Wall Street celebrated the arrival of the largest initial public offering in its history with SpaceX on Friday. But after SpaceX’s first day of trading ends, a pair of start-ups in San Francisco will be watching the share price of Elon Musk’s rocket company closely.
OpenAI and Anthropic, two of the leaders in artificial intelligence, have also announced their intentions to go public as soon as this year. While A.I. is only one component of SpaceX’s business, how SpaceX fares among investors will be a crucial gauge of how the average person feels about investing in the public offerings of other A.I. companies that are believed to be far from profitable.
Here are three things these companies are most likely considering:
Is there a big appetite for big I.P.O.s?
The market for I.P.O.s has been choppy for 10 years, as some of the highest-profile tech companies have been able to hold off going public for longer because of their seemingly endless ability to raise private capital.
But SpaceX’s debut may kick off a blockbuster year for tech companies heading to Wall Street. Anthropic and OpenAI will watch how SpaceX trades over the next few months to see if the markets are hungry for more shares of tech companies.
The total value of SpaceX shares was inching toward $2 trillion on Friday, easily making it the biggest I.P.O. ever. But if OpenAI and Anthropic go public, they will not be far behind. Both are expected to be worth a little under $1 trillion.
Bankers always find it difficult to time an I.P.O. “correctly,” especially lately, given instability in the global economy. But SpaceX’s pop on Day 1 could offer hope that there is plenty of investment interest to go around.
Are people worried about profits?
Everyday investors were willing to stomach money-losing tech companies in previous booms — until they weren’t. The dot-com boom of the 1990s was followed by a brutal bust for tech stocks.
A similar pattern followed another generation of tech companies that went public more than a decade later. By 2019, Wall Street was turning away from companies with balance sheets awash in red ink. That year, when Uber, which would not turn an operating profit until 2023, went public, its stock market debut lost more in dollar terms than any other American initial public offering since 1975.
If there’s one thing A.I. companies are known for, it’s losing vast sums of money. Last year, OpenAI pulled in about $13 billion in revenue, according to a person with knowledge of the company. But over the next four years, it expects to spend about $100 billion. Less is known about Anthropic’s financial situation, but the company has regularly spoken about the costly nature of its work and analysts believe the company has not regularly turned a profit.
SpaceX’s initial stock price surge suggests that profitability has again taken a back seat to growth and industry cache. That could be positive news for Anthropic and OpenAI, which have great name recognition and are spending as fast as they are growing. The A.I. companies are expected to spend billions on leasing computing power from data centers to research new products and fuel existing ones.
Is a great day for SpaceX not so great for the A.I. start-ups?
A strong debut for SpaceX could be good for the overall market, but executives at Anthropic and OpenAI may not want it to be too good of a day for SpaceX.
When companies of a similar class are considering going public, they often find themselves competing against one another. There are always concerns that interest could wane for the second or third big I.P.O. of the year.
Of course, if traders invested early in SpaceX only to see the company’s valuation tank, it may scare them off from taking a gamble on OpenAI or Anthropic.
(The New York Times sued OpenAI and Microsoft in 2023, accusing them of copyright infringement of news content related to A.I. systems. The two companies have denied those claims.)
