The SEC Should Block Anthropic’s IPO to Protect the Public

Matt Scherer is co-author of the recent report Brace for Impact: Protecting people and the economy when the AI bubble bursts.

Things are seldom what they seem when it comes to the finances of the AI industry. The AI ecosystem’s circular business dealings, extensive use of financial engineering, and otherwise murky finances make it hard for investors, regulators, or workers saving for retirement to get an accurate financial picture of AI companies.

That is particularly true of Anthropic, which filed the registration statement for its initial public offering (IPO) last week ahead of a planned November stock market debut.

The company’s topline financial figures look quite impressive for a startup, with revenues that appear to have grown quickly over the course of 2026 and a fairly healthy balance sheet — on the surface, that is.

Dig a little deeper, however, and a far bleaker picture emerges. Footnotes to the company’s most recent financial disclosures revealed nearly $900 billion in spending commitments, most of them stretching into the 2030s. The company’s financial results for 2026 have not been subjected to formal auditing, which makes them less-than-reliable, but the third-quarter results suggest that the company’s revenue growth slowed to a crawl over the summer.

Anthropic will have to reverse that trend and sustain extraordinary revenue growth to meet its vast obligations. But the financial pressures that are squeezing Anthropic — and, indeed, the AI industry as a whole — will make it exceptionally hard for the leading model developer to do so. If the company goes public, workers, retail investors, and retirees will increasingly be left holding the bag when Anthropic’s bills come due.

The financial mountain that Anthropic must climb is unprecedented for a company making its stock market debut. While Anthropic has an impressive $96 billion in cash reserves, its amended registration statement reveals at least $582 billion in non-cancelable spending commitments to just five companies (Amazon, AMD, Broadcom, Google, and Microsoft) to gain access to the vast computational power required to train and run Anthropic’s generative AI models.

Even though they do not appear on Anthropic’s balance sheet, those obligations are effectively debts in a legal and practical sense: they are payments that Anthropic is contractually required to make in the future, regardless of whether the company can afford to do so.

Moreover, it is not clear how much of the remaining $300 billion or so of the $895 billion in contractual commitments will ultimately land on Anthropic’s balance sheet. With the company continuing to negotiate further massive infrastructure and compute contracts, Anthropic may well end the year with a trillion dollars or more in contractual commitments.

Generating the revenues necessary to meet those obligations would be, to say the least, quite difficult for any company. But the margins of AI model developers are being squeezed by several forces that will make that task extraordinarily challenging for Anthropic.

First, it isn’t clear that there is nearly enough demand for generative AI products and services to justify Anthropic’s spending. Multiple studies, including from organizations notable for their bullishness on AI, suggest LLMs are not accelerating productivity or otherwise generating positive returns on investment for most businesses. Worryingly for enterprise-focused Anthropic, one study found that the number of Americans using AI at work fell significantly between the summers of 2025 (46%) and 2026 (33%).

Anthropic’s spending commitments suggest that the company believes it will be able to convince businesses to pay for ever-larger and more expensive models. But there are growing signs that most businesses are not interested in paying for more powerful and expensive models. When Anthropic released its much-hyped Fable 5 frontier model this summer, its commercial reception was tepid.

Even if a future Anthropic model captivates businesses, the company would run into a second obstacle: the AI industry’s frenzied competition. Anthropic is part of a crowded Silicon Valley ecosystem where numerous well-heeled corporations (including Google, Meta, Microsoft, OpenAI, and SpaceX, along with Anthropic) offer generative AI models that are largely indistinguishable in their quality and capabilities. As a result, AI companies can quickly offer competing products whenever a rival identifies a use case that shows even a hint of commercial potential.

In such an environment, companies can rarely afford to raise prices because doing so will prompt customers simply to switch to a rival. The rush to grab customers ahead of their IPOs led Anthropic and OpenAI to launch a price war this summer that remains ongoing. Competition from Chinese companies offering open-weights models puts further downward pressure on prices, as does the increasing availability of models that can run locally on phones and laptops — no expensive data centers required.

That leads to the third problem: the extraordinarily high costs of the chips and data centers needed to train and run AI models, which put powerful and continuous upward pressure on Anthropic’s costs. Between the chips, servers, networking equipment, electricity and cooling infrastructure, construction costs, and other expenses, a 1 gigawatt (GW) data center costs an estimated $31 billion, and the prices for some components are soaring.

That is for 1 GW. Anthropic has committed to 15 GW of data center capacity in the coming years and the company estimates it will ultimately need 20-25 GW, which explains the company’s half-trillion-plus dollars in spending commitments.

And that is just the cost of the physical infrastructure. Once a data center is up and running, training AI models entails using tens of thousands of chips running in parallel that require massive amounts of energy to power, run hot, and need to be kept cool. Moreover, each time someone prompts a model to answer a question, create an image, or perform a task, additional computational power, energy, and cooling are needed to process the query and generate a response or complete the task.

Finally, there are external factors that are delaying data center construction and piling on additional costs. The fierce and still-rising backlash to AI in general and data centers in particular across the country has scuttled a number of data center projects and delayed many others. Every delay limits the computational capacity Anthropic is counting on to generate the revenue it will desperately need, and rising costs due to the Iran War and supply-chain challenges could drive Anthropic’s operational costs still higher.

Anthropic will further pad its cash reserves if its IPO is successful, but the brutal economics of its business are not likely to improve anytime soon. Even if demand picks up significantly, intense competition will apply unrelenting downward pressure on prices even as high costs and resource constraints squeeze it from the opposite direction. That is a deadly mix for Anthropic in light of its slowing revenue growth and massive off-balance-sheet debts, a vast and immovable fixed cost.

If Anthropic were to go public now, it would pile additional risk onto a stock market that is already historically overvalued and disproportionately concentrated in a handful of tightly interconnected mega-cap companies from the tech sector. That has already created a risk of a historically damaging stock market crash; never before has such a huge amount of wealth depended on the performance of a small number of companies whose fortunes are inextricably linked. Adding another huge, unprofitable tech giant to public exchanges would exacerbate both of those factors and create a higher risk of contagion if (or, rather, when) Anthropic reaches a financial precipice.

It also would mean that an ever-larger share of the fallout from a potentially devastating AI crash would fall on ordinary people. As a private company, Anthropic’s shares are overwhelmingly owned by corporate insiders, tech giants, and venture capitalists. Once the company goes public and shares start getting funneled into 401(k)s, retirement accounts, and index funds, it will be workers, retirees, and retail investors that are increasingly left holding the bag when the forces squeezing Anthropic’s margins start to bite.

The Securities and Exchange Commission (SEC) has the power to stop that from happening. The agency can delay or stop companies from going public if it believes a company’s registration statement is “on its face incomplete or inaccurate in any material respect.” That legislative language might as well have been written with Anthropic in mind, considering that the company’s prospectus includes only unaudited financial results for the period where it claims the greatest revenue growth, relegates its most significant future obligations to the footnotes of its registration statement, and has continued to announce new 11-digit financial commitments as its IPO approaches.

The SEC should block Anthropic’s stock market debut until the company provides two consecutive quarters of audited financial statements, with all material information about the company’s spending commitments disclosed. Failing to do so could have dire consequences for workers, investors, and ultimately the financial system and economy.