Anthropic: The best AI stock you can't buy yet?

Charlene Young (0:08)

Hello, and welcome to this week's episode of the AJ Bell Money & Markets podcast. I'm Charlene Young, and joining me this week are Sarah Coles and Tom Sieber. There's a definite political flavor to this week's show with Labour conference announcements making waves on the stock market and raising some pretty big questions for people's personal finances.

Sarah Coles (0:28)

So we're going to look at plans for social care reform, which have come out of conference, and crucially whether the headline grabbing announcement on the state pensions triple log is going to be enough to pay for it.

Charlene Young (0:38)

With Stoptober and Sober October about to get underway, Sarah's been crunching a completely different set of numbers. We'll review how giving up cigarettes and alcohol and investing that money instead could potentially add over a quarter of a million pounds to your pension over 20 years. There is always a pensions angle.

Sarah Coles (0:57)

Yes, there always is. But first, Tom is actually here to take us through what's been happening on the markets, including why house builders have been enjoying a burn and bounce.

Of course, utility stocks have been heading in the opposite direction. And with artificial intelligence back in the spotlight, Tom is going to be looking at the latest developments around Anthropic including its prospectus before Dan Cotsworth speaks to Bloomberg Intelligence about some of the big questions prospective investors are asking about the AI giant.

Charlene Young (1:22)

Yeah. So hi, Tom. Lots to get through this week. But as Sarah says, let's start with AI, because it feels like we can't go very long at the moment, not even maybe one or two podcast episodes about it cropping up somewhere, right?

Tom Sieber (1:34)

Yeah, absolutely. Thanks for having me on the podcast. You're right to say that once again, AI has been kind of dominating the agenda to an extent this week. We had some kind of more stories along the lines of the kind of concerns about the safety of AI.

Open AI actually kind of scrapped or at least hit pause on its next model over safety issues this week. But as you say, we've also had quite a significant development in that there's been some reporting at least around Anthropics prospectus. This is the document a company puts together explaining how its business model works and outlining all the risks before it joins the stock market and Anthropics planning to do that later on this year.

So they are just reports, but we have had some insights into potentially what Anthropics prospectus looks like.

Charlene Young (2:26)

It was the only thing that stood out in those reports to you at all.

Tom Sieber (2:29)

Yeah. We talked about the safety concerns there. I think that is the big elephant in the room really, isn't it? This risk that AI systems become too powerful for their own goods and that they're developing at such a pace.

I think one thing that undoubtedly stood out in the reporting around the prospectus is that one of the risks mentioned is that the technology may pose existential risks to humanity. It's hard to think of any bigger risks than that, isn't it really?

I don't know if risk even really does it justice. Trying to take both sides of this, there were reports as well that the prospectus will position AI as likely to have a greater impact on the global economy and global economic activity than industrialization, electricity or the internet. I guess you might say, they would say that, wouldn't they? Yeah, yeah. It is nonetheless, it puts into some respect to just how significant this could be.

Charlene Young (3:34)

Yeah, I mean, some big food for thought there. And I think we've seen eye-watering valuations when it comes to these types of companies. Do you think investors might become a little bit more, I don't know, discerning about what they're prepared to pay to participate in these IPOs?

Tom Sieber (3:50)

Yeah, possibly. I think we've seen some evidence of that. And there is undoubtedly, one of the big kind of worries or bits of nervousness for the market around AI is obviously how much is being spent on it whether or not that will actually generate a proper return. But, and Anthropic is no exception. So the reporting around the prospectus suggests it's going to spend $518 billion on kind of cloud computing and infrastructure necessary to sort of develop its AI tools and in the coming years.

Charlene Young (4:23)

How does that fit into that kind of broader battle between like the major players in terms of like, amounts they're planning to spend?

Tom Sieber (4:29)

It's a good question. It's the right question, I think. So, Anthropic is seeing very, very significant revenue growth, or certainly, you know, with a backward-looking kind of or with a rear-view mirror, it did. So, in 2025, revenue was up 12-fold. So, even for an AI-related company, that is huge, huge growth. And there aren't that many companies around sort of offering that level of growth. One thing that's significant about Anthropic maybe makes it stand out a little bit compared to some of its peers is that it's mainly focused on kind of selling its tools to companies.