It is silly season in the world of artificial intelligence. Anthropic, the maker of the Claude AI model, is preparing to go public on Wall Street, with predictions that it could achieve a valuation of $1 trillion (£740 billion). This puts Anthropic ahead of rivals such as OpenAI and Elon Musk’s SpaceX in the race to become the first AI model developer to float on the stock market.
The Race to Go Public
Anthropic has registered to sell shares in the United States, positioning itself at the forefront of AI companies seeking public investment. Meanwhile, Alphabet, Google’s parent company, is seeking to raise $80 billion from investors to pour into AI development. Alphabet’s market value stands at $4.5 trillion, surpassing the combined value of all companies on the UK All Share index, which is $2.8 trillion.
Anthropic’s Safety-First Approach
Founded in 2021 by former OpenAI executives, including siblings Dario and Daniela Amodei, Anthropic has positioned itself as a safety-first AI lab. The company’s website states: “We want AI to be safe and beneficial for our users and for society as a whole. Our team is a quickly growing group of committed researchers, engineers, policy experts and business leaders working together to build beneficial AI systems.”
Despite its safety focus, Anthropic is currently in a legal dispute with the Pentagon, which designated it a “supply-chain risk” over national security concerns. The Trump administration’s Department of War sought unrestricted use of Anthropic’s technology, while the AI lab demanded assurances that its models would not be used for fully autonomous weapons or domestic mass surveillance.
Investor Frenzy and Soaring Valuations
Private investors have already shown immense enthusiasm for Anthropic. Last week, the company raised $65 billion in a funding round, valuing the AI lab at $965 billion in one of the largest private funding rounds in history. This allowed Anthropic to leapfrog OpenAI, maker of ChatGPT, which was last valued at $852 billion.
However, such valuations are dizzyingly high. For context, there are between 100 billion and 400 billion stars in the Milky Way, which is less than half a trillion at the upper end. This suggests that the stock market is once again capable of irrational exuberance, reminiscent of the dot-com bubble of the late 1990s.
Fear and Greed Driving Investment
Billions of dollars are being poured into the AI race, driven not by a cool assessment of potential returns but by a mixture of fear and greed. Investors are asking not “is this a good bet?” but “how big of a chump will I look like if I miss out?” This is not a sound investment strategy. AI increasingly resembles the modern-day equivalent of Dutch tulips, the first documented economic bubble, which occurred when tulips became a status symbol in the Netherlands.
The Risks of a Bubble Burst
If the AI bubble bursts, the consequences could be severe. Initially, the cash burned by tech companies came from wealthy investors through private funding rounds. Now, however, public markets are being tapped. A tech crash would spread pain across pension funds, investment accounts, and savings, battering confidence and making it harder for profitable companies in other sectors to raise capital. Jobs would be lost, and the real-world implications would be significant.
While established giants like Alphabet would likely survive a downturn, earlier-stage companies like Anthropic may not. The question arises: is Anthropic already too big to fail at $1 trillion? An even scarier thought is the potential job destruction if AI delivers on its grand promises. In the meantime, investors should keep a close eye on these digital tulips and be prepared to bolt as soon as the virtual wind picks up.
