compute commitments

Perhaps the even bigger benefit that Amazon and Alphabet get from an Anthropic IPO is that it will provide the company with the currency to continue its aggressive AI infrastructure investments. According to The Information, Anthropic has committed to spending $517 billion on compute deals over the next several years in just the past 11 months. A lot of this will be sent Amazon and Alphabet's way.

In April, Anthropic expanded its partnership with Amazon, agreeing to spend more than $100 billion over the next decade to both train and run Claude using Amazon Web Services (AWS). As part of the partnership, Anthropic will use both Amazon's Trainium AI accelerators and its Graviton central processing units (CPUs). Amazon also collects a fee when it resells Claude through AWS.

Alphabet, meanwhile, secured $200 billion in commitments for Google Cloud from Anthropic over the next five years this spring, according to The Information. This likely includes a combination of cloud compute and chip sales. Alphabet and partner Broadcom formed a partnership with Anthropic to use its Tensor Processing Units (TPUs), and Broadcom has since said that Anthropic will become its largest customer in the coming years. For any direct chip sales, Alphabet gets a high-gross-margin licensing stream of revenue.

With large positions in Anthropic's upcoming IPO and massive compute commitments, both Amazon and Alphabet investors look poised to continue to partake in Anthropic's success. They are also two of my favorite AI stocks.

Geoffrey Seiler has positions in Alphabet, Amazon, and Broadcom. The Motley Fool has positions in and recommends Alphabet, Amazon, Broadcom, and Nvidia. The Motley Fool has a disclosure policy.