Anthropic expects to price its initial public offering at $70 to $78 per share on Nov. 18, valuing the five-year-old AI company at between $1.26 billion and $1.41 trillion. The range falls well short of the roughly $2 trillion valuation that bullish investors and analysts projected over the summer, and it means Anthropic will not claim the largest-IPO-in-history title currently held by SpaceX, which priced its June IPO at $1.77 trillion.

Several market experts told Fortune the conservative pricing reflects strategy rather than distress. At a time of political and economic uncertainty, the discount lets Anthropic manage expectations and preserve room for a strong trading pop when shares begin trading on the Nasdaq on Nov. 19 under the ticker ANT.

Why did Anthropic price below expectations?

Lior Prosor, general partner at the venture capital firm Deep33, said: "Anthropic is moving forward with its IPO at a steeper discount than market initially anticipated. We think that is a smart pricing strategy. It gives nervous AI-trade investors meaningful potential upside while securing the capital Anthropic needs to take full control of its destiny and fund its compute commitments."

Compute is among the biggest risks in Anthropic's business. According to its most recent S-1 filing (the registration document companies file with regulators before listing), the company has nearly a trillion dollars in committed compute-related spending, and that may still not be enough. "We expect demand for compute to continue meaningfully outpacing supply across the chain," Prosor said.

The IPO could raise as much as $94 billion, capital that will be vital to securing compute and staying at the forefront of the AI race. As with every listing, Anthropic must balance two risks: leaving money on the table by pricing too low, or pricing too high and watching the share price plummet when trading begins.

What does the pricing mean for investors?

Darian Shirazi, general partner at Gradient, framed the decision as media strategy. "Pricing an IPO to perfection doesn't leave much excitement or positive press, especially if the stock falls after the IPO," he said. "Anthropic is likely optimizing for positive media coverage of the IPO and to drive more upward momentum after pricing. IPOs that fall after pricing usually suffer months of negative press before recovery, so this is likely a good way to ensure a positive outcome for all investors—existing and new."

Aman Verjee, founder and general partner at Practical Venture Capital, said astronomical compute spending combined with slowing third-quarter revenue has "given prospective buyers pause." He added: "Recent broader market sell-off related to political headwinds in Congress in key states where data centers are being built—notably Texas, Georgia, and Ohio—has dampened some enthusiasm."

Even so, Verjee said the lower valuation "reduces expectations and leaves plenty of room for upside appreciation." If the IPO exceeds expectations, Shirazi noted, the resulting positive press could have favorable downstream impacts.

How strong is Anthropic's underlying business?

Anthropic's third-quarter revenue totaled $17 billion, up more than 1,100% year over year. Sequential growth, however, slowed to 47% in the third quarter from 144% in the second quarter.

Anthropic remains one of the undisputed leaders in frontier AI models (systems at the cutting edge of capability), with its technology widely used by businesses, particularly for software programming and cybersecurity. A key question facing investors is whether Anthropic can make its AI tools must-have technology for a broader set of customers, as they compare it with competitors such as OpenAI and Google.

Last week's midterm election results could also complicate the data center buildout. In anticipation of more difficulty getting projects approved, and in a bid to curry public favor, rival OpenAI is attempting to rebrand data centers as "compute campuses."

What products has Anthropic launched ahead of the listing?

Anthropic has built pre-IPO buzz with a series of product announcements:

• On Monday, Nov. 9, it debuted new models, Fable 5.2 and Mythos 5.2, priced 20% below rival OpenAI's flagship GPT-6 Astra, while claiming superior performance.
• On Tuesday, Nov. 10, it released a suite of workplace tools that could threaten Microsoft's grip on white-collar work in non-coding roles.

The lower-than-expected valuation does not signal any "weakness in Anthropic's business," Bastiaan Janmaat, general partner at Lithos Capital, said. "In fact they've shown incredible advances recently."