Q3 numbers are not what you want to see heading into an IPO.
Again the issue is not is Anthropic an amazing growth story. Zero would debate that.
The issue is this is a probably $200-300B company pretending it’s a $2T company.
Add to that the insane amount of committed spend, a high interest rate environment which means they’ll pay a painful premium to patch cashflow gaps, and a likely “junk” bond rating (per Friday’s news) and that’s why folks are concerned.
It’s also just wrong to keep dismissing the paper losses from convertible notes as somehow not real losses. Once they are a public company this will be actual value taken away from existing public shareholders so they are legit losses not to be ignored. It’s like claiming equity based comp is free money… it’s not, you’re taking it out of the pockets of shareholders.
They may not be $2T company but they are also definitely not a $200-300B one. Their Q1-Q3 revenue is $33B with $17B in Q3. Even if they magically flatline for Q4, that's $50B revenue for the year. There are exceedingly few tech companies with P/S of 6 or less (equivalent to $200-300B valuation with $50B revenue) and we all know Anthropic's revenue will not be anything remotely like flatline for awhile.
> There are exceedingly few tech companies with P/S of 6 or less
I think an open question is if SOTA labs should be priced like software companies have been. Software has been so valuable because the marginal cost approaches zero as distribution increases. Profit/employee at a company like meta prior to massive AI spending was measured in the millions. Meanwhile, the balance sheets of the labs look entirely different - remaining competitive requires continuous and astronomic capital costs, and there's no indication that this goes away. They are perennially being chased by competitors offering the same performance as models mere months old at fractions of the cost.
Their business to me, at least long term, looks a lot more like an airline, railroad, or other extremely capital-heavy industry with very competitive and low margins. None of those trade at 6+ p/s. Particularly on the buyer side, the switching cost to me as a high-AI-spending employee if a cheaper model offers compelling performance is less than deciding that I should ditch my preferred business travel airline.
I think that's why you're seeing so many calls from the leaders of those companies to regulate their competition away.
But like Google and Facebook have a lot of hardware. They aren’t just pure in the cloud (though Google is running other peoples clouds). But yes their hardware demands per dollar of revenue is much lower
Ultimately it's marginal, meaning that every $ of revenue that Google and Meta make have an associated compute cost with it, but scale your revenue down and you scale compute down also. Moreover this compute cost per revenue is fairly low. A small cloud instance equivalent's of compute can generate a ton of business value.
The big foundational labs are not like this. Every model they release takes a ton of data infrastructure and training (pre, train, post) compute. Then inference itself requires compute. Even if the labs sell tokens, each token embodies a lot of training and inference compute. This is a much more capital heavy business, so I can see revenue multiples being smaller than pure SaaS businesses. A model release bust (like Opus 5) ends up leading to big losses because of the necessary training compute spent on the model and the labor spent on training. A bust SaaS product ends up being wound down quickly, and only costs the labor spent on building it and the compute spent running it.
A good analogy is chip companies before all of the AI related compute pressure. These were largely low margin businesses because of the fixed capital cost associated with each new chip gen, architecture, process, etc
This is what makes a market. If they keep growing those waiting for the bear case will be left behind. Those who are on the side that the biggest most important AI company will continue to grow revenue will win.
Anthropic has something close to first-mover advantage but that doesn't mean they'll continue to grow revenue. Ten years from now the dominant player could be Google or DeepSeek or some random startup that doesn't even exist yet.
The only justification for extremely high P/S ratios is if there’s strong evidence that the future margins and profit will be amazing.
With the price of AI rapidly falling to the price of compute, with models therefore basically having zero value, and with Anthropic having rented all its compute from others then there’s little evidence that such high profits are in the future.
> we all know Anthropic's revenue will not be anything remotely like flatline for awhile
The SOTA US labs are one chinese open model away from being abandoned overnight by the masses. Ive argued before, but argue again here, that the current hardware shortages are the main thing keeping this from being a reality currently. If more people were able to run local models for a reasonable all-in cost, we would have a much higher velocity of iteration and improvement in the open source community. But its still too niche while people cant justify the cost, and so they continue to pay the premium for inference.
The limiting factor now is more electricity than hardware. There is hardware sitting idle because data centers can't get grid connections and power delivery contracts. Even for those who willing to run gas turbine generators on site there are severe supply constraints.
You should stop arguing that because it doesn’t make any sense.
If a Chinese company released an open weight model that somehow was so superior to Anthropic and OpenAI then they can just take the model and deploy it, reverse engineer it, use it to improve their models, and/or do any number of things they currently do today which are of increasing value.
Most people don’t want to or have any interest in running or managing models locally.its not just about cost. The market for running models is infinitesimal in comparison to the market for managed products. That’s why everyone uses Office and not Open Office. Nobody is going to run some Chinese open weight model no matter how good it is on their critical banking infrastructure or something.
There will be space for lots of different solutions and many products and types of models including Chinese open-weight models and American ones too once we get around to making money on them.
The game isn’t just “cheapest open-weight model at all costs” which is what you are asserting here.
> Most people don’t want to or have any interest in running or managing models locally
When I argue the hardware cost, I should note that I think this is the limiting factor for _improvement_ of these models. But ultimately I dont think most users will self host in that world. They will still pay for inference, but it will be for one of a dozen commoditized vendors who are able to reap the benefits of inference at scale.
It could happen, but it would be an anomaly. In general if a business is to make money it does not let itself become a commodity vendor. You can't go to General Burger and select from one of a Wendy's or Big Mac or Burger King burger. You can't go to Microsoft and buy a Playstation. There are exceptions, of course, but whoever is building this stuff is going to want to make money and becoming a commodity vendor isn't the path toward that goal.
It's the same reason that open source software has been a commercial failure except for a few evangelists or whoever becomes a cool "thought leader" by releasing a new library and then gets invited to conferences to speak. Software was commoditized in many ways, yet all the big software vendors made more money than GOD because they took whatever commodity parts came to exist and monetized them.
I think the models can be improved with either recursive improvement (it would be faster with better hardware but if you can do it at all you just need time) and algorithmic developments. I don't know what those would be, but usually we see improvements to both over time. The algorithms will tend to be trade secrets as well.
Aren't their operating expenses quite high? That is they depend on high expenses to continuously drive revenue. If they can't keep raising money, then their revenues should be expected go down.
There's a world where capabilities narrow and Anthropic is stuck selling a commodity (not like they don't have any competition now). In this world it's not unbelievable that Anthropic would trade around or below 1x revenue no?
I think calling Anthropic a tech company could be like calling an electric utility a tech company.
I think this is focused on the wrong side of the distribution. You can view the value of bear cases at ~zero and it doesn't move the math much.
The $2T comes from the implied odds (perhaps 10 or 20%) that we get near term AGI or RSI and AI becomes the entire economy, crossed with the odds that Anthropic gets there first and is the runaway winner (maybe 25%).
The trouble, in my view, is that today's revenue numbers are essentially irrelevant to the outcome that drives ~all of the expected value. The market has been pretending otherwise, but fundamentally we're looking at a globally top-10 public company that boils down to a binary call option, and the probability underlying that option is inscrutable. That's never happened before, and an inability to divine a fair valuation properly demands extreme volatility, especially in reaction to capabilities progress.
Finally (total speculation): I think Anthropic knows this. I think they're sitting on something with Fable 5.5 and the surprise outperformance of Opus 5.5 is a tell. They intend to release it just before the IPO and make some big claims underwritten by its performance.
