AI model builder Anthropic, which recently reached a valuation of nearly $1 trillion, is planning to launch an IPO. Some are questioning whether it deserves such a high valuation.
However, to the extent that its AI models are meaningfully superior to the competition’s, its valuation could easily soar to $3 trillion, $5 trillion, or even higher. And there is significant evidence that its models are indeed much more capable than those of other leading companies.
Although the Pentagon’s attempt to blacklist Anthropic will hurt the company to some extent, Washington is still using Anthropic’s cybersecurity tools, and the ban is unlikely to be permanent.
In light of these points, growth investors should consider buying Anthropic’s shares following its IPO.
Signs That Anthropic Is Superior to the Competition
Anthropic’s Mythos model was reportedly able to identify 23,000 “potential vulnerabilities … across more than 1,000 open source software (OSS) projects,” and can determine how flaws can be combined to create a more severe vulnerability. Most impressively, it can spot weaknesses in … every major operating system and web browser,” and, according to CBS, other AI products are not as apt as Mythos in spotting security flaws.
The latter information suggests that Mythos is indeed meaningfully more powerful than other AI models. I’ve never heard of another AI tool being so proficient at finding flaws in any area, and CBS confirms that Anthropic is more effective at pinpointing IT security vulnerabilities than its peers. Mythos’ aptitude in this area, in turn, suggests that all of Anthropic’s models could genuinely be superior to those of its competitors in many, if not all, areas.
Anthropic’s large market share and extremely rapid growth also suggest that it may be superior to its competitors. In March, almost 25% of the customers of Ramp, a financial operations platform for companies with more than 50,000 customers, paid for Anthropic. During the same period a year earlier, only 4% of Ramp’s customers were using Anthropic. Also in March, Anthropic’s share of Ramp’s customer base jumped by 4.9 percentage points versus February.
Meanwhile, in Q1, Anthropic’s revenue and usage soared an incredible 80 times “on an annualized basis.” The firm reports that it’s having difficulty meeting demand.
Thoughts About Valuation
If Anthropic’s AI models are indeed meaningfully superior to those of the competition, then it should be able to find new ways to help nearly every business save more money and generate more revenue. The firm should also be able to accelerate the drug discovery process and help researchers in other fields mine data more effectively.
It should improve the military’s ability to find and target its enemies, and it will likely help law enforcement agencies find criminals more effectively. In other words, if Anthropic’s models are indeed meaningfully more effective than those of its competitors, they will be extremely valuable to almost every business, police department, and military branch worldwide.
If that is indeed the case, the company’s products would be much more valuable than Google’s (GOOG) ads, Microsoft’s (MSFT) cloud-computing products, or SpaceX’s (SPCX) AI technology and rockets. After all, ads, cloud computing, and rockets can’t meaningfully boost the top and bottom lines of almost every company, and we’re assuming that Anthropic’s models are superior to SpaceX’s.
Consequently, to the extent that Anthropic has developed the best AI models, its revenue and market capitalization should be meaningfully higher than those of competing firms within the next five years, enabling its market capitalization to reach $5 trillion to $10 trillion in that time.
Anthropic and the Military
While the Pentagon says it’s “weaning itself off Anthropic” due to the antipathy of President Donald Trump and Secretary of War Pete Hegseth toward the firm, the U.S. government still seems intent on using Mythos for IT security purposes.
Further, the Pentagon will eventually be unable to avoid using the company’s AI models if they’re better than the competition’s. And in two and a half years, a new administration will come into office that could very well be less antagonistic towards the firm, enabling it to resume extensive work with the agency.
*This article is intended to be informational only; it is not financial advice.
