Oct 20, 2026: Anthropic's draft S-1 shows the loss and the bill
The Wall Street Journal published its report on Anthropic's draft initial public offering prospectus at 3:30pm ET, half an hour before the close. Reuters carried the headline figure at 3:33pm. The prospectus has not been filed publicly, and Anthropic declined to comment to the Journal.
What the draft shows, according to the Journal:
- Revenue of $16.3 billion in the first half of 2026, up from $1.1 billion a year earlier. Revenue for all of 2025 was $4.6 billion.
- A net loss of $80.7 billion, against $13 billion a year earlier and $42 billion for all of 2025. About $72 billion came from accounting charges tied to changes in the value of convertible notes and other instruments the company issued to raise funding.
- Nearly $9 billion spent on computing capacity and infrastructure, up from $2.3 billion a year earlier and more than the $7.3 billion it spent in all of 2025.
- About one-fifth of revenue from two customers. The company expects a "significant portion" of revenue to come from a "limited number of customers for the foreseeable future."
- Compute obligations above $600 billion. About $450 billion is cloud agreements over seven to ten years, mostly noncancelable, and more than $160 billion is an obligation to lease Google chips in a deal with Broadcom. Talks under way could add up to $150 billion.
How the stocks traded around the report, from the Oct 19 close:
| Stock or fund | Oct 19 close | Oct 20, 3:25pm | Oct 20 close | After the report | Day |
|---|---|---|---|---|---|
| Alphabet (GOOGL) | $344.18 | $338.90 | $340.28 | +0.4% | -1.1% |
| Microsoft (MSFT) | $533.52 | $530.60 | $531.87 | +0.2% | -0.3% |
| Amazon (AMZN) | $262.45 | $262.37 | $262.63 | +0.1% | +0.1% |
| Nvidia (NVDA) | $217.09 | $216.30 | $216.47 | +0.1% | -0.3% |
| Invesco Nasdaq-100 ETF (QQQ) | $718.36 | $717.12 | $717.63 | +0.1% | -0.1% |
| Broadcom (AVGO) | $334.59 | $334.69 | $334.37 | -0.1% | -0.1% |
Alphabet's decline came before the report. It traded as low as $338.36 during the session, a day when a power event knocked out services in Google Cloud's London region, The Telegraph and MT Newswires reported. The decline is not clearly tied to that outage, and no other company news explains it. The flat response to one of the largest half-year losses on record, as the Journal described it, says investors read the figure the way the prospectus explains it: mostly an accounting charge, not cash spent. After the close, RSI(14) for Alphabet stood at 45, the shares sat 1.1% below their 50-day average and 0.3% below their 200-day average, volume of 16.5 million shares was 0.7 times the 20-day average, and the stock was 16.7% below its 52-week high of $408.61.
Why the $72 billion charge is a gain for Amazon and Alphabet
The charge does not mean Anthropic spent $80 billion. Anthropic raised money with convertible notes and other instruments that turn into shares. When the company's valuation went up, reaching $965 billion with its $65 billion Series H in May, those instruments became more valuable, and Anthropic had to record the increase as a loss. Its holders record the same increase as a gain.
The holders' filings show it. Amazon invested $8.0 billion in Anthropic convertible notes from 2023 through 2025, converted part of them into nonvoting preferred stock in the first quarters of 2025 and 2026, and put another $5.0 billion each into the Series G and Series H rounds in the second quarter of 2026. Its 10-Q says it recorded upward adjustments of about $50.5 billion in the second quarter and $62.8 billion in the first half "to reflect observable changes in price related to Anthropic's fundings," plus $4.5 billion of gains when notes converted. Amazon's second-quarter net income of $62.6 billion included $53.4 billion of non-operating income, "primarily from our investments in Anthropic."
Alphabet does not name the company. Its 10-Q reports $113.6 billion of net unrealized gains on non-marketable equity securities in the first half and says its holdings under that method "primarily consist of our investment in a private company," carried at $124.3 billion on June 30, up from $64.1 billion at the end of 2025. Startup Fortune, reading the same filing, reported that the stake is Anthropic. Alphabet's second-quarter other income was $98.0 billion, which also included gains on its SpaceX shares.
So the headline loss and the investor gains are the same number seen from two sides. For readers who value Alphabet or Amazon by their parts, our guide to sum-of-the-parts valuation shows how a stake like this is counted separately from the operating business.
