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Anthropic could become one of the most successful companies of the AI revolution. But before buying its stock when it goes public, hold on…
Legendary investor Louis Navellier thinks investors should be very careful.
In today’s Friday Digest takeover, Louis explains why he’s excited about the upcoming IPO of the company behind Claude – yet has no intention of chasing its shares when trading begins.
It’s not that Louis doubts Anthropic’s potential. But after nearly five decades of investing, he’s learned that a great business and a great investment aren’t necessarily the same thing.
Today, he walks through three reasons for his caution, and he explains why the recent selling pressure across AI stocks may have created more attractive opportunities in established companies already delivering impressive profits.
Louis will expand on that thinking during a special free presentation on Thursday, November 12, at 2 p.m. Eastern, where he’ll reveal two specific recommendations for 2027: one stock he believes investors should buy and another he thinks they should avoid. You can reserve your free spot right here.
Wall Street loves an exciting new story. Louis would rather follow the earnings.
I’ll let him take it from here.
Have a good evening,
Jeff Remsburg
Folks, I have to tell you, I’m looking forward to the Anthropic IPO.
The company behind the Claude artificial intelligence platform has been growing at an incredible pace. Its revenue surged more than 1,200% in the first nine months of 2026.
That’s phenomenal growth.
Anthropic’s arrival on Wall Street could give the entire AI sector another shot in the arm.
Remember, I’ve been telling you for months that the AI boom isn’t slowing down. The order backlogs are enormous. The companies supplying chips, servers, storage, and cooling equipment to the hyperscalers are reporting spectacular earnings.
But there’s something I want to make very clear: I’m not recommending that you rush out and buy Anthropic stock when it begins trading.
I’ve been investing for 47 years, and I’ve learned that there’s a big difference between an exciting company and a stock that deserves a place in your portfolio.
So, let me give you three reasons why I’m not chasing Anthropic’s IPO… and where investors should be putting their money instead.
Reason No. 1: IPOs Can Be Awfully Expensive
Anthropic got started in 2021. Just five years later, it’s preparing for what could be one of the largest initial public offerings in history.
Its net revenue retention rate is approximately 900%. In plain English, customers that were already using Anthropic’s services a year ago are now spending roughly nine times as much.
But here’s the problem.
Everybody knows Anthropic is growing rapidly. Wall Street knows it. Institutional investors know it.
So, how much are they willing to pay?
As I write this, Anthropic hasn’t announced its final offering price. And even when it does, there’s no guarantee that ordinary investors will be able to buy shares at that price.
If demand is overwhelming, the stock could open substantially higher.
We’ve seen this movie before.
When SpaceX Technologies Corp. (SPCX) went public in June, its shares surged roughly 40% in the first two trading days.
Then the stock tumbled from those early highs. Investors who chased the excitement paid the price.
The same thing could happen with Anthropic.
There’s also an unusual provision in Anthropic’s offering that could allow certain insiders to sell shares immediately, rather than waiting through the traditional lockup period. That creates another potential source of selling pressure.
I’m not predicting that Anthropic will collapse after its IPO. It could certainly go higher.
But I don’t like guessing about what a stock will do when everybody is chasing it.
I prefer to let the excitement settle down.
Reason No. 2: I Want to See the Earnings
I am obsessed with fundamentals.
I want strong sales growth. I want even stronger earnings growth. I want positive earnings surprises. And I especially want to see analysts revising their earnings estimates higher.
Anthropic certainly has the sales growth.
And its operating results are improving dramatically. During the first nine months of 2026, its operating loss narrowed to approximately $1.3 billion, compared with $5.2 billion during the same period last year.
That’s very encouraging, but the company still has a lot to prove.
Anthropic has disclosed nearly $900 billion in future spending commitments, primarily associated with computing power and infrastructure. That’s an enormous amount of money.
But there’s a difference between spending money and making money. So, I want to see how Anthropic converts its extraordinary revenue growth into sustainable earnings.
That’s why I generally wait at least a year before considering a newly public company.
My Stock Grader system evaluates thousands of publicly traded stocks using a combination of fundamental and quantitative factors.
The fundamental side looks at sales growth, earnings growth, operating margins, earnings surprises and analyst revisions. The quantitative side helps me identify stocks attracting buying pressure relative to their volatility.
And the results speak for themselves.
