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Zoom Shares Jump 11% as Anthropic Investment Seen Valued Up to $4 Billion

Prime Highlights:

  • Zoom Video Communications’ shares surged after analysts highlighted the hidden value of its early investment in AI startup Anthropic.
  • The stake could significantly boost investor sentiment and emerge as a major long-term value driver for the company.

Key Facts:

  • Analysts at Baird estimate Zoom’s Anthropic investment could be worth between $2 billion and $4 billion, depending on dilution and ownership.
  • Zoom disclosed in 2023 that Zoom Ventures invested in Anthropic as part of a strategic partnership, with $51 million in strategic investments reported that quarter.

Background:

Shares of Zoom Video Communications rose 11% on Monday after analysts said the company’s investment in artificial intelligence startup Anthropic could be worth between $2 billion and $4 billion. The estimate came from analysts at Baird, who described the investment as a largely overlooked asset with strong upside potential.

Zoom disclosed in 2023 that its venture arm, Zoom Ventures, had invested in Anthropic as part of a strategic partnership announced in May that year. While the companies did not reveal the size of the investment, Zoom reported $51 million in strategic investments during that quarter, according to regulatory filings.

Baird’s analysts believe all, or at least most, of that amount was invested in Anthropic. With the AI startup now valued at around $350 billion, the stake could deliver a return of nearly 78 times the original investment, depending on dilution and ownership levels.

The analysts said investors have mainly focused on Zoom’s efforts to revive revenue growth and expand its AI-based products. However, they noted that the Anthropic investment could become one of Zoom’s most valuable financial assets.

Zoom rose sharply in the early months of the Covid-19 pandemic as remote work drove demand for video conferencing tools. As offices reopened and hybrid work became more common, the company’s growth slowed and its share price fell from peak levels.

The potential value of the Anthropic stake could help improve investor sentiment. Analysts said Zoom is directly exposed to the success of Anthropic’s AI model, Claude, through its investment and partnership.

Speculation around a possible Anthropic initial public offering has also increased investor interest. Analysts said an IPO or other liquidity event could make Zoom’s investment even more significant.

While Zoom continues to focus on product innovation and AI integration across its platform, analysts believe the early bet on Anthropic may turn out to be a key long-term value driver for the company.