Anthropic IPO filing stokes fears of AI stock glut

Anthropic made its IPO filing public on Monday, Oct. 26, and strategists are already asking whether the market can take in another AI offering this large. The filing came on the same day Meta Platforms announced plans to raise up to $95 billion by selling stock, which added to worries that a flood of new AI shares could pull money away from other tech stocks and concentrate the market further.

Anthropic plans to list on the Nasdaq under the ticker "ANT," with Goldman Sachs and Morgan Stanley leading the deal. The filing does not include a share count or price, according to NBC News Comcast Corporation ↗ 0.32%. Business Insider reported that the company is expected to seek a valuation of $1.5 trillion to $2 trillion when it debuts in November.businessinsider.com+1

Competition for capital

Thierry Wizman of Macquarie told Business Insider that investors may sell other holdings to make room for Anthropic. He said the pressure would likely show up most in chip and neocloud stocks, which have already been falling. Alexander Lis, chief investment officer at SDV, said he did not think it was "a coincidence" that Meta announced its equity plan around the time of Anthropic's filing. "Growing competition for investor capital could become a meaningful headwind for technology stocks," he said.businessinsider.com

Meta will start with about $35 billion in underwritten offerings and then raise another $60 billion through an at-the-market program, CNBC reported. Brian Mulberry of Zacks Investment Management told Reuters that the two deals together could create "a saturated market." Art Hogan of B. Riley Wealth Management said he expects money to shift gradually rather than in a sharp selloff. His bigger concern is that bankers set Anthropic's price too high, Business Insider reported.cnbc.com+2

Concentration and forced buying

Bret Kenwell of eToro said that at a $1.5 trillion valuation, Anthropic would push the combined value of the 10 largest US companies above $29 trillion. It would also knock Berkshire Hathaway out of the top 10, leaving a group made up entirely of AI-linked companies, according to Business Insider.businessinsider.com

Index rules could add more pressure. Under Nasdaq's "fast entry" rule, which took effect May 1, a new listing that ranks among the 40 largest companies in the Nasdaq-100 can join the index after 15 trading days, Yahoo Finance reported. Funds that track the index, such as the Invesco QQQ Trust ↗ 0.39%, then have to buy the stock at whatever it costs.uk.finance.yahoo.com

The SpaceX precedent

SpaceX is the closest recent example. It joined the Nasdaq-100 on July 7, and JPMorgan estimated that index funds would need to buy about $4.3 billion of its stock. That buying did not keep the price up. The shares fell about 15% over their first six sessions in the index, according to Yahoo Finance.uk.finance.yahoo.com

A lot will depend on how many Anthropic shares actually trade. Holders of nearly all existing shares have agreed to lockups of up to 180 days, which could leave a small float that index funds would have to compete for. With a roadshow reportedly set to begin the week of Nov. 9, fast entry could come as soon as December.

For now, stocks rose on Monday as tech shares led gains after the filing, MT Newswires reported.fidelity.com