Nvidia’s $10bn Bet on Anthropic Under Scrutiny After Huang Exit
Jensen Huang has resigned as Nvidia's chief executive a week before Anthropic is due to start trading. The move puts Nvidia's $10 billion pledge to the AI company in focus, along with the chip guarantees that underpin AI borrowing.
Nvidia’s $10 billion bet on Anthropic is under fresh scrutiny after Jensen Huang resigned as the chipmaker’s chief executive, a week before the AI company is due to begin trading on Nasdaq on November 19. The listing could be the biggest in stock market history.
Huang quit following reports of affairs. One involved a woman whom US officials believe was spying for China. Beijing has denied the allegations.
What Anthropic is offering
Anthropic, maker of the Claude chatbot, has put 825 million shares on offer at $70 to $78 each. That would raise up to $64.4 billion and value the company at up to $1.4 trillion. The shares are expected to trade under the symbol ANT.
A separate private placement comes alongside the IPO. Seven technology companies have agreed to buy $26 billion of shares at the IPO price, according to Anthropic’s filing.
Nvidia and Google are each buying about $10 billion. AMD is taking about $2.5 billion. Broadcom, Micron and Microsoft are each taking about $1 billion, and TSMC about $500 million.
Together the two sales could raise as much as $90.4 billion. That tops the $75 billion SpaceX raised in its June listing.
Analysts weigh the risk
The placement depends on the IPO going ahead and on “the satisfaction of certain conditions”, the filing says. Mandeep Singh, an analyst at Bloomberg Intelligence, said a leadership change “could prompt Nvidia’s board to reassess the size, timing or strategic rationale of the commitment to Anthropic.”
A delay or cut by Nvidia, Singh wrote, “could weaken an important signal of support for Anthropic’s IPO pricing at around $1.4 trillion.” He added that commitments from Google and other strategic investors might limit the financing impact.
Matt Maley, chief market strategist at Miller Tabak, was more relaxed. “For now, it looks like the deal will go through,” he said in a note to clients. He said the Nvidia revelations did not seem to be having an outsize impact on Anthropic.
Anthropic declined to comment. Nvidia did not immediately respond to a request for comment.
Demand and revenue
The IPO has drawn about six times as many orders as there are shares on offer, according to people familiar with the matter. Anthropic’s revenue was $17 billion in the three months to September 30, its filing shows.
Its revenue run rate, which annualizes current sales, reached $81 billion at October 31. That is up from $65 billion at the end of July.
Why chip guarantees matter
Under Huang, Nvidia was dubbed “the central bank of AI”. It took stakes in companies and guaranteed deals across the industry to bolster confidence.
The guarantees matter most in chip leasing, a market that has grown fast as AI firms race to secure expensive processors. In a typical deal, a specially created company borrows money to buy chips and leases them to an AI firm. If lease payments stop, the chips are re-leased or sold to repay the debt.
A chipmaker’s guarantee, known as residual value support, covers any shortfall left over. That brings in more lenders, helps the debt win higher credit ratings and lowers borrowing costs.
Nvidia has said it would cover up to 25% of a deal. Broadcom has gone further. In May it guaranteed $30 billion of a $35 billion debt deal under which Anthropic leases tensor processing units, AI chips made by Broadcom and Google. It is backing about $43 billion of a second $63 billion deal that will also support Anthropic.
