OpenAI & Anthropic Set Stage for "More Bullish" IPOs Following SPCX Debut

0:00Welcome back to the Waxless, San Nicole Petalili's time now for our panel, digging into the IPO prospects, the timelines that we could anticipate for both them. Robbick and OpenAI joining me for this conversation, John Jennerone, editor-in-chief IPO Edge, Willie Lee, principal, Ethnios Stellar. It's great to see you both. John, some of your thoughts. Of course, this has been somewhat of a landmark year for IPOs. We've had some big ones and looking forward to more. And Thropic is probably coming sooner than OpenAI presume. What are some of your thoughts on some of these big names? Well, thanks, Han Nicole. Always great to be back here on your show. You're right. All eyes are on Anthropic right now. And the only obvious comp is Sterling Raid Addis, of course, SpaceX, which is trading pretty well. It's trading at about $155 around there. Remember at price 135, open at 150. So considering the size of that deal, that was a success. And I think it cleared the way for Anthropic to go. Now, Anthropic is going to be bigger.

1:00Anthropic, we're looking from what I'm hearing from private market investors who own it. Now $2 trillion valuation, a little bit more than 1.7 on Anthropic. And my co-panelist here can probably talk more about the fundamentals. But this thing is going like gangbusters a couple of weeks ago. The company comes out and says the total addressable market is $30 trillion. By the way, US GDP is $32 trillion. Those kind of numbers are unheard of. It's gigantic, doing really well. If I can just slip in one more thought here in a call. Anthropic does not trade very much privately. The reason for that is that Anthropic doesn't want it to. So if you try to sell your shares to someone else who Anthropic does not want to own them, there's a chance Anthropic will cancel your shares and render them worthless. So for that reason, there's a lot of institutional money out there trying to get into Anthropic and it cannot. So it's going to have to wait for the IPO. And that could actually drive a lot of demand for the IPO process. And I saw on your notes that you talked about Anthropic also seeking investment, grade

2:01debt rating, despite some of the metrics like negative operating cash flow. I thought that was interesting. So let's continue our conversation. Willie, what are some of your thoughts on Anthropic and OpenAI? Look, I think the Anthropic IPO is extremely exciting. Neo Stellar is an investor in OpenAI. And I think for us, we're really just excited to see how it prices. I think where it's going to go. I think there's some people that are talking about whether or not the Anthropic IPO is a referendum on AI demand. And I think where it's pricing $2 trillion or above, I think what's very clear is the AI demand is there, whether that's an Anthropic in OpenAI, open source. So there is clear demand for AI capabilities. And I think the conversation of whether or not people are seeking AI or AI productivity is over. I think it's here. It's just a matter of who's going to be the beneficiary.

3:02And when we think about the IPO of Anthropic, you said it should not be framed as a referendum on whether demand exists. What does that mean? Explain that to me, Willie. Look, yeah, I think what I really mean is when you see the IPO, the IPO, the IPO, the IPO, and see the amount of capital that's gone into the IPO markets over $145 billion this year. Or if you look at the money that's gone into the hyperscalers, meta and Oracle, over $250 billion there, investors are already putting capital towards AI infrastructure. And guess who the main buyers in the backlog of these hyperscalers are. It's OpenAI and Anthropic. So investors are already putting in money whether they are intentionally doing it or not. They're putting in money into AI infrastructure that's supporting these companies. And so you're taking bets that this demand is going to continue. We saw a lot of demand and appetite for SpaceX. And John, you said that you expect even more for Anthropic.

4:07You have even some numbers that you care to share. I do. I do, Nicole. I'm going to ask someone with someone who's on the hunt for shares of Anthropic. That's where I leaned the information I just shared. What he said was that, you know, I think that depending on how you do the math, we're talking about four times over subscription on SpaceX. We're talking six X maybe eight X could be the numbers. Now, of course, this is a little speculative. The S1 has not come out yet. But what I'm hearing is that anyone who has a chance to buy those shares will take them because they're so, so hard to find. Nicole, if I can just go back to what we were talking about, these hyperscalers for a moment, and these hyperscalers are financing these deals to help the likes of OpenAI and Anthropic out. What you're seeing there is a little bit cozy and possibly concerning. I mean, you hear this talk about it being circular. What it tells me is that their need for cash is so tremendous. They're looking absolutely everywhere they can. We got the IPO's coming up. They are looking to the debt markets. They want to be investment grade. By the way, Nicole, I worked in debt capital markets in Morgan Stanley long, long time

5:09ago. This is not the kind of company that would get an investment grade debt rating. Never. It wouldn't even get junk. This is incredible that we're talking about these guys tapping the debt markets before they're turning a profit by any metric. I think that what we're seeing here is an incredible thirst for cash and these companies are looking every which way anywhere they can get it. They're getting as much as they can from the likes of Google and Amazon right now. That's working. The debt market yet to be seen. But the IPO, I'm telling you. I'm more bullish on this one than I was even on SpaceX. And I think about the timeline for Anthropic is looking like we'll see that maybe before Election Day for Open AI. You have the CFO say will be a public company in 2027. There was some thought that it could be even sooner based on some of the comments that they made. We'll see. I wanted to ask this final question to you, Willie, as we talk about some of the hyperscalers in the infrastructure, they provide Amazon, Google, Microsoft, to everything, to both your

6:13final thoughts. Yeah, I think that's when you look at the hyperscalers and the amount of capital they've raised, I mean, it's incredible. I think that the demands for the AI infrastructure, whether that's going to an Anthropic or an Open AI, what I think people are really getting at, especially when you think of the credit worthiness of an Anthropic, what people are seeing is the persistent demand of AI. And being able to underwrite that, especially in this IPO, is really what people are doing when they're trying to price an Anthropic. And so when you think about what these hyperscalers are doing, Google, Amazon, Microsoft, they are seeing this demands so strong in the markets and what they're seeing on their ends that are willing to underwrite that for an Anthropic and for themselves, whether that's for open source or their own internal AI use, I think that's what people are missing is the signals that these hyperscalers are seeing that they feel comfortable underwriting this type of

7:15capex vent. So for right now, it certainly sounds like you both believe there will be plenty of demand and fact over subscribed. And so we'll continue to watch these two very key IPOs, John and Willie. Thank you, John, Jennifer, and Willie Lee.