Copyright © BusinessAMBE 2023
Key takeaways
- Nvidia could invest 10 billion dollars (8.6 billion euros) in Anthropic’s record-breaking IPO.
- Anthropic is aiming for a staggering market valuation of 2 trillion dollars (1.7 trillion euros).
- Critics are questioning Nvidia’s circular model, in which the company finances customers who buy its chips.
Nvidia is considering a huge investment of up to 10 billion dollars (8.6 billion euros) as lead investor in Anthropic’s upcoming IPO. Anthropic is seeking to raise as much as 100 billion dollars (86 billion euros), with a targeted market valuation of around 2 trillion dollars (1.7 trillion euros). That is reported by Reuters.
If realised, this would be the largest IPO ever, surpassing the 75 billion dollars (64 billion euros) of capital raised and the valuation of 1.77 trillion dollars (1.5 trillion euros) achieved by SpaceX in June.
Strong ties between Nvidia and Anthropic
The relationship between the two entities is deeply intertwined, as Nvidia already serves as hardware supplier and has pledged a separate 10 billion dollars (8.6 billion euros) in funding.
Anthropic has undergone explosive growth, with quarterly revenue in August of more than 11.5 billion dollars (9.9 billion euros), a fourteen-fold increase compared with the previous year. Although neither organisation has officially responded to these reports, Nvidia is showing similar patterns in Europe: it recently took part in Mistral’s funding round worth 3 billion euros, valuing the European company at more than 21 billion euros.
Nvidia’s circular financing model under fire
Nvidia’s proposed investment in Anthropic is dizzyingly large. It exceeds the total equity round for Mistral and is almost equivalent to half of Anthropic’s total value.
This strategy reflects a growing trend in the US, where Nvidia finances customers who buy its processors and occasionally leases hardware back to them. This circular financial model has attracted the attention of the Bank for International Settlements because of a lack of transparency about the terms.
Mistral focuses on AI sovereignty
In Europe, there is a parallel, albeit smaller, ecosystem. For instance, ASML took part in Mistral’s earlier funding, and Mistral secured 830 million dollars (715 million euros) in loans to purchase nearly 14,000 Nvidia chips for a data centre in Paris.
The objectives differ, however: Mistral focuses on “AI sovereignty” for regulated sectors and governments, a strategy championed by Emmanuel Macron, while Anthropic is targeting large-scale commercial expansion.
Market impact
As the official IPO documents are expected this month and the listing is scheduled just before the midterm elections, European institutions may be invited to invest.
The IPO price may also partly depend on Nvidia, which already holds stakes in competing AI ventures. (lv)
© The Content Exchange, source News