> The $2T comes from the implied odds (perhaps 10 or 20%) that we get near term AGI or RSI and AI becomes the entire economy
At this point every churches should IPO and raise hundreds of billions from the implied odds that judgment day is near and Paradise becomes the entire economy, that wouldn't be crazier.
Another consideration: if we get AGI and it becomes the entire economy, what are the odds that the money you've invested still matters? It seems like both the "universal post-scarcity" or "AI company controls all wealth and power, the peasants live in squalor" scenarios are likely outcomes.
> There are exceedingly few tech companies with P/S of 6 or less (equivalent to $200-300B valuation with $50B revenue)
But a big part of the reason this has been true is that (mostly-software-based) tech companies haven't historically been spending significant billions of dollars every year in capex.
Well, it depends on how you interpret the drop to a 47% quarterly growth rate.
If this is the new normal, that's great news. Revenue growing at 47% per quarter will 10x in 6 quarters. Even if you think it should be a $200B company today, it'll be a $2T company in 18 months, assuming the same revenue multiple.
If you think this is the start of a rapid decline to 0% or negative growth rate, then it's obviously bad news.
The real answer is probably somewhere in the middle -- but exactly where in the middle you think it will fall depends more on your own priors than anything you can read from the data.
> Once they are a public company this will be actual value taken away from existing public shareholders so they are legit losses not to be ignored.
They reported a loss here because they sold notes convertible into shares and their valuation went up. Normally shareholders do not lose money when the stock price goes up.
It's weird that they had to report it like this because they are technically derivatives, and if they had just given out actual shares (as with stock-based comp), they wouldn't. Yes, giving people stock is a real cost, but what happens to the price afterwards is not, and when the price goes up shareholders are definitely making money, not losing it.
Either way, they did report it. It is up to you to decide how you interpret that information.
To me, "a probably $200-300B company" sounds absurd. You're describing one of the possible outcomes of a massive range that goes from $0, where they get over their skis on financial commitments to well beyond $2T, where their 10x YoY growth continues for a few more years. A $200-300B outcome is possible, but certainly not probable. (And in fact, for us HN commenters, the most probable outcome should be assumed to be roughly what the market will bear.)
>The issue is this is a probably $200-300B company pretending it’s a $2T company.
What do you expect for FY2027 revenue to confidently conclude this? not saying you're wrong, but considering the dramatic changes in their revenue you seem strangely very certain that you know where it will land.
Because if they priced the company more reasonably many later stage investors would stand to lose money. So they’ve backed themselves into a corner of having to go public at a $1T plus valuation just so some later stage investors don’t realize a big loss.
Maybe they can use it, but if there is an overshoot of investment in compute, future competitors may get it for firesale prices while Anthropic pay more than full price. That is, they can get dragged down by those commitments not because their own growth is lacking, but because the market gets weaker. They may even contribute to it, the more competitors they kill, the less demand there is for compute.
In some ways it is crazy, but at the same time, anyone that has seen typical efforts of "digital transformation" in aging Fortune 500 companies is going to be skeptical of said company's abilities to become relatively efficient. I always considered that new entrants that don't think like they do would eventually win once the value of putting tech in the middle of decision making, getting rid of large divisions worth of cruft was worth enough. Trying to do the very same thing by competing with everyone is similar once you squint. You get extra money from your parent company to throw around during growth or massive reorg, but still have the problem of iffy incentives we currently see in the modern tech holding company, where what is good for the company, for consumers, and for the random VP have nothing to do with each other.
I don't fully agree with you that it doesn't make sense for Anthropic to claim it is in competition with every other industry.
Take a look at how OpenAI has shaken up higher level math.
Frontier AI labs have a Swiss army knife of a tool that can do as well or better than every other company or collective in every industry.
Say you have a magic hotpot that can deliver any dish you want and each dish it delivers can be as good or better than any restaurant in your area of business. You basically cannot be beaten in the food business. Your competition can only cry about their cooking being more artisanal or whatever but at the end of the day convenience and cost will triumph.
Now say you have a magic pen for art, a magic jukebox, a magic text generator for authorship, and so on. You get the idea why I don't think Anthropic is wrong.
I guess AI will be very competitive in all research fields, but your example is actually interesting: they do not have a magic hotpot, right? So are they competing in the food industry? Or how quickly will they be able to compete with Amazon in logistics?
So I think they can compete in many industries (and I don't like it), but not all of them for sure. They can only compete in all industries with infinite money, and I don't think it would be good for most people.
Art, music, writing... those are all cheap. They've also already got plenty of good models out there, and people will judge you for using them.
The places where American society needs costs cut or needs an increase in labor - healthcare immediately comes to mind - are places where you'd be asking Anthropic (or any other AI player) to take on massive amounts of liability.
If you screw up someone's drawing, you regenerate the drawing and charge the hack/fraud for the privilege. If you screw up a blood bank order, you pay the survivors a few million dollars. Since you've created a system that can scale blood bank order up-screwing, you'll be doing that a lot. There's not profit in paying out medical torts.
Given that SV-based companies work to dismiss liability even more than most American companies do (which is saying a lot), I don't see that working well for them.
> Okay so Q3 ARR at $67.8bn versus $46.2bn for Q2, +47% QoQ. Turns out tokenmaxxing's end over the summer slowed revenue growth versus an absolutely torrid 100%+ growth rate in Q1/Q2 but 46% sequential is still eye-popping
> Operating margins (GAAP) went from 8% to -3$, with a -28.5% QoQ incremental operating margin. $SPCX compute coming online is the reason.
> Bottom line after seeing this Q3 update: the basic takeaways from the original S-1 don't change, but fears that they were excluding Q3 because it was a disaster were definitely wrong. Do with this information what you will.
It's also worth noting that Q3 only has one week of Opus 5.5 (9/22 - 9/30) which may have changed the economics for Q4.
> fears that they were excluding Q3 because it was a disaster were definitely wrong
That's a very generous reading. Anthropic's entire growth narrative is the rapid growth over the previous 12 months, from near-enough zero to $100bn+ this year. Now we see that actually growth is levelling off and that their revenue was ~$5bn/month over the last quarter, which is barely over their compute commitments, and nothing close to the $100bn+ leaked.
I guess if people thought Q3 would show negative growth rate, sure, it isn't a disaster, but their growth rate slowing so much is surely very bad and matches all the concerns commenters had.
And this is Anthropic! Anthropic are the financial success compared to OpenAI. OpenAI are doing much worse, so this does not bode well for OpenAI either.
People will point out that +46% is still good, but this is like measuring the escape velocity of a projectile that's still at 1000 feet. It's not that the projectile isn't going very fast or won't get very high, it's that if you want to have enough momentum to break out of Earth's gravitation pull you can hardly afford any deceleration.
Really, you're talking about expectations ("expected") of the expected ("price") trajectory (actual business performance).
If the above comment was intending to say "chart go up steeper make price higher, chart go up less steep make price lower", then no dispute there. But that carries virtually zero predictive information about whether the business will achieve "escape velocity" (whatever that means).
You absolutely cannot predict Anthropic's fate based on their growth rate slowing from Q2 to Q3. Obviously.
You can predict the resting place of a projectile with information like this. You cannot do so with a business, especially one as dynamic as Anthropic in an environment as dynamic as today's.