Every single year since 2020, Stock Grader has issued a Buy or Strong Buy rating for at least 23 of the 25 top-performing stocks in the market.
That’s what happens when you focus on the numbers instead of Wall Street’s latest excitement.
Of course, those numbers have to exist before I can evaluate them.
I need a meaningful trading history and several quarters of public financial results to evaluate those things properly.
With Anthropic, we’re just getting started.
So, I’ll watch its earnings reports. I’ll watch its margins. I’ll watch whether analysts become more or less optimistic. And eventually, if the numbers justify it, Anthropic might earn a place on my buy list.
But I’m not going to abandon a system that’s served me well for nearly five decades just because Wall Street has a shiny new stock to sell.
Reason No. 3: There Are Already Better Opportunities
While everybody is talking about Anthropic, some of the companies already making money from the AI boom have been getting knocked around.
And frankly, I think it’s ridiculous.
Look at Micron Technology Inc. (MU).
The company is benefiting from extraordinary demand for memory chips used in AI systems. Yet its shares recently traded at less than four times forecasted 2027 earnings.
Or look at Super Micro Computer Inc. (SMCI).
Its latest quarterly sales surged nearly 300%, while earnings increased more than 570%. Yet the stock was trading at only roughly five times forecasted earnings.
Folks, I’ve rarely seen an environment where companies are growing this quickly while trading at such low earnings multiples.
But markets react. They don’t think.
Sometimes investors sell excellent companies because they’re worried about interest rates, politics, or whatever the latest Wall Street narrative happens to be.
I look at the earnings. Are sales still growing? Are operating margins holding up? Are analysts cutting their estimates, or are they raising them?
If the fundamentals remain strong, I’m inclined to hold on.
Good stocks bounce like fresh tennis balls. Bad stocks bounce like rocks.
So, why would I chase Anthropic at an unknown valuation when I can already identify companies with proven earnings, established trading histories and attractive prices?
And it’s not just AI.
We’re also finding extraordinary earnings opportunities in energy, refining, shipping, and other industries.
I want to own the best stocks I can find, wherever they happen to be.
The Stocks to Buy and Avoid for 2027
Finding a good stock is only the first decision. You also have to decide whether it’s better than the stocks you already own.
I might like a company. I might think its business is phenomenal. But if I already own another company with stronger earnings growth, better analyst revisions, and less volatility, why would I replace it?
And the opposite is just as important. If a stock’s fundamentals deteriorate, I don’t want to hang on to it simply because it used to be a winner.
That’s why I’m constantly evaluating thousands of stocks, looking for opportunities to replace good companies with even better ones.
And as we head into 2027, I think the difference between the winners and losers could become even more pronounced.
Some companies are delivering spectacular earnings growth, expanding their profit margins, and attracting institutional buying. Others are struggling, and I expect some of them to struggle a whole lot more.
That’s why I’ve put together a special presentation to show you where I believe the biggest opportunities and dangers lie as we head into 2027. We’re doing it at 2 p.m. Eastern this coming Thursday, November 12 (reserve your spot here).
And I’m going to give you two specific stock recommendations, absolutely free.
First, I’ll reveal an A+ stock that I believe could be among the market’s top performers in 2027 and explain why I think it’s an exceptional opportunity to buy now.
And I’ll also show you one stock I believe you should sell or avoid immediately. It could become one of the market’s worst performers in 2027.
Now, I hope Anthropic has a spectacular IPO. I hope its business continues growing, and I hope its success helps lift the entire AI sector.
But I’m not going to chase it.
Wall Street will always have another exciting story to sell you. My job isn’t to buy every story.
It’s to find the fundamentally superior stocks, avoid the fundamentally inferior ones, and let earnings do the heavy lifting.
Sincerely,
Louis Navellier
Senior Investment Analyst, InvestorPlace
P.S. Louis has been at this a long time, and one thing I’ve always appreciated about him is that he doesn’t get distracted by Wall Street’s latest obsession. He follows the earnings, the numbers, and his own research. And right now, he’s seeing some remarkable opportunities — along with some stocks he’d steer clear of. At his free presentation Thursday, November 12, at 2 p.m. Eastern, he’ll reveal one stock to buy and one to avoid for 2027. Reserve your seat here.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Micron Technology Inc. (MU) and Super Micro Computer Inc. (SMCI)