The compute bill is revenue for four suppliers
The more important figures for public stocks are the commitments, because they are future revenue for the suppliers.
| Supplier | Commitment in the draft S-1 | Who earns it |
|---|---|---|
| Broadcom deal for Google chips | More than $160 billion | Broadcom (AVGO) and Alphabet (GOOGL) |
| Google Cloud | $111 billion | Alphabet (GOOGL) |
| Amazon Web Services | $110 billion | Amazon (AMZN) |
| Nscale and Lambda, Nvidia chips | Up to $86 billion, through 2033 and 2034 | Nvidia (NVDA), indirectly |
| Microsoft Azure | $31 billion | Microsoft (MSFT) |
Anthropic will pay Google, Amazon and Microsoft these amounts "regardless of actual usage," the Journal reported. In size, $111 billion over seven to ten years is about $11 billion to $16 billion a year for Google Cloud, which had revenue of $24.8 billion in the second quarter alone, up 82%. AWS had second-quarter sales of $42.2 billion, up 37%, and Amazon said in July that Anthropic and OpenAI had both made multi-year, multi-gigawatt commitments to its Trainium chips.
Broadcom disclosed its side in an 8-K on April 6: Anthropic will access about 3.5 gigawatts of Google TPU capacity through Broadcom beginning in 2027. The filing added a condition: the consumption of that capacity "is dependent on Anthropic's continued commercial success." Today's prospectus is the first full look at that success: revenue up almost fifteenfold in a year.
Compute spending was about 55% of revenue in the first half of 2026, down from about 159% for all of 2025, using the Journal's figures. That ratio matters more to suppliers than the net loss, because it shows whether Anthropic can keep paying the bills from sales.
Our view on Amazon (AMZN)
Bullish through October 29, 2026, when Amazon reports third-quarter results. For: the $110 billion AWS commitment is in Anthropic's own filing and mostly noncancelable; Amazon's preferred stock was marked up on observable funding prices, and an IPO near the reported $1.5 trillion would be another observable price above the $965 billion Series H; AWS growth reached 37% in the second quarter, its fastest in 18 quarters. Against: Amazon's trailing free cash flow was an outflow of $7.6 billion at June 30; Amazon has agreed to make up to $15 billion more available to Anthropic under its financing facility, so part of the AWS revenue is funded by Amazon; and Anthropic says its cloud partners see it as a competitor. We would turn Neutral if AWS growth falls below 30% on Oct 29 or if Anthropic prices below $965 billion.
Our view on Broadcom (AVGO)
Bullish through December 10, 2026, around when Broadcom's fiscal fourth-quarter report is expected. For: the prospectus puts the Broadcom chip lease above $160 billion, the largest single item; Broadcom's own 8-K tied that capacity to Anthropic's commercial success, and revenue of $16.3 billion in a half year is strong evidence of it; and the stock is 32% below its 52-week high at 17 times forward earnings. Against: the capacity starts in 2027, so it does not help the next report; Anthropic's third-quarter growth slowed, which Barron's said gave some investors pause; and the stock fell 7.6% in the past month as AI infrastructure names weakened. We would turn Neutral if Anthropic cuts or delays the TPU capacity in its final prospectus or if Broadcom's AI revenue guidance for the next quarter falls.
Our view on Nvidia (NVDA)
Neutral through November 18, 2026, when Nvidia's next report is expected, because Anthropic's spending is too small to decide that report either way. Up to $86 billion of rented Nvidia chips through 2033 and 2034 is about $10 billion a year if spread evenly through 2034, against Nvidia's guidance of $108 billion of revenue in a single quarter. Anthropic's two largest commitments go to Google's chips, and Amazon is selling it Trainium. Nvidia also committed up to $10 billion to Anthropic in November 2025, so it shares in the valuation gains on a small scale. We would turn Bullish if the final prospectus shows Nvidia-based capacity growing faster than TPU capacity, and Bearish if Anthropic moves the Nscale or Lambda capacity to custom chips.
What comes next
Microsoft and Alphabet report on Oct 28 after the close and Amazon on Oct 29. Each report will show third-quarter gains or losses on AI stakes, and the earnings-day setup is covered in what an earnings catalyst is. The public S-1 filing is the next dated step for Anthropic itself; a listing in November would start a lockup clock for early holders, explained in what a lockup expiration does to a share price. Investors weighing the cash side should read the cash flow statements rather than net income, which our guide to reading a cash flow statement walks through. For a cloud supplier that moved on AI financing worries, see why CoreWeave stock fell, and for the rest of the day's moves see today's biggest stock moves.