The point being made here I think is that the same can be expressed in natural english language that does not pretend to be a physics class for some reason.
That reason possibly being to grant legitimacy to an otherwise mostly illegitimate and equally mostly fictional branch of the economy (that whole MBA cluster).
Mathematically they can work very similarly though because you have a revenue growth rate, and margin. The question is can that revenue/margin reach break even before you run out of runway (the expected sum of all rounds of investing) .
The main difference I would concede is that gravity, mass, forces, awind drag etc are much easier to model.
Sure they can work very similarly. But they can also not behave very similarly.
Businesses can have stalled growth, degrading margins, etc. etc. and then simply... reverse it. They can raise more money. Their competitors can get regulated out of existence. They can do a literal infinite number of things that cannot be factored into a model like "a projectile."
That's why the projectile analogy is stupid as fuck. It suggests you can presuppose the conclusion by presupposing the conclusion.
It's a model that helps you make present tense valuations of potential futures.
No one said it literally is a projectile. It's an analogy and model. The similarities are in the present tense maths. It's presumed and beyond having to be stated that businesses exist in a complex set of variables all of which could change and might not be as predictable as the valuation maths.
You're not wrong, you're just not adding anything to the conversation that any but the most uneducated do not already know and acknowledge.
And the analogy is literally not useful in any way whatsoever.
It implies that you can know Anthropic's outcome from this slice of data. That is literally not true in any way at all.
Like it's not even remotely or analogously or roughly true.
Anthropic behaves like a high-growth business with a quarter of slowing growth. It does not behave like a baseball. Any conclusions you draw from analyzing it as a baseball will be de facto faulty because the two systems are nothing like one another. The most basic assumption of projectile analysis (that energy is not added in-flight) is the opposite of the most basic assumption of a business (that they are actively profit-seeking).
The analogy adds nothing except ambiguity at best and active falsehoods at worst.
>It implies that you can know Anthropic's outcome from this slice of data.
No it doesn't. All I said was that given how little we have to go on and how early in the process we are, a minor 2nd or 3rd derivative slowdown isn't a positive signal. All indications are they they need additional orders of magnitude in revenue fairly soon.
I also never said that it wasn't self-propelled. I was starting to write about waiting to see if another stage of propulsion comes online but I deleted it.
I think that's an unnecessarily pessimistic take. The way I look at it the industry did not wake up to how big this was until Q4 and so it makes sense that you would see astronomical growth in q1 and Q2 as everybody woke up and started adopting. Seeing the growth Taper down to a 4.5x annualized rate which to your point will only continue to taper but it's still mind-boggling at this scale ... you just don't have anything else like this in the economy. This is like hyperscaler Revenue scale achieved in 15 years being achieved five times as quickly. At this rate Anthropic will exceed AWS Revenue within a year
It is a lot easier to switch model providers than it is to switch cloud providers. And the open weight models from Chinese Labs make Claude a lot more of a commodity than any service provided by AWS.
10x year over year couldn't continue for long--they were what...3.5 years from exceeding US GDP?
47% quarterly growth is still 4.5x annual growth, which would put them at $300+ billion revenue in a year. This is still unprecedented growth for a company of this size.
The negative perspective depends on assuming that the 47% quarterly growth is going to continue dropping soon. And it is going to drop, since it's only a bit more sustainable than last year's growth. The question is how many hundreds of billions they're making a year when it levels off.
If we assume LLMs will continue to advance at a pretty rapid pace (relative to the current rate of advancement; so, same or faster), all these numbers look good to me.
Some people just start out with wanting LLMs/AI/Anthropic to fail or be scams and consistently try to fit any new evidence pegs into those unchanging hypothesis-shaped holes. This group ideologically despised LLMs from the start and needs them to be fake.
Lots of people making the financial case against Anthropic are not anti-LLM. I think the technology is great, interesting, powerful, innovative etc etc etc my issue is with the garbage business that Anthropic and OpenAI are building and the nonsensical ideas people have about business in general. Technology is exciting, business is not, business is boring. Money come in, money go out. Selling technology, no matter how exciting it is, does not change the nature of business.
And yet one can argue that the "garbage businesses" you label are the ones doing their best at matching market demand. See how well things are going for other entrants, like Google, Microsoft or Meta. Putting Copilot in every app makes a whole lot less sense than Cowork, Codex and the like. They just are doing worse things while attached to traditional money fountains, like ads in social media and search.
You can be bullish on LLMs profoundly transforming society while being bearish on the economy "digesting" this new technology fast enough to justify the incredible capital spending necessary to power it.
It doesn't matter how much they "continue to advance at a pretty rapid pace", if the economy has no actual demand for the new capabilities. Even if we accept the premise that LLMs can produce good code at scale now and automate most software development work, then what? As *an industry*, the bottleneck was that we needed people to write code, and that bottleneck has been removed since ~Opus 4.6. Where is the industry now bottlenecked which requires some significant quantum leap in model capability?
Don’t bother - these knuclkleheads don’t understand nuance and despite much of their devices being manufactured in China - they struggle to accept Chinese offerings can take significant market share.
>If we assume LLMs will continue to advance at a pretty rapid pace
Why assume that?
So much money have been given to that handful of companies and to that field, that it's pretty much guaranteed to plateau (it's not some small but growing market with lots of room to grow. It's already taking as investment a huge chunk of the economy, and the returns don't seem to justify it).
Most of it is a pre-IPO hype and a circular financing loop between Nvidia, Oracle, Amazon, and the AI players anyway, so the real returns are even worse.
No there are just numerate people pointing out ANT/OAI need to make X $$$ to make Y $$$ spend make sense. The financials are separate from model capabilities, they can cure cancer and invent big dick pills and still go out of business if their balance sheet is fucked.
> Now we see that actually growth is levelling off ...
I really don't understand how could it be otherwise? They're planning to IP at a valuation representing 5% of the US GDP and, unlike NVidia, they are neither selling shovels in a goldrush nor a business with decades-old proven track of records.
Are people really going to buy ANT thinking it'll 10x to 50% of the US GDP?
Aren't there better stocks to YOLO on if you think you could maybe 10x? And if you want something safe instead of YOLO'ing, aren't there plenty of companies much safer and much more boring to invest in than something IPO'ing at 5% of the US GDP?
Isn't the entire Anthropic narrative based on infinite growth? How is infinite growth sustainable?
> Aren't there better stocks to YOLO on if you think you could maybe 10x?
This is why any [consumer] investment in ANT is bad. If ANT goes 10x then congrats, we [the citizens] are in a crisis. If ANT goes 1/10x then congrats, holders of ANT are in a crisis.
Disagree on the tokenmaxxing end. People are still doing it (and I'd argue more people are doing it due to wider adoption). Its just that most low hanging coding adoption has reached saturation point very quickly (which is genuinely impressive).
Now, they need to unearth new use cases and saturate them to keep the momentum going. Its unclear if they have found these opportunities and can turn them into sustained growth.
Doesnt matter at this stage of growth what financial analysts say because they havent seen anything similar in their lives :) Large corps are going to really be the deciding factor, in what ANTs next years revenue is going to look like. And right now inside large corps there are literally hundreds to thousands of different experiments running and no one knows what is going to click.
That's not the takeaway of this analyst or anyone I have heard.
This is specifically about the end of tokenmaxxing and how much worse the growth rate would look after the Q3 numbers came out.
