All the investing world seems to be talking about these days is Anthropic. The disruptive artificial intelligence (AI) lab is building no-code tools for software development that are taking the world by storm, and share prices for many software stocks are down as a result. Anthropic's revenue is exploding higher, and its valuation is now in the hundreds of billions.
And yet, individual investors cannot own a piece of the rapidly growing company until Anthropic goes public (which it is rumored to do later this year). So what is an investor to do? One way to gain exposure to Anthropic is to invest in Zoom Communications (ZM 0.23%), the parent company of Zoom Video.
Zoom invested in the start-up years ago, and that investment has turned into a home run win. Depending on how an IPO goes, Zoom's investment could wind up representing a good percentage of its stock's market cap today. Here's why Anthropic's rapidly growing valuation could mean a win for Zoom investors over the next few years.
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Zoom's AI investment
Back in 2023, Zoom invested $51 million in Anthropic when it was just a tiny start-up. Now, Wall Street analysts estimate that this stake could be worth $2 billion to $4 billion, which would be a massive return in just a few years. It is an estimated range because of the unknown dilution from follow-on investments into Anthropic, making it unclear what percentage of Anthropic Zoom owns right now.
The company is rumored to go public later this year, likely at a higher market cap than its current $380 billion valuation. If revenue keeps growing by 10x year over year through 2026, the business will be doing tens of billions in revenue and could quickly close in on $100 billion, up from a standing start just a few years ago. Even with additional dilution, Zoom's stake may be worth $5 billion or more at the time of the initial public offering (IPO).
As of Feb. 24, Zoom has a market cap of $26 billion. If its stake in Anthropic is valued at $5 billion, that would make up close to 20% of its market cap overnight, which isn't reflected on the balance sheet today. Add in $8 billion in cash on the balance sheet, and Zoom's enterprise value could be as low as $13 billion later this year.
NASDAQ: ZM
Key Data Points
Should you buy Zoom for its stake in Anthropic?
What is the actual Zoom business doing today? It is not in hypergrowth mode as it was during the COVID-19 pandemic, but it still grew revenue 4.4% year over year last quarter, with strong margin expansion.
Operating earnings were $1.1 billion over the last 12 months, or less than 12x its estimated enterprise value at the time of its public listing later this year. If you believe in Zoom's business stability and the potential of its Anthropic stake, the stock could be a cheap buy today.
