Wall Street is currently preparing for what could be the defining liquidity event of this decade: Anthropic’s IPO.
With draft paperwork floating around and whispers of an eye-watering $1.5 trillion to $2 trillion valuation, the maker of Claude is gearing up to tap the public markets.
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On paper, Anthropic is a true poster child of the generative artificial intelligence boom. Nvidia (NVDA) might be the king of the AI trade, but that firm went public decades ago. The most it can do to goose the public offering market these days is just issue more debt.
There is just one glaring problem: the market environment Anthropic is preparing to enter looks vastly different from the unbridled euphoria of the past few years. So, the question every serious investor needs to ask right now isn’t how fast Anthropic’s revenue is growing. It is whether the stock market will still have enough speculative FOMO left in the tank to greet a multitrillion-dollar AI IPO with open arms by the time the opening bell actually rings.
QQQ: The Alpha Dog Is Losing Its Bite
To take the temperature of institutional risk tolerance, you don’t look at press releases. You look at the Invesco QQQ Trust (QQQ).
For the past four years, QQQ has been the undisputed alpha dog for global risk-taking. That is, any risk assets are likely to follow its lead. That trickles all the way down to smaller companies’ stocks. If a company is growth-oriented, QQQ is the leader it follows.
Money pours into QQQ, passive algorithms allocate capital to mega-caps, and those hyperscalers funnel hundreds of billions of dollars directly back into data centers, compute infrastructure, and foundational model labs. Recently, however, the alpha dog QQQ has begun to limp.
We have seen repeated multi-percent weekly drops, momentum indicators slipping into bearish territory, and internal breadth quietly deteriorating. All while Wall Street pundits continue to be broadly bullish. An AI IPO like the Anthropic one approaching might mistakenly be assumed to be a sign of market strength. But my chartwork increasingly shows a more discouraging picture.
As in, I’m not certain the Anthropic IPO will even occur as scheduled. Investors are finally asking the question Wall Street avoided for three years: Where is the return on invested capital (ROIC) from the trillions spent on AI infrastructure?
The narrative is in danger of shifting from iconic growth opportunity to balance sheet drag. If QQQ continues to fade and enters a protracted consolidation or bear market, the appetite to underwrite high valuations for cash-burning model developers will dry up overnight.
Can Nvidia Buck the Downtrend and Save the Day?
www.barchart.com If QQQ is the market’s nervous system, Nvidia is the beating heart keeping the entire AI machine alive.
Nvidia has been the sole reason the AI trade has maintained its credibility. Every time doubts arise about enterprise AI software adoption, Nvidia reports a record-shattering quarter of data center GPU sales and drags the entire Nasdaq higher with it.
Nvidia’s ability to buck the recent downtrend and defend its lofty valuation is practically the only catalyst capable of keeping the Anthropic IPO on track.
If NVDA can stabilize, hold technical support, and convince the market that the next generation of AI compute demand is accelerating into 2027, it will generate just enough liquidity and sentiment cover for bankers to price the Anthropic deal.
If Nvidia rolls over, the party ends:
Wall Street’s IPO Distribution
Investors must remember how the Wall Street IPO machine actually operates. Venture capital firms and early private backers do not take companies public to offer retail investors an attractive deal. They take them public because they need an exit.
After pouring tens of billions into private funding rounds, institutional insiders want public market liquidity to take them off the hook for future compute bills.
The playbook is as old as the dot-com bubble: manufacture peak hype, build an enormous book of institutional demand, and hand the shares off to passive index funds and retail dip-buyers at the top of the valuation cycle.
If Anthropic debuts in a frothy tape, retail buyers will rush in out of habit. But if QQQ is breaking down and Treasury bills are still quietly paying 5% risk-free, the incentive to gamble on a massive public offering vanishes.
If the market greets Anthropic with open arms, I suspect it will be because NVDA staged one final hero move to rescue tech sentiment. If not, this IPO may mark the exact moment the tide went out on the great AI FOMO trade.
Rob Isbitts is a semi-retired CIO, former fiduciary investment advisor, and Barchart columnist. Check out his other work and model portfolios at ETFYourself.com and ROAR.PiTrade.com.
Rob Isbitts is a semi-retired CIO, former fiduciary investment advisor, Barchart columnist, and straight-talker. Download his new free e-book on hedged bond investing for retirement at ETFYourself.com. His research and model portfolios are at ROAR.PiTrade.com.
On the date of publication, Rob Isbitts did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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