(I do think moats are shallow, and I personally switch away from Anthropic every few months for a while, but I've been coming back. All software moats have been made more shallow now, affecting the entire investment landscape.)
Anthropic is working hard to create a vertically integrated stack from model to harness to productivity apps. That may or may not work, but it’s clear they see models as a value add for integration and not a product that can be a moat in themselves.
harness is not a moat. CC is great, I mix it with codex with my own vibe coded messaging and hierarchy layer. Lately there are more CC because of Opus5.5 but Codex caught back up with Sol-6.1;
I use Claude Opus at work and DeepSeek v4.1 Flash on my personal projects. For the kind of work I'm doing, they're basically interchangeable and DeepSeek costs 3% what Claude does.
We have Copilot and can select between various OpenAI and Anthropic models, and when I accidentally select the “wrong” one it takes me awhile to notice.
Opus 5.5 is great, but you are kidding yourself if Deepseek 4.1 flash isn't as good as good for 99% of coding tasks. Anthropic (and OpenAI) are between a hammer and an anvil in terms of good enough local models being able to run performantly on current and next gen Apple hardware.
Does this person not own a calendar? Q3 numbers still polluted by expensive tokenmaxxing, which wind down late Q2 / early Q3 i.e. mid year budget review which will take rest of year to unwind. Q3 numbers = more mirage of tokenmaxxing tail and velocity = lagging indcator of tokenmaxxing end. Q3 also when fable tier coding commoditized and everyone doing a deepseek on cheap inference. The latter is what will kill ANT hardest, they signed up for 100s of billion of none cancellable compute contracts last year based on projected demand x expensive token cost, but demand / growth is less than token max timeline while inference cost getting cheaper. They have fixed, exorbitant costs, and operating margins negative for Q3, and Q3 just beginning of full price war. TLDR they will likely be vastly overpaying for compute. If turns out jevons isn't people using more expensive tokens on more expensive compute, but more cheap tokens on less compute, then ANT's entire balance sheet breaks.
>Q3 numbers still polluted by expensive tokenmaxxing, which wind down late Q2 / early Q3 i.e. mid year budget review which will take rest of year to unwind.
Evidence? I was told by a lot of people that token use was going to start to slow down 5 months ago because of "the end of tokenmaxing."
People PREDICTED token maxx was a fad/trend Q1 while it was underway, but companies asking employees to cut back was late summer, i.e. Q2/Q3 transition. And the argument isn't end of token maxxing its end of EXPENSIVE tokenmaxxing, i.e. tokens pushed at $$$ and volume that can make ANT numbers square. They're not precisely because people can now maxx on cheap commoditized tokens. The market for premium tokens (at least in SWE) got kneecapped, there's only so much demand for smart/fast.
Yes look at the dates... end of Q2, i.e. start of Q3, things take time to unwind. Marcus tweet MS cancelled contract, but doesn't say when terms end, but they almost always unwind over following monthS not ASAP. Real world works on a lag / budget cycles not how fast tweets / articles get published.
> Okay so Q3 ARR at $67.8bn versus $46.2bn for Q2, +47% QoQ. Turns out tokenmaxxing's end over the summer slowed revenue growth versus an absolutely torrid 100%+ growth rate in Q1/Q2 but 46% sequential is still eye-popping
There is an unbelievably enormous difference in 100% vs 47% -> and when you look at the 2nd derivative this is REALLYREALLYREALLY bad.
I mean, the growth is astounding and incredible. It does not bode particularly well for a ~$2T valuation.
We desperately need to ground these discussions in actual numbers.
This should help build some intuition and establish a baseline for what the $2T valuation means.
If you buy at $2T Anthropic needs to be worth about $3T by 2030 for a normal market return. That's ~25x P/E and ~$120B/year of profit.
That could be something like $400B of revenue at 30% net margins, $300B at 40%, or $600B at 20%.
It would take 1.7x revenue growth a year to get from today’s $68B run-rate to $400B by 2030. Anthropic's current growth rate is ~4.7x a year. Anthropic doesn't need to maintain that, they basically just need to prevent it from absolutely collapsing and hope margins hold up against open weight models.
You could look at this and say "yeah that's plausible" or "I highly doubt they achieve that" but it's hyperbolic to say its actually impossible they can meet this valuation, definitive proof of bubble, cant be worth this unless they can create God, etc.
> [Anthropic] basically just need to prevent it from absolutely collapsing and hope margins hold up against open weight models.
There are so many variables involved that are outside their control. If GPU/RAM demand dries up (or supply increases), for example, local models are suddenly a threat in addition to hosted open weight models.
The quality there is already good enough. I've been 100% local for personal projects since Qwen3.8 Flash dropped. It's not as nice an experience as Claude I use for work, but it gets the job done and I fully control my data and can do whatever I want with it.
You just made me wonder if part of the buy-up of RAM by OpenAI and other spend on GPUs and datacenters is literally trying to weaken the value proposition of open weight models.
Not just against open weight models and not just on hardware I think. Also on token subsidies etc. OpenAI and Anthropic both seem to be aiming to outspend everyone else, so that they can be the last ones standing. It is a risky move, especially since everyone else includes Google and Microsoft, players that have both existing surplus cashflow, solid warchests, and excellent distribution channels. But all outcomes are open still...
Interesting. Their revenue has "only" gone up 47% in Q3, compared to doubling revenue in most previous quarters. Meanwhile their "compute and infrastructure" cost has increased by 77% compared to Q2
Maybe they tried too hard to get good Q2 numbers, making revenue happen earlier and expenses later, and that now makes Q3 look worse? Either way, this does not look great
It still doesn't look anything like a death knell. There is a point where you approach market saturation and the growth curve follows a sigmoid. Have you ever tried folding a piece of paper ten times?
I agree. Their financials are fine. They look like a company that has solid foundations, with room to grow but close enough to profitable that they can survive the end of the AI boom
But are they still a 1.5T USD company if their growth is already slowing this much?
They clearly mention the cost increase in the amendment - it's because of the spot pricing of gpus (likely SpaceX). Their demand exceeded so much they had to quickly find some gpus at _very_ expensive prices
And they say that this will likely continue to grow until 2027 (when the long term commitment compute comes online, which comes with opposite problem .. will there still be enough demand)
Funny how no one ever disputes his facts, only his predictions. He can easily be wrong on the predictions, while still being correct about the facts, i.e. their financials are shit and completely unsustainable. I don't care at all about his predictions, and am very interested in his fact-finding.
If you are trying to indicate that revenue is somehow not a key indicator of a successful business, or that somehow revenue growth is not the primary indicator used to derive Anthropic's eye-popping valuation for IPO, then I think you have lost the plot.
No, not when that business spends more than it makes to bring in that revenue.
A better way to phrase your thinking might be that revenue is an indicator of demand.
The issue here is that they've not really tested what happens to demand when the prices moves to where it needs to be to cover the cost of keeping the lights on.
If you go just by operating income, they showed they can be profitable in Q2, and the operating loss in Q3 is fairly small (in relative terms. For every 32 dollars in revenue they lost one dollar). They haven't shown wild profits, but nobody expects them to. Any money they make has more value when it's reinvested into growing their market share and growing the market, making next quarter's numbers look better. And imho they have solid enough financials that they can make the bleeding stop if the money faucet turns off
All of that isn't very newsworthy though. We knew all that from the Q2 numbers. What is interesting is that reinvesting all their profits to make the number go up in the next quarter didn't work as well this time as it did all the other times
I'm unconvinced they have a moat that will allow them to ever show wild profits though. They are constantly 6 months ahead of open weight models. Their potential customers are perfectly able to wait them out. They'd need a government enforced cartel against open weights at this point for me to not view the IPO as a plain and simple cash out.
