Tech Stocks Hit by Sell-Off Wave as Anthropic's $1.5 Trillion IPO Faces Valuation and Timing Test

Author: Zhao Ying, Wall Street Insight

AI star company Anthropic is facing a major test of its listing plan. In the two-day tech stock plunge after the midterm elections, Nasdaq Composite index constituents erased $2.5 trillion in market cap in a single day. The Anthropic IPO, once viewed as a must-buy asset, is now under pressure on both valuation and timing, the two core issues.

On Thursday, according to reports from The Wall Street Journal and Reuters, people familiar with the matter said three major investors planning to participate in the IPO have explicitly indicated that the $1.5 trillion target valuation may be difficult to achieve, with one believing the actual valuation may be closer to $1 trillion. At the same time, some investors have directly questioned whether the roadshow can launch as scheduled in the week of November 9, and market confidence in Anthropic's ability to complete the listing within the year is fading rapidly.

The situation is significant for the broader market. Anthropic has deep business ties with tech giants including Google, Amazon, and Nvidia. Its IPO was expected to break the record set by SpaceX in June this year and become the largest public offering in history. If the listing plan is derailed or forced into a substantial discount, it could further weigh on already fragile sentiment in the AI sector and pressure the broader market, which is heavily weighted toward tech stocks.

Tech Stock Liquidity Stampede: AI Infrastructure Narrative Hits a Reality Check

The trigger for this tech stock sell-off was this week's midterm election results. The results brought a group of AI policy skeptics into centers of power, and several states passed moratoriums that could delay U.S. data center construction, directly hitting the core of the AI infrastructure investment thesis.

In the following two trading days, AI-related assets were sold off collectively. More than 50 S&P 1500 tech stocks on the Nasdaq fell more than 10% in a single day. Data center and computing power concept stocks such as CoreWeave, Nebius, and IREN led the decline, with each losing half of its market cap over the past month. Credit default swap spreads covering CoreWeave and SpaceX both hit record highs, and market-implied default expectations over the coming years rose significantly.

Keith Lerner, Chief Investment Officer of Truist Advisory Services, said the tech sector's relative decline versus the S&P 500 over the past month reached 10.7%, the most extreme single-month underperformance since May 2002. He described the current sell-off as 'uncomfortable but not abnormal,' while warning that 'the rubber band is being stretched tighter.' Vanda Research data showed retail selling intensity was the strongest since the pandemic.

During the same period, Microsoft also tightened oversight of some data center projects involving emerging cloud service providers such as Nebius, IREN, and Nscale, further exacerbating market concerns about a slowdown in AI infrastructure investment.

Valuation Dispute and Missing Key Data: $1.5 Trillion Fails to Convince

Anthropic originally planned to complete its listing in the week before Thanksgiving, raising up to $100 billion at an implied valuation of about $1.5 trillion. Earlier this year, the market briefly expected its valuation could reach as high as $2 trillion.

Now, according to Reuters citing four people familiar with the matter, some investors have come to view $1.5 trillion as a valuation ceiling rather than a reasonable baseline, and are demanding a larger pricing discount from the company before they are willing to lock in subscription commitments. Investors' concerns stem not only from market volatility but also from scrutiny of Anthropic's fundamentals, as the company continues to report quarterly losses and has taken on large capital commitments with AI infrastructure construction partners.

Investors are also waiting for October revenue data left blank in Anthropic's latest S-1 amendment, to assess whether the company has reaccelerated after slowing in recent months. The absence of this key data makes it harder for institutional investors to make large bets in the current market environment.

According to The Wall Street Journal, another major investor said bluntly that even if the market rebounds, convincing institutional investors who just suffered losses in this sell-off to take another heavy position in the AI sector remains a huge challenge. The investor did not rule out the possibility that Anthropic could delay the listing.

Weighing Multiple Paths: The Cost of Delay Amid a Dilemma

Anthropic executives and their advisors are expected to meet in the coming days to discuss next steps for the IPO. According to people familiar with the matter, the company has deliberately avoided making public commitments to a specific timeline throughout the preparation process, preserving flexibility to adjust. As of September 30, the company had $146.6 billion in cash on its balance sheet.

Under external pressure, Anthropic faces several paths: proceeding with the listing at a lower valuation, scaling back the fundraising, or simply postponing until market conditions improve.

However, delaying the listing is not without cost. A delayed decision could further intensify outside concerns about the health of the AI ecosystem, especially against a backdrop where political signals restricting data center construction have already become clear. At the same time, as one of the most highly valued AI companies, Anthropic being seen as struggling to complete its fundraising could create negative spillovers for broader market valuations, particularly for indices heavily weighted toward large-cap technology stocks.

OpenAI's Fundraising Shrinks: The AI Capital Frenzy Is Accelerating Its Retreat

By contrast, the experience of AI competitor OpenAI also underscores the cooling of the current fundraising environment. According to The Wall Street Journal, OpenAI's latest fundraising round has raised only about $11 billion to date, less than half of the initial $30 billion target, and the actual valuation at closing was also lower than previously expected, settling at $1.25 trillion.

Rick Meckler, a partner at Cherry Lane Investments, remains cautiously optimistic about the market's long-term prospects: 'These companies will ultimately become part of the future, they will ultimately go public, and investor interest remains. Private market valuations have risen over the long term, and a pullback now is normal.' But in the current market environment, whether this optimism can support Anthropic in completing an IPO at its desired price remains to be tested.

Source: TechFlow