Anthropic's initial public offering is going to be a big moment for the artificial-intelligence sector as a whole. Early investors Alphabet and Amazon.com are set to be winners if the IPO succeeds.
Anthropic released the prospectus for its initial public offering on Monday, and it contains more details on its agreements with Google's parent and Amazon.
Alphabet provided initial funding for Anthropic by buying convertible debt, which has since been converted into equity. This year, Alphabet doubled down by agreeing to invest up to $30 billion in Anthropic.
An initial $10 billion has already been invested under that arrangement, with the remaining $20 billion commitment contingent partly on Anthropic's meeting certain revenue targets. Alphabet valued its stake in Anthropic at $124.3 billion at the end of the second quarter, according to Bloomberg.
So, how much of Anthropic will Alphabet own after the IPO? It depends on those revenue targets, but Alphabet has an ownership cap of 14.99%. Anthropic hasn't revealed how many shares it will make available, but at an anticipated valuation of $1.5 trillion, Alphabet's maximum stake would be worth just shy of $225 billion, although the company can waive that limit.
Meanwhile, Amazon agreed to invest $20 billion in Anthropic earlier this year. It has already directly invested $5 billion, with a further $15 billion available tied to Anthropic's hitting computing capacity milestones.
Amazon also backed Anthropic by purchasing convertible debt in previous years. However, unlike Alphabet's purchase, that debt has not been fully converted into equity, with approximately $6.2 billion of the principal amount outstanding as of June 30.
Again, Amazon's total post-IPO ownership is uncertain, but it is currently subject to a cap of 12%. At the mooted $1.5 trillion valuation, that would be a stake worth $180 billion plus any unconverted debt, although the e-commerce company can waive the equity limit to take a greater stake.
So, Alphabet and Amazon could stand to have stakes in Anthropic worth hundreds of billions of dollars. However, that won't translate into control -- Anthropic is issuing special shares that will hand its seven founders votes that equal 50.1% of the company's shares outstanding. Neither Alphabet nor Amazon holds any designated board seats or observer rights.
Still, equity stakes aren't the only thing on offer. Anthropic is on the hook to pay more than $475 billion in compute capacity agreements over the next seven to 10 years. Among the biggest beneficiaries are Alphabet and Amazon, which are each set to receive around $110 billion in the coming years.
Both Alphabet and Amazon have already seen major gains from their backing of Anthropic, but the biggest gains could be yet to come.
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