Some of my nephews ran a hugely successful pokemon card selling business (for ten year olds). I later found out that their mom was buying all their card packs for them to open and sell.
They stopped when the free packs stopped coming and they needed to finance their own.
There is no company on earth that can run on customers being interested alone, you also need to offer a product they can afford at a prices that generates profit.
Right now, I could start a business selling gold bars for $1 a piece. There would be more people interested in that than Anthropic.
Since the start of the year the market has shifted from 50/50 split (closed v open weights) to 30/70 (70% of usage they see through their platform - is now open weight)
DeepSeek V4.1 Flash 1017 sees 5x the weekly token usage through OpenRouter than the closest closed weight model (GPT-6 Luna)
Even though OpenRouter is only one limited view of the market - those trends should be worrying to potential investors.
I'm not saying that OpenRouter isn't worth looking at but it, obviously, shows a much smaller slice of LLM market and it's going to, obviously, trend towards open models since those are the only model where there is any competition for inference pricing. No one is undercutting Luna because they can't really.
OpenRouter could so 90/10 split and it still wouldn't mean open models are beating (in usage) closed models.
This view will ALWAYS overweight open models. The closed ones are being used in their own harnesses via direct API connections that OpenRouter will never have visibility to.
Let's say I'm starting a shitty cash-grab SaaS that needs some kind of "Ask Jenny" feature. Is the standard practice to sign up directly with a Claude/OpenAI API account?
The sentiment they are trying extraordinarily hard to create is that in the long run Anthropic will be the only one with any AI worth anything.
That makes any loss or risk reasonable.
It's great propaganda, so great that they have themselves started believing it with certainty. This is one of the self owns that brought down the USSR :)
Of course they could be correct too, time will tell.
Beyond it being propaganda, they're trying to work the regulatory capture angle to pressure lawmakers to pass safety regulations that would functionally ensure a market in which there are under a dozen players legally capable of competing.
And of course, obviously untrue to anybody paying any attention to the rapid progress in open weight models. The IPO will be a cash out for insiders and leave the typical institutional investors with the bag.
It could be untrue, but it's not obviously untrue.
The open weight models right now are nowhere close to ..say.. Fable 5.1
They could catch up if Anthropic reaches some sort of a plateau and they manage to keep improving, but there's no reason to be certain about that happening.
Google currently appears (by their latest numbers) to be sacrificing the only substantially profitable portion of their business to attempt to create that reality.
> You think we will eventually be able to run inference on a rasp pi?
Not today's raspberry pi, but the equivalent of it absolutely. I don't work in it, but have a number of friends who are involved in LLM development - the "breakthrough" optimizations are obvious work in hindsight. We are still in the very early innings of optimizing both hardware and software techniques. The recent market imbalance has blurred the idea that hardware simultaneously gets both cheaper and much better, but no one serious expects that to stop on a longer timeline.
Going beyond the "my watch has more computation power than NASA at the moon landing" - speech-to-text used to be unreliable tech that needed datacenters backing it as recently as the early iphone, and now runs in near-realtime on smartphones that cost about the same. A ~$50 processor running in my closet does realtime person/vehicle/package detection on my front door camera reliably.
Possibly. 1.58-bit models already run on CPUs https://github.com/microsoft/BitNet They're not good exactly but they are surprisingly better than you might think.
Meta? They're not even in the game. They don't provide inference to anyone. I think NVIDIA or any other hardware players that want to step up and take the bags of money awaiting them are the only actual winners. They also win when we inevitably move to local AI for many use-cases.
> Get rich following the bot's trade advice and never tell anyone about your bot.
The fun thing about open markets is the market will punish you for this with second order effects and it's in your best interest to get some whales on the bandwagon.
Tokens themselves are already a bit of a commodity, and the margins are gonna be fierce on these as there is not a whole lot of lock in.
Would Anthropic and OpenAI position themselves using their extra tools, their ai agents, presentations, docs. Are they nice; yes. However, that doesn't make a 2T company. It reminds me a bit of Dropbox, a truly great product, however, they're differentiation is simply not there. I think the momentum is there for the IPO to go decent, but it feels like the company is on such unstable ground that the fallout could be catastrophic.
Agree. Was starting to look seriously into Google's AI stuff last night.
Owning the best search index and being able to retrieve content immediately straight out of their index seems like such a massive competitive advantage.
The market is completely divorced from fundamentals at this point. Just look at Musk's companies. Neither Space X nor Tesla have the fundamentals to justify even a fraction of their valuations, yet here we are. Anthropic wants in on the same bags.
They were, but then Anthropic got so much flack in the business press for omitting them publicly (while sharing them privately with potential subscribers) that the bad PR was as bad as the financials themselves.
Yea, my guess is they decided they would rather have the actual Q3 numbers (and any reactions to them) rather than anxiety about unreleased Q3 numbers priced into IPO performance.
Which was probably the right move. The S-1 didn't seem to really change the overarching economic and financial narratives about Anthropic (it seems like whatever people already felt before the S-1, they felt it even more after looking at it).
So I don't think there's going to be any problem with boosters metabolizing the Q3 numbers.
In Q3, I think they struggled with the government ban on Mythos/Fable, Opus 5 not being so good, OpenAI models being more token efficient, and they decided to dedicate a higher percentage of compute to training.
The increase in token volume corresponds with a price cut. The S-1 revision already reflects what's going on financially. Anthropic is buying volume with margin. There's nothing wrong with that but we shouldn't expect profit to show back up as Anthropic's costs are increasing and have a fixed minimum. Given that OpenRouter users can switch models with the click of a button, what this demonstrates is that OpenRouter users are extremely price sensitive.
Why do they have to go with the ridiculous gazillion dollar valuations? Is it really such a bad thing to be valued at "only" 400B or whatever more realistic number, why does it have to be in the trillions?
the revised S-1 behind that $895B commitments figure says nine of the ten largest pharma cos, so it seems interesting that's what they seem to be basing off of
I have yet to see anyone releasing a nuanced report on all the metrics involved, everything I've found is short term or incomplete or misinformation, I am neutral, but the matter is complicated, they might pull it off, despite all the misleading marketing and Chinese competition and data center obstacles.
Too much sensationalist reports out there, cherry picked by all sides.
> It reported a $104 billion net loss during the period, though most of that was due to the change in fair value of convertible notes and derivative liabilities.
Look, I've seen and I understand the arguments that the GAAP income adjustment for this kind of thing is fake, but a number of them seemed to take it for granted that it was a "one-time" adjustment. If it's going to keep happening I really feel like we ought to insist on a more comprehensive argument. The accounting principle must be generally accepted for a reason: what shenanigans could someone get up to by reporting net income without this adjustment, and how do we know Anthropic is not getting up to those shenanigans?
It’s like shareholder dilution from issuing more stock or stock options. Existing shareholders might have a smaller share of the company than they thought. The accounting is weird.
We aren’t shareholders, though, so why should we care?
>We aren’t shareholders, though, so why should we care?
They're going through an IPO, so unless this is a one-off thing, people reading this thread will become shareholders, either directly or through their pension pots.
