Jim Cramer, the host of CNBC's Mad Money, stated on Monday that the upcoming initial public offering for Anthropic will serve as a critical test for investor confidence in the artificial intelligence sector. The comment came exactly two weeks after the company, known for its Claude model, filed its S-1 paperwork. Despite a recent decline in AI-related equities, reports indicate that Anthropic is proceeding with its plans to go public.
According to the Wall Street Journal, which cited sources familiar with the matter, the company is scheduled to meet with major investors this week. The target for its trading debut is as early as Thursday or Friday of next week. Cramer emphasized the magnitude of the event, stating that it is not hyperbolic to describe this as one of the most consequential IPOs in history.
The CNBC host explained that the vast amounts of capital currently being deployed into AI chips and data centers rely heavily on a small group of developers, including Anthropic, to generate sufficient revenue. He noted that Anthropic is one of the few companies at the end of the investment chain that must ultimately turn a profit to justify the spending. If the company cannot demonstrate this capability or convince investors of its potential, it becomes difficult to support the current level of AI investments.
Cramer used SpaceX as an example to illustrate the interconnected nature of the AI market. Much of the recent revenue growth for Elon Musk's company has come from leasing computing capacity to clients such as Alphabet and Anthropic. Google reportedly pays approximately $900 million per month for this service. Meanwhile, Anthropic's financial commitment has increased significantly, growing from an initial $1.25 billion monthly to more than $3 billion, according to its IPO prospectus.
These contracts enable SpaceX to make large purchases of Nvidia chips. Cramer warned that if the Anthropic deal fails, the company may lack the cash to fulfill its contractual obligations. This scenario would likely force downward revisions in estimates for SpaceX, Nvidia, and other compute providers and suppliers. Additionally, Alphabet, Amazon, and Nvidia have all invested in Anthropic, making their earnings sensitive to changes in the AI developer's valuation.
A complicating factor is the apparent weakening of investor appetite for the offering. Anthropic's potential valuation has reportedly dropped from a high of $2 trillion earlier this fall to as low as $1 trillion. This decline followed a technology sell-off last week, driven by concerns that a Democratic wave in the midterm election could lead to slower construction of new data centers.
During the CNBC Investing Club's Annual Meeting on Friday, Cramer again stressed the importance of the Anthropic offering to the broader AI trade and to specific portfolio names, including Alphabet, Amazon, and Nvidia. His remarks underscore the high stakes involved in this week's investor meetings and the potential impact on the tech landscape in the coming days.
