Did Anthropic's Valuation Drop by $900 Billion? Here's What Investors Should Know.

Anthropic is preparing for one of the biggest initial public offerings (IPOs) in history later this month. At the start of October, the artificial intelligence (AI) company was reportedly seeking a $2 trillion valuation.

"Investors estimated a fair valuation for Anthropic as high as $2 trillion in early October," a Bloomberg article confirmed last week.

Now, many investors are reportedly looking to put a much lower valuation on the AI lab. That's reasonable, as the valuations of many major AI stocks are well off their highs. Nvidia, for example, is off by 25% from the all-time high it touched in early October.

"Ahead of the AI lab kicking off formal IPO marketing next week, potential buyers are discussing a $1.2 trillion to $1.3 trillion valuation range for the company," the Bloomberg article reported. "Some are weighing a value as low as $1.1 trillion."

Is Anthropic really worth $900 billion less than it was just a month or two ago? There are two things investors should understand.

1. Anthropic will likely settle for an IPO valuation around $1.5 trillion

Betting markets continue to be bullish on Anthropic's potential IPO valuation. Nearly 75% of bettors believe the company's target valuation will be between $1.25 trillion and $1.75 trillion. Just 10% believe Anthropic's starting market cap will exceed $1.75 trillion, while only 14% believe it will start below $1.25 trillion.

Still, it should be noted that the projected odds of the lower end of that range have spiked in recent trading sessions. At the beginning of November, Polymarket pegged the odds of a valuation between $1.25 trillion and $1.5 trillion at just 5%. As of Nov. 6, that figure was closer to 28%.

Investors should remember that Anthropic has yet to disclose an official target valuation range, and reports are largely based on insider sources, investment bank projections, and personal opinions. But as far as betting markets go, expect Anthropic to target the middle of its expected $1 trillion to $2 trillion range.

Image source: Getty Images.

2. Continued market weakness could force Anthropic to delay its IPO

Betting markets are still expecting an Anthropic IPO this year. But uncertainty is rising. In recent weeks, the odds of an Anthropic IPO announcement this year have ranged from 72% to 93%, with plenty of volatility in between.

If Anthropic is set on achieving the higher end of its targeted valuation range, however, it may need to wait for better conditions.

"Three major investors who plan to participate in the IPO say the valuation will likely need to come down, with one saying it could be closer to $1 trillion," reports The Wall Street Journal.

"Another investor who plans to participate wondered if Anthropic might delay its offering to wait for more favorable conditions. Even if the market bounces back, it could be a challenge to persuade institutional investors who have just been burned in the recent sell-off to take a big risk on the AI sector again so soon."

The odds seem likely that the Anthropic IPO will go according to plan, with a valuation hovering around $1.5 trillion. But if AI stocks continue to crater, don't be surprised to see the IPO temporarily shelved.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.