Sometimes accounting is weird because it's necessary to prevent tricks. Why do all your held-to-maturity bonds become "tainted" and get revalued at market prices when you sell a couple, even though nothing has changed about them? Because any other rule would let a company which cannot in fact hold bonds to maturity get up to tricks and systematically overstate their assets.
So while yes, this does look a lot like shareholder dilution, that doesn't really satisfy the question of why it's not treated that way under GAAP. Perhaps GAAP is just wrong, or perhaps there's some possible tricks which Anthropic is provably not engaging in. What it's definitely not is a one-time adjustment now that it's happened in two consecutive quarters.
It's a good question: why are the GAAP rules what they are? It needs to be investigated, though.
The reason it happens in multiple quarters is likely that Anthropic's valuation has increased in multiple quarters. Every time Anthropic's valuation increases, the convertible bonds are worth more money. Other shareholders have "lost" money compared to what would have happened if Anthropic had sold regular bonds instead of convertible bonds. Except that no, the value of their shares is increasing too. An increased valuation is actually good for them.
That's how equity works. If someone owns 1% of a company and its valuation doubles, their share is worth twice as much and so is yours and we wouldn't even normally consider it to be diluting the other shareholders.
So the question is whether convertible bonds are worth more than regular bonds and the answer is, yes, absolutely, but they are partially equity, and it's the equity part that's increasing when the company's valuation is increasing.
And if the company's valuation went down then the value of the equity part of the convertible bonds would decrease. Maybe that would be a profit by GAAP rules?
> The bond market works best when there’s an end in sight, Lyman noted. Every AI investor believes there’s a light at the end of the tunnel. We just have no idea how long this tunnel is.[0]
It is like someone who loses repeatedly at Roshambo while saying: "Okay, then. Best two out of three- three out of five- four out of seven- five out of nine..."
These are all supposed to convert to regular shares at or around IPO IIRC. If they're still pulling that crap after that point we'll know. There's an end date for those contracts that we're expecting
Only with money you can afford to have sit (hold) for 10+ years. The closest analogy we have dotcom bubble and crash. We don't know if we are in 1998 or 1999. For most investors who got in in 1999 and held, they didn't break even until 2007 or longer. Versus the investor that got in 1998, was break even in 2003.
Obviously the investors who bought in at the bottom did the best :-) Most people who are crying 'AI bubble' predicted 8 of the last 2 bubbles.
My personal opinion is ANT IPO is like the netscape IPO of 1995, its the start of the cycle not the end. Things are going to get really crazy over the next 3-5 years, the last year was just a warmup. I don't think people realize how much credit fiat dollars have been and can be created, and how $1T companies will be commonplace. I think humans have a mental block, where we think dollars are like rulers or other fixed measuring devices, so you can look at the same number at different periods of time and compare. credit backed currency completely warps our sense of scale when it comes to measuring things in dollars.
It's not the same thing as early NVidia / Amazon / Google IPO: these companies didn't IPO at a value immediately placing them in the top 10 (by companies market cap) and certainly didn't IPO at values representing 5% of the US GDP.
Can it x2? x3? x4? Maybe.
Can it x100 and represent five times the US GDP? I don't think so (I know, I know, the US GDP would grow too).
I know ANT ain't SPCX, but look at what happened so far to SPCX's valuation.
Half of the revenue in the first 9 months of 2026 was in Q3? No one is going to believe that. Focus on the net loss of $23.29 billion in Q3, that's more instructive.
Q3 numbers are not what you want to see heading into an IPO.
Again the issue is not is Anthropic an amazing growth story. Zero would debate that.
The issue is this is a probably $200-300B company pretending it’s a $2T company.
Add to that the insane amount of committed spend, a high interest rate environment which means they’ll pay a painful premium to patch cashflow gaps, and a likely “junk” bond rating (per Friday’s news) and that’s why folks are concerned.
It’s also just wrong to keep dismissing the paper losses from convertible notes as somehow not real losses. Once they are a public company this will be actual value taken away from existing public shareholders so they are legit losses not to be ignored. It’s like claiming equity based comp is free money… it’s not, you’re taking it out of the pockets of shareholders.
They may not be $2T company but they are also definitely not a $200-300B one. Their Q1-Q3 revenue is $33B with $17B in Q3. Even if they magically flatline for Q4, that's $50B revenue for the year. There are exceedingly few tech companies with P/S of 6 or less (equivalent to $200-300B valuation with $50B revenue) and we all know Anthropic's revenue will not be anything remotely like flatline for awhile.
> There are exceedingly few tech companies with P/S of 6 or less
I think an open question is if SOTA labs should be priced like software companies have been. Software has been so valuable because the marginal cost approaches zero as distribution increases. Profit/employee at a company like meta prior to massive AI spending was measured in the millions. Meanwhile, the balance sheets of the labs look entirely different - remaining competitive requires continuous and astronomic capital costs, and there's no indication that this goes away. They are perennially being chased by competitors offering the same performance as models mere months old at fractions of the cost.
Their business to me, at least long term, looks a lot more like an airline, railroad, or other extremely capital-heavy industry with very competitive and low margins. None of those trade at 6+ p/s. Particularly on the buyer side, the switching cost to me as a high-AI-spending employee if a cheaper model offers compelling performance is less than deciding that I should ditch my preferred business travel airline.
I think that's why you're seeing so many calls from the leaders of those companies to regulate their competition away.
But like Google and Facebook have a lot of hardware. They aren’t just pure in the cloud (though Google is running other peoples clouds). But yes their hardware demands per dollar of revenue is much lower
Ultimately it's marginal, meaning that every $ of revenue that Google and Meta make have an associated compute cost with it, but scale your revenue down and you scale compute down also. Moreover this compute cost per revenue is fairly low. A small cloud instance equivalent's of compute can generate a ton of business value.
The big foundational labs are not like this. Every model they release takes a ton of data infrastructure and training (pre, train, post) compute. Then inference itself requires compute. Even if the labs sell tokens, each token embodies a lot of training and inference compute. This is a much more capital heavy business, so I can see revenue multiples being smaller than pure SaaS businesses. A model release bust (like Opus 5) ends up leading to big losses because of the necessary training compute spent on the model and the labor spent on training. A bust SaaS product ends up being wound down quickly, and only costs the labor spent on building it and the compute spent running it.
A good analogy is chip companies before all of the AI related compute pressure. These were largely low margin businesses because of the fixed capital cost associated with each new chip gen, architecture, process, etc
> we all know Anthropic's revenue will not be anything remotely like flatline for awhile.
How can you confidently say that? At some point they oversaturate and growth stalls. Didn’t F100 have a major pullback already this year on AI spend?
This is what makes a market. If they keep growing those waiting for the bear case will be left behind. Those who are on the side that the biggest most important AI company will continue to grow revenue will win.
"Biggest" and "most important" are not given, settled facts
Anthropic has something close to first-mover advantage but that doesn't mean they'll continue to grow revenue. Ten years from now the dominant player could be Google or DeepSeek or some random startup that doesn't even exist yet.
Isn’t the whole reason companies go public now to dump on retail? What growth is left?
SpaceX is down, Cerebras is down, etc.
I didn't know that the "left behind" rhetoric also extends to investing into their stock?
I guess it applies to everything. Universal. Like LLMs.
It's not that hard to get 33B revenue with the 104B net loss.
Anthropic has a great product but is for sure a bad investment.
The only justification for extremely high P/S ratios is if there’s strong evidence that the future margins and profit will be amazing.
