Bad News: There’s a New Red Flag Ahead of the Anthropic IPO

Five months ago, on June 12, Elon Musk’s Space Exploration Technologies (SPCX +0.72%), better known as SpaceX, rewrote Wall Street’s record books with its $1.77 trillion initial public offering (IPO). In mere weeks, the developer of the Claude large language model (LLM), Anthropic (Nasdaq: ANT), may challenge SpaceX for the top spot with its own IPO.

Anthropic filed its public registration statement (S-1) on Oct. 26, starting the 15-calendar-day clock until it markets its upcoming debut and (likely) kicks off an IPO roadshow. With a lightning-fast growth rate that had Anthropic generating $65 billion in annual run rate sales as of July, there should be plenty of excited retail investors.

But skepticism is also building ahead of this monumental IPO. On top of a laundry list of historical headwinds, a new red flag has emerged ahead of Anthropic’s debut.

Historical headwinds are mounting ahead of the Anthropic IPO

Though history is an ally of long-term-minded investors, it can be the foe of IPOs and hyped tech trends, at least over shorter timelines.

For instance, every game-changing tech innovation since the mid-1990s has navigated an early-stage bubble-bursting event. These bubbles form and subsequently burst because investors overestimate how quickly game-changing tech innovations will be optimized. Consistently overshooting the mark leaves hyped technologies, including artificial intelligence (AI), prone to a bubble-bursting event.

Moral of the story – do NOT chase hot IPOs Year-1 average drawdown = 55% Year-1 median drawdown = 54% Table: Truist

— Puru Saxena (@saxena_puru) June 3, 2026

Additionally, tech-focused IPOs don’t have the best track record early on. Data from Truist Financial (TFC -0.14%) shows that the average year-one maximum drawdown for the 30 hottest tech-driven IPOs since May 2012 is 55%! SpaceX, which debuted after Truist released its data set, has endured a max drawdown of 54%!

History also says that premium valuations aren’t well tolerated by Wall Street. For example, a trailing 12-month (TTM) price-to-sales (P/S) ratio above 30 can alert investors to an unsustainable bubble. Anthropic’s TTM P/S ratio should land between 75 and 100 at its IPO.

There’s a new reason to avoid Anthropic’s potentially record-breaking debut

The bad news for retail investors is that historical precedent isn’t the only problem for Anthropic. The bond market is increasingly signaling that trouble lies ahead for AI hardware providers, neoclouds, and hyperscalers.

While some companies are financing the AI infrastructure build-out and the development of LLMs with cash on hand, most are relying on debt in some capacity. When public companies issue debt, they do so at a par value of $1,000, which is commonly expressed as $1 on financial websites. When bond traders are confident a company will make good on its debt obligations, the bond price hovers around par value.

Credit markets are flashing WARNING SIGNS across the AI trade: Oracle, $ORCL, 5-year credit default swap (CDS) spread has surged to ~263 basis points, while SpaceX’s has risen to ~203 basis points, both at record highs. At the same time, CoreWeave’s $CRWV, 5-year CDS is up to a record 982 basis points. This comes as tech companies have issued nearly $500 billion in new debt this year to finance AI infrastructure, with 9 US investment-grade bond deals worth at least $25 billion each. The growing debt burden is colliding with uncertainty over whether AI revenues will justify the enormous spending. As a result, investors are increasingly demanding higher compensation to take on credit risk. Oracle’s market-implied 5-year default risk has risen above 20%, compared with around 16% for SpaceX and more than 7% for Nvidia. The pressure could intensify further, with Goldman Sachs projecting hyperscaler debt issuance to jump from $250 billion in 2026 to a massive $420 billion in 2027, as 35% of next year’s capital spending is expected to be debt-funded. The AI boom is now testing credit markets, as investors begin repricing the risks behind Big Tech’s unprecedented borrowing spree.

— Global Markets Investor (@GlobalMktObserv) October 14, 2026

What we’re seeing is several mid- and long-duration bond prices for AI companies plunging. The 2056 note SpaceX issued at par less than five months ago is trading at an all-time low of $0.83. Even Nvidia‘s (NVDA -5.47%) 2060 notes are trading at just $0.63.

The rout we’ve witnessed in bond prices, which has driven up yields, indicates tangible skepticism about the ability of AI companies to meet their debt obligations.

Given that Anthropic’s operating model isn’t yet time-tested or proven, this bond market malaise can sink Wall Street’s hottest upcoming IPO before it has any chance to gain traction.