Anthropic’s lower-than-expected IPO valuation: smart strategy or sign of trouble?

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Shares for ANT will hit the market at $70 to $78 a share, with a $1.3 trillion valuation, which is lower than experts thought earlier this year.

With a valuation that could reach $1.4 trillion, Anthropic’s initial public stock offering will represent an incredible, nearly unprecedented feat—and a disappointment.

The five-year old AI company expects to price its shares somewhere between $70 and $78 apiece on Nov. 18, and begin trading on the Nasdaq the following day under the ANT ticker. That price range, which translates to a valuation between $1.26 billion and $1.41 trillion, is significantly lower than the roughly $2 trillion projection that bullish investors and analysts were throwing around over the summer.

And it means that Anthropic would fall short of claiming the largest-IPO-in-history title, currently held by Elon Musk’s SpaceX, which priced its June IPO at $1.77 trillion.

But while Anthropic may miss out on bragging rights, its lower-than-expected IPO price is not necessarily a sign that its business is in trouble, several market experts told Fortune. At a time of political and economic uncertainty, Anthropic’s conservative pricing allows it to manage expectations while leaving itself room to generate buzz if it sees a big pop in its trading debut.

“Anthropic is moving forward with its IPO at a steeper discount than market initially anticipated,” Lior Prosor, general partner at the VC firm Deep33, tells Fortune. “We think that is a smart pricing strategy. It gives nervous AI-trade investors meaningful potential upside while securing the capital Anthropic needs to take full control of its destiny and fund its compute commitments.”

Compute is among the biggest risks in Anthropic’s business. The company has nearly a trillion dollars in committed compute-related spending, according to its most recent S-1 filing, and it still might not be enough. “We expect demand for compute to continue meaningfully outpacing supply across the chain,” said Prosor.

Anthropic could raise as much as $94 billion in its IPO—capital that will be vital to its efforts to secure compute and stay at the forefront of the AI race.

“Prici…

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