With the price of AI rapidly falling to the price of compute, with models therefore basically having zero value, and with Anthropic having rented all its compute from others then there’s little evidence that such high profits are in the future.
> we all know Anthropic's revenue will not be anything remotely like flatline for awhile
The SOTA US labs are one chinese open model away from being abandoned overnight by the masses. Ive argued before, but argue again here, that the current hardware shortages are the main thing keeping this from being a reality currently. If more people were able to run local models for a reasonable all-in cost, we would have a much higher velocity of iteration and improvement in the open source community. But its still too niche while people cant justify the cost, and so they continue to pay the premium for inference.
The limiting factor now is more electricity than hardware. There is hardware sitting idle because data centers can't get grid connections and power delivery contracts. Even for those who willing to run gas turbine generators on site there are severe supply constraints.
You should stop arguing that because it doesn’t make any sense.
If a Chinese company released an open weight model that somehow was so superior to Anthropic and OpenAI then they can just take the model and deploy it, reverse engineer it, use it to improve their models, and/or do any number of things they currently do today which are of increasing value.
Most people don’t want to or have any interest in running or managing models locally.its not just about cost. The market for running models is infinitesimal in comparison to the market for managed products. That’s why everyone uses Office and not Open Office. Nobody is going to run some Chinese open weight model no matter how good it is on their critical banking infrastructure or something.
There will be space for lots of different solutions and many products and types of models including Chinese open-weight models and American ones too once we get around to making money on them.
The game isn’t just “cheapest open-weight model at all costs” which is what you are asserting here.
> Most people don’t want to or have any interest in running or managing models locally
When I argue the hardware cost, I should note that I think this is the limiting factor for _improvement_ of these models. But ultimately I dont think most users will self host in that world. They will still pay for inference, but it will be for one of a dozen commoditized vendors who are able to reap the benefits of inference at scale.
It could happen, but it would be an anomaly. In general if a business is to make money it does not let itself become a commodity vendor. You can't go to General Burger and select from one of a Wendy's or Big Mac or Burger King burger. You can't go to Microsoft and buy a Playstation. There are exceptions, of course, but whoever is building this stuff is going to want to make money and becoming a commodity vendor isn't the path toward that goal.
It's the same reason that open source software has been a commercial failure except for a few evangelists or whoever becomes a cool "thought leader" by releasing a new library and then gets invited to conferences to speak. Software was commoditized in many ways, yet all the big software vendors made more money than GOD because they took whatever commodity parts came to exist and monetized them.
I think the models can be improved with either recursive improvement (it would be faster with better hardware but if you can do it at all you just need time) and algorithmic developments. I don't know what those would be, but usually we see improvements to both over time. The algorithms will tend to be trade secrets as well.
Aren't their operating expenses quite high? That is they depend on high expenses to continuously drive revenue. If they can't keep raising money, then their revenues should be expected go down.
Look at the Supermicro, their expected revenue is ~70B for FY2027 (was 39B in FY2026), and they are valued at 20B, and they even have some profits.
200-300B might be plausible depending on how market perceives the company
And what are the debt levels of these other tech companies?
Rumors going around that they want to ipo at $1.5T. If true there is an argument to be made that they are cheap.
I wouldn't be so sure as to say definitely.
There's a world where capabilities narrow and Anthropic is stuck selling a commodity (not like they don't have any competition now). In this world it's not unbelievable that Anthropic would trade around or below 1x revenue no?
I think calling Anthropic a tech company could be like calling an electric utility a tech company.
I think this is focused on the wrong side of the distribution. You can view the value of bear cases at ~zero and it doesn't move the math much.
The $2T comes from the implied odds (perhaps 10 or 20%) that we get near term AGI or RSI and AI becomes the entire economy, crossed with the odds that Anthropic gets there first and is the runaway winner (maybe 25%).
The trouble, in my view, is that today's revenue numbers are essentially irrelevant to the outcome that drives ~all of the expected value. The market has been pretending otherwise, but fundamentally we're looking at a globally top-10 public company that boils down to a binary call option, and the probability underlying that option is inscrutable. That's never happened before, and an inability to divine a fair valuation properly demands extreme volatility, especially in reaction to capabilities progress.
Finally (total speculation): I think Anthropic knows this. I think they're sitting on something with Fable 5.5 and the surprise outperformance of Opus 5.5 is a tell. They intend to release it just before the IPO and make some big claims underwritten by its performance.
> The $2T comes from the implied odds (perhaps 10 or 20%) that we get near term AGI or RSI and AI becomes the entire economy
At this point every churches should IPO and raise hundreds of billions from the implied odds that judgment day is near and Paradise becomes the entire economy, that wouldn't be crazier.
Another consideration: if we get AGI and it becomes the entire economy, what are the odds that the money you've invested still matters? It seems like both the "universal post-scarcity" or "AI company controls all wealth and power, the peasants live in squalor" scenarios are likely outcomes.
> There are exceedingly few tech companies with P/S of 6 or less (equivalent to $200-300B valuation with $50B revenue)
But a big part of the reason this has been true is that (mostly-software-based) tech companies haven't historically been spending significant billions of dollars every year in capex.
The other tech companies have such a thin and easy to vaporize moat too?
Because we're just waiting for the world to find out that they can spend 1/10th and get virtually the same results.
Open source models are now 1/100th in price per task of US sota from this summer...
Before you start using multiples - you should know that p/s multiples are internally inconsistent.
Well, it depends on how you interpret the drop to a 47% quarterly growth rate.
If this is the new normal, that's great news. Revenue growing at 47% per quarter will 10x in 6 quarters. Even if you think it should be a $200B company today, it'll be a $2T company in 18 months, assuming the same revenue multiple.
If you think this is the start of a rapid decline to 0% or negative growth rate, then it's obviously bad news.
The real answer is probably somewhere in the middle -- but exactly where in the middle you think it will fall depends more on your own priors than anything you can read from the data.
> Once they are a public company this will be actual value taken away from existing public shareholders so they are legit losses not to be ignored.
They reported a loss here because they sold notes convertible into shares and their valuation went up. Normally shareholders do not lose money when the stock price goes up.
It's weird that they had to report it like this because they are technically derivatives, and if they had just given out actual shares (as with stock-based comp), they wouldn't. Yes, giving people stock is a real cost, but what happens to the price afterwards is not, and when the price goes up shareholders are definitely making money, not losing it.
Either way, they did report it. It is up to you to decide how you interpret that information.
To me, "a probably $200-300B company" sounds absurd. You're describing one of the possible outcomes of a massive range that goes from $0, where they get over their skis on financial commitments to well beyond $2T, where their 10x YoY growth continues for a few more years. A $200-300B outcome is possible, but certainly not probable. (And in fact, for us HN commenters, the most probable outcome should be assumed to be roughly what the market will bear.)
>The issue is this is a probably $200-300B company pretending it’s a $2T company.
What do you expect for FY2027 revenue to confidently conclude this? not saying you're wrong, but considering the dramatic changes in their revenue you seem strangely very certain that you know where it will land.
Why aren't they aiming for a reasonably sized valuation then?
Because if they priced the company more reasonably many later stage investors would stand to lose money. So they’ve backed themselves into a corner of having to go public at a $1T plus valuation just so some later stage investors don’t realize a big loss.
Their last investment round in May had them valued at 965B. And the company has grown a lot since then, those investors obviously expect a profit
They are probably going to need all that capacity.
