My Stocks and Shares ISA portfolio has many exciting growth firms in it today, including Nvidia, Raspberry Pi, and Shopify. But while these are increasing revenues quickly, they’re not putting up the insane growth rates of Anthropic.
The company behind Claude, the frontier AI system, is expanding as quickly as any in business in history. As such, there’s talk that its forthcoming IPO could top SpaceX‘s, valuing the business at $2trn or more.
Clearly then, we’re looking at an absolute juggernaut. So is it a shoo-in for my Stocks and Shares ISA?
What is Anthropic?
As a reminder, Anthropic is an AI lab whose models have largely been built for enterprises and developers rather than everyday consumers. Therefore, it’s mainly business-to-business today.
The amazing thing is that the company was only founded in January 2021, so this is a truly staggering rise. Its tools have been adopted widely due to a particular focus on safety and reliability.
How fast is it growing?
The rate of growth here is barely believable. In late 2024, the company’s annualised revenue run rate was around $1bn. Fast-forward to today, that figure is rumoured to be north of $74bn.
Plus, the firm has turned profitable on an operating basis, according to reports. So this is promising to see, though when actual profits will come through regularly is still uncertain.
Another thing to like here is the optionality. Every industry and organisation on Earth wants to operate more efficiently, so the market opportunity is simply enormous.
Outside of coding, for example, Anthropic is seeing strong demand in financial services and life sciences for its products.
Claude for Financial Services could automate complex analysis, portfolio construction, and research workflows that previously required teams of highly paid specialists. In life sciences, the prize is compressing drug discovery timelines that currently span years and cost billions of dollars.
Baillie Gifford
What concerns do I have?
As exciting as this all sounds, I do have a few concerns. One is competition from cheaper Chinese models, which could ultimately limit the firm’s pricing power.
Fact is, we just don’t know how the AI revolution will play out and whether Anthropic has a truly durable competitive edge. And reports of its AI agents going rogue and hacking websites give me pause for thought.
Finally, as mentioned, the market cap could top $2trn. At this size, I worry that the firm is grossly overvalued (very likely, from what I see) and that long-term returns will be disappointing.
My move
For the next few months then, I’m happy to get my Anthropic exposure through Scottish Mortgage Investment Trust (LSE:SMT). The FTSE 100 fund is set to gain from any record-breaking IPO after taking a stake in Anthropic last year.
At the end of July, the AI lab made up 2.8% of assets, so it was already a decent-sized position. It will surely be much higher by the IPO, which could happen as early as October.
Of course, if the event is a flop, this could impact Scottish Mortgage. It also has a massive holding in SpaceX, so any AI-related sell-off is a risk.
But with the FTSE 100 stock trading at a 10% discount to its world-class growth portfolio, I think it’s worth considering ahead of the Anthropic IPO.
Should you invest £5,000 in Scottish Mortgage Investment Trust Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Scottish Mortgage Investment Trust Plc made the list?
Ben McPoland owns shares of Nvidia, Raspberry Pi, Scottish Mortgage, and Shopify.
This story originally appeared on Motley Fool
