Anthropic Is Expected to List on Nov. 19. I’d Rather Own Amazon Stock Than the IPO.

Anthropic is expected to start trading on the Nasdaq under the ticker “ANT” on Thursday, Nov. 19. Its amended filing on Nov. 10 put the expected price of the 825 million shares between $70 and $78 each.

At the top of the range, the Claude maker could be worth up to around $1.4 trillion on a fully diluted basis. In May, it announced a funding round at a $965 billion valuation. And Bloomberg said on Nov. 12 that the offering had drawn about six times as many orders as there were shares available.

Amazon (AMZN -0.29%), meanwhile, trades near $267 as I write this, about 7% off its 52-week high. And with the stock at about 25 times its expected 2027 earnings, I think Amazon stock is a better way to get a piece of Anthropic’s growth than the initial public offering (IPO) itself.

Image source: Getty Images.

Anthropic pays Amazon either way

Amazon will hold over 5% of Anthropic’s outstanding shares after the offering, the filing says. But I’d argue the bigger link is the bill Anthropic pays Amazon.

In April, Anthropic agreed to spend at least $110 billion with Amazon between May 2026 and April 2036, no matter how much computing capacity it actually uses. If its spending falls short, it has to pay Amazon the difference.

The commitment covers computing capacity, which Amazon sells through Amazon Web Services (AWS), its cloud computing arm and its biggest source of profit. Showing how much demand AWS is handling, its revenue rose 39% year over year to $46.0 billion in the third quarter, speeding up from 37% in the second quarter. A year before, AWS grew 20%. Even more, AWS operating income climbed 55% to $17.8 billion. It was almost two-thirds of Amazon’s total operating income of $28.1 billion.

More than a cloud business

Amazon’s retail and advertising businesses come with that, of course. The company’s other two segments, North America and International, made a combined $10.3 billion in operating income in the third quarter.

Advertising took in $19.6 billion in sales for the quarter, up 12% year over year not counting currency changes. That was slower than 22% growth on the same basis a year before, and Amazon said timing around Prime Day hurt the quarter. But Amazon’s ad sales in the past four quarters were about $78 billion — more than double the revenue Anthropic brought in over the same stretch.

All told, Amazon’s sales were nearly $800 billion for the last 12 months, and it’s worth about $2.9 trillion. So the stock costs around 3.6 times sales.

Of course, the AI build-out isn’t cheap. Amazon’s free cash flow was negative $42.4 billion in the past 12 months, as its spending on property and equipment jumped. That cash burn may last a while, and it’s the biggest risk for the stock.

What would IPO buyers be paying for?

At the top of its range, Anthropic would be valued at around 40 times its sales in the 12 months through September, which were $35.3 billion. It’d be worth nearly half as much as Amazon, with under a twentieth of Amazon’s sales.

Anthropic’s growth is still remarkable, but it cooled in the third quarter. Revenue rose 47% from the second quarter, to $17.0 billion. In Q2, it had soared 144%.

Its reported profit fell, too. After an operating profit of $974 million in Q2, Anthropic booked an operating loss of $567 million in Q3. The filing pointed to around $5.0 billion in computing capacity bought on short-term commitments, which costs far more than its multi-year deals, plus $2.0 billion in non-cash charges linked to a donation matching program.

A just-listed stock might also need to absorb lots of fresh supply. Current owners accepted limits on selling (called lock-ups), but they loosen in stages. According to the filing, up to 316 million shares could become eligible for sale right after the offering. And up to 3.3 billion more may become eligible within around six months — four times the 825 million shares in the IPO.

Ultimately, I don’t doubt that Anthropic has quickly built an impressive business. But at up to around 40 times sales, the IPO price relies on that growth staying fast for a long time.

Amazon, though, already gets a piece of Anthropic’s growth from its stake and the AWS contract, plus retail and ad businesses that earned $10.3 billion in the third quarter alone. At around 25 times next year’s expected earnings, I’d rather own Amazon stock than buy into the IPO.