Maybe they can use it, but if there is an overshoot of investment in compute, future competitors may get it for firesale prices while Anthropic pay more than full price. That is, they can get dragged down by those commitments not because their own growth is lacking, but because the market gets weaker. They may even contribute to it, the more competitors they kill, the less demand there is for compute.
So is SpaceX but markets don't care.
Also, anthropic has no real moat, LLMs are a commodity.
Their bet is that they will acquire other companies to become valuable ( their ceo said they are competiton to every other industry)
It does not make sense but it is what they say
In some ways it is crazy, but at the same time, anyone that has seen typical efforts of "digital transformation" in aging Fortune 500 companies is going to be skeptical of said company's abilities to become relatively efficient. I always considered that new entrants that don't think like they do would eventually win once the value of putting tech in the middle of decision making, getting rid of large divisions worth of cruft was worth enough. Trying to do the very same thing by competing with everyone is similar once you squint. You get extra money from your parent company to throw around during growth or massive reorg, but still have the problem of iffy incentives we currently see in the modern tech holding company, where what is good for the company, for consumers, and for the random VP have nothing to do with each other.
you can't acquire your way to value, because the seller will want their piece when they sell, and eat up that value as their premium for selling.
The only way to get value from acquiring other companies is to buy them when they're distressed.
That's why the playbook is to force the companies into distress.
I'd like to see the list then.
I don't fully agree with you that it doesn't make sense for Anthropic to claim it is in competition with every other industry.
Take a look at how OpenAI has shaken up higher level math.
Frontier AI labs have a Swiss army knife of a tool that can do as well or better than every other company or collective in every industry.
Say you have a magic hotpot that can deliver any dish you want and each dish it delivers can be as good or better than any restaurant in your area of business. You basically cannot be beaten in the food business. Your competition can only cry about their cooking being more artisanal or whatever but at the end of the day convenience and cost will triumph.
Now say you have a magic pen for art, a magic jukebox, a magic text generator for authorship, and so on. You get the idea why I don't think Anthropic is wrong.
I guess AI will be very competitive in all research fields, but your example is actually interesting: they do not have a magic hotpot, right? So are they competing in the food industry? Or how quickly will they be able to compete with Amazon in logistics?
So I think they can compete in many industries (and I don't like it), but not all of them for sure. They can only compete in all industries with infinite money, and I don't think it would be good for most people.
Art, music, writing... those are all cheap. They've also already got plenty of good models out there, and people will judge you for using them.
The places where American society needs costs cut or needs an increase in labor - healthcare immediately comes to mind - are places where you'd be asking Anthropic (or any other AI player) to take on massive amounts of liability.
If you screw up someone's drawing, you regenerate the drawing and charge the hack/fraud for the privilege. If you screw up a blood bank order, you pay the survivors a few million dollars. Since you've created a system that can scale blood bank order up-screwing, you'll be doing that a lot. There's not profit in paying out medical torts.
Given that SV-based companies work to dismiss liability even more than most American companies do (which is saying a lot), I don't see that working well for them.
Have it build an airplane.
Unless they are able to create God. There is no possible road to profitability.
> The issue is this is a probably $200-300B company pretending it’s a $2T company.
They probably asked Claude. Sounds like a normal LLM hallucination.
Should have followed it up with a second prompt to get the real answer ... "You're absolutely right. valuation is only $20b"
From a financial analyst on Bluesky: https://bsky.app/profile/peark.es/post/3mzdkyxzzns2w
> Okay so Q3 ARR at $67.8bn versus $46.2bn for Q2, +47% QoQ. Turns out tokenmaxxing's end over the summer slowed revenue growth versus an absolutely torrid 100%+ growth rate in Q1/Q2 but 46% sequential is still eye-popping
> Operating margins (GAAP) went from 8% to -3$, with a -28.5% QoQ incremental operating margin. $SPCX compute coming online is the reason.
> Bottom line after seeing this Q3 update: the basic takeaways from the original S-1 don't change, but fears that they were excluding Q3 because it was a disaster were definitely wrong. Do with this information what you will.
It's also worth noting that Q3 only has one week of Opus 5.5 (9/22 - 9/30) which may have changed the economics for Q4.
> fears that they were excluding Q3 because it was a disaster were definitely wrong
That's a very generous reading. Anthropic's entire growth narrative is the rapid growth over the previous 12 months, from near-enough zero to $100bn+ this year. Now we see that actually growth is levelling off and that their revenue was ~$5bn/month over the last quarter, which is barely over their compute commitments, and nothing close to the $100bn+ leaked.
I guess if people thought Q3 would show negative growth rate, sure, it isn't a disaster, but their growth rate slowing so much is surely very bad and matches all the concerns commenters had.
And this is Anthropic! Anthropic are the financial success compared to OpenAI. OpenAI are doing much worse, so this does not bode well for OpenAI either.
People will point out that +46% is still good, but this is like measuring the escape velocity of a projectile that's still at 1000 feet. It's not that the projectile isn't going very fast or won't get very high, it's that if you want to have enough momentum to break out of Earth's gravitation pull you can hardly afford any deceleration.
Businesses aren't projectiles
Their forward pricing prices in all expected growth... so if they don't have accelerating momentum that reduces expected price.
You're now talking about the expected trajectory.
Really, you're talking about expectations ("expected") of the expected ("price") trajectory (actual business performance).
If the above comment was intending to say "chart go up steeper make price higher, chart go up less steep make price lower", then no dispute there. But that carries virtually zero predictive information about whether the business will achieve "escape velocity" (whatever that means).
You absolutely cannot predict Anthropic's fate based on their growth rate slowing from Q2 to Q3. Obviously.
You can predict the resting place of a projectile with information like this. You cannot do so with a business, especially one as dynamic as Anthropic in an environment as dynamic as today's.
The point being made here I think is that the same can be expressed in natural english language that does not pretend to be a physics class for some reason.
That reason possibly being to grant legitimacy to an otherwise mostly illegitimate and equally mostly fictional branch of the economy (that whole MBA cluster).
Mathematically they can work very similarly though because you have a revenue growth rate, and margin. The question is can that revenue/margin reach break even before you run out of runway (the expected sum of all rounds of investing) .
The main difference I would concede is that gravity, mass, forces, awind drag etc are much easier to model.
Sure they can work very similarly. But they can also not behave very similarly.
Businesses can have stalled growth, degrading margins, etc. etc. and then simply... reverse it. They can raise more money. Their competitors can get regulated out of existence. They can do a literal infinite number of things that cannot be factored into a model like "a projectile."
That's why the projectile analogy is stupid as fuck. It suggests you can presuppose the conclusion by presupposing the conclusion.
It's a model that helps you make present tense valuations of potential futures.
No one said it literally is a projectile. It's an analogy and model. The similarities are in the present tense maths. It's presumed and beyond having to be stated that businesses exist in a complex set of variables all of which could change and might not be as predictable as the valuation maths.
You're not wrong, you're just not adding anything to the conversation that any but the most uneducated do not already know and acknowledge.
And the analogy is literally not useful in any way whatsoever.
It implies that you can know Anthropic's outcome from this slice of data. That is literally not true in any way at all.
Like it's not even remotely or analogously or roughly true.
Anthropic behaves like a high-growth business with a quarter of slowing growth. It does not behave like a baseball. Any conclusions you draw from analyzing it as a