(Bloomberg) — Anthropic PBC’s artificial intelligence tools sent a shock wave through markets, but for equity investors looking to capitalize on the newfound prominence of the closely held startup, there aren’t many options.
For nearly a month investors have raced to dump shares of companies that could be disrupted by AI tools like Anthropic’s Claude Cowork. Sharp selling has been seen by a wide variety of sectors including software, legal services, wealth management and transportation logistics on worries that the tools could erode growth, demand and pricing power at traditional companies.
But, unlike with other major players in the space, stock traders don’t have a clearly defined way to bet on Anthropic’s potential success. This absence of a publicly traded companies that offer some kind of exposure or correlation to Anthropic is becoming a frustration for traders, who are instead stuck trying to side-step the growing a list of stocks that have plunged because of its tools.
“There are basically no Anthropic pure plays in the public market you can look at, which means investors really can’t play Anthropic,” said Daniel O’Regan, managing director of equity trading at Mizuho Securities. “Given how prominent it has become, it’s a bit frustrating, an unscratchable itch. God knows we have plenty of Anthropic losers.”
By contrast, OpenAI — which is also private — has struck deals with numerous publicly listed companies including Oracle Corp., Advanced Micro Devices Inc. and CoreWeave Inc., making them decent proxies for investors.
Meanwhile, investors looking to bet on the success of Gemini can easily invest in Alphabet stock itself, or in shares of companies that play a role in its infrastructure, like Broadcom Inc., Celestica Inc., Lumentum Holdings Inc., and TTM Technologies Inc.
A basket tracking companies connected to OpenAI has risen more than 40% since the start of last year, while one tracking Alphabet-linked shares has jumped nearly 190%, both outpacing a 17% gain by the S&P 500.
One additional complication for those looking to get exposure to Anthropic is that the company isn’t sticking to one provider for its compute or hardware. In an announcement about its latest funding round, which valued Anthropic at $380 billion post-money, the company said it trains and runs Claude on chips from Amazon.com Inc., Alphabet and Nvidia Corp., and that its model is available on the three major cloud platforms — Amazon Web Services, Alphabet’s Google Cloud Platform and Microsoft Corp.’s Azure.
In fact, while all four are investors in the company, they are all also competitors or connected to rival AI labs in some form, suggesting that none offer any sort of distinctly unique correlation to Anthropic.
“There’s clearly a lot of overlap in the obvious names, and it’s not exactly logical to invest in Alphabet if what you’re looking for is Anthropic exposure,” O’Regan said.
Building a Potential Basket
Investors looking for Anthropic plays aren’t completely out of luck.
Cloudflare Inc. soared in late January amid reports of rising adoption of an open-sourced AI assistant that works with Anthropic’s Claude. On the company’s earnings call earlier this month, Chief Executive Officer Matthew Prince said the firm is always looking to “work with great companies like Anthropic.”
Datadog Inc. has emerged as another contender. Multiple Wall Street analysts including JPMorgan Chase & Co.’s Mark Murphy believe that the firm’s reference to an “eight-figure land with a leading AI model company” on its most recent earnings call was a reference to Anthropic.
Separately, analysts have begun highlighting Zoom Communications Inc.’s $51 million investment in Anthropic from 2023, calling it an underappreciated benefit of the company. Shares of the video conferencing firm jumped more than 11% last month after Baird said the stake “could be worth anywhere from $2-4 billion depending on dilution assumptions.”
Meanwhile, shares of SK Telecom Co., which invested $100 million in Anthropic in 2023, have soared more than 60% since mid-January. That surge, however, drove Bank of America Corp. analyst Sun Jung Lee to downgrade the stock to underperform this week, saying South Korea’s biggest mobile operator had run up too fast.
Snowflake Inc., which itself has been caught up in the selloff in software shares, announced a $200 million partnership with Anthropic last year that will make the Claude AI models available in its platform.
“There are a number of key partnerships where you can get a kind of proxy for Anthropic, but it won’t be one-for-one,” said Nate Miller, vice president of product development at Amplify ETFs, which has an exchange-traded fund dedicated to the AI value chain. “That can be frustrating, and it is uniquely challenging to investors that so many companies in this space are private.”
Still, equity investors seeking pure Anthropic exposure may not have to wait long: the company is said to be eyeing an initial public offering, potentially listing by the end of the year. They’re not alone, either. OpenAI is reportedly holding informal talks with banks about its own IPO by the end of the year.
“Relief might be too strong a word, but it will certainly remove a challenging aspect of getting AI exposure when we finally get these IPOs,” Miller said. “They’re head-and-shoulders above everyone else.”
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