Anthropic disclosed a net loss of $80 billion for the first half of the year in its IPO prospectus filed Monday, as its major backers Microsoft, Google and Amazon all reported quarterly results that spooked investors about the economics of the AI buildout.
The three hyperscalers, which are also Anthropic's biggest partners and investors, all reported capex figures below analyst expectations. Microsoft cut its full-year capex forecast to $170 billion from $175 billion. Google maintained guidance for up to $205 billion and Amazon reiterated roughly $220 billion. More concerning, Amazon posted negative free cash flow of $42.4 billion for the trailing 12-month period for a second straight quarter, while Google reported negative free cash flow of $9.1 billion. Microsoft maintained positive free cash flow of $18.6 billion but saw it decline significantly quarter over quarter and announced plans to raise $25 billion in bonds on Thursday.
"Suddenly, they're like, 'We can't keep funding this on free cash flow,'" Daniel Newman, CEO at Futurum Group, told CNBC. "The worry is that basically now there's no company that's able to do this using their own business capabilities to create cash flow. It's becoming increasingly alarming."
The Nasdaq Composite fell 2.9% on Friday, notching its first three-week losing streak since March. Nvidia traded lower along with the broader semiconductor sector after Intel issued a weak forecast and posted its steepest drop since the 1970s. Google stock fell nearly 13% on Thursday, its worst day ever.
Anthropic disclosed more than 90 pages of risk factors in its prospectus and hundreds of billions of dollars in compute commitments. The company showed 1,300% annual sales growth, 900% net revenue retention and an implied gross margin of 85%. Investors await the company's third-quarter financials.
The IPO market has largely frozen since SpaceX's offering in June. Oura, Firmus and SK Hynix's Solidigm subsidiary have postponed or abandoned IPO plans. Nscale, a neocloud that filed in September, has not updated its prospectus in weeks, nor has SoftBank's SB Energy.