Market turmoil saps enthusiasm for the buzziest IPO of the year

By Allison Morrow, CNN

New York (CNN) — Anthropic couldn’t have picked a worse time to pull off the biggest IPO the world has ever seen.

Thursday marked one of the sharpest sell-offs on Wall Street in years. Tech stocks bore the brunt, but almost no equities were spared as fears of an AI slowdown gripped investors and sent them rushing to safety. The Nasdaq Composite lost $2.5 trillion in value, the biggest single-day dollar-value drop in its history. Asian and European markets followed the US down on Friday.

Put simply: The vibes around AI have never been worse, and Anthropic — a company that seldom misses a chance to warn of doomsday scenarios — is trying to convince investors the future for AI has never been brighter.

Thursday’s losses were so severe, some market commentators speculated that the company — which has been expected to make history this month with a target valuation of around $1.5 trillion — may have to delay the deal or significantly lower its price.

Before Tuesday’s midterm elections, traders on the prediction market Kalshi had put the likelihood of Anthropic’s IPO taking place this month above 90% But on Thursday, as markets tumbled over fears the Democratic sweep would throttle the AI buildout, those odds fell to 60%.

Anthropic didn’t immediately respond to CNN’s request for comment.

“My view is that Anthropic can still come to market and will come to market [but] will likely be forced to do so at a lower valuation,” Mike O’Rourke, chief market strategist at JonesTrading, told CNN in an email.

The market rout comes just days before Anthropic was expected to begin its pre-IPO “roadshow,” a process in which private companies try to stir up investor interest and gauge demand before pricing its shares.

The Wall Street Journal reported Thursday that three “major investors” who plan to participate in the IPO said the valuation would need to come down from the $1.5 trillion level analysts and investors have forecast.

Investors have been awaiting Anthropic’s IPO in part because it is expected to serve as a barometer for not only the AI trade but the broader US economy, which has been buoyed by heavy investment in the data centers and energy infrastructure that Anthropic’s technology requires.

At the same time, public sentiment around AI has been souring. Wall Street has been questioning whether companies may be overestimating the amount of demand they’ll see in the near future for AI. All of that was already weighing on AI-related stocks in the lead-up to Tuesday’s midterm elections. Markets rallied to historic highs on Wednesday after Democrats’ decisive win, followed by President Donald Trump’s comments that he would work with the opposition.

But by Thursday, the reality of that Democratic sweep’s impact on AI settled in. Voters overwhelmingly elected candidates who are critical of data-center development — one of many potential pitfalls Anthropic warned about in its IPO prospectus last month.

Even Dan Ives, one of the most bullish AI voices on Wall Street, struck a subdued note in an email to clients Thursday, saying he now expects the breakneck growth of Big Tech companies’ spending on AI to peak in 2027 rather than 2028 or 2029.

“Our overall bullish tech thesis around the AI Revolution does not change, but it makes us more selective in the names and sectors that will outperform into 2027.”

The political shift compounds an already complex financial picture for Anthropic. The AI company this week disclosed in an updated regulatory filing that it has committed to spending nearly $900 billion in the coming years on computing power and data centers — a staggering amount relative to the $132 billion in cash and investments the company was sitting on a month ago.

“Many assumed the push for data center moratoriums was political theater that would fade after the election,” O’Rourke said in a note to clients Thursday. “This is no longer a bull-bear debate on AI infrastructure demand, there is clear evidence that a structural shift in the environment is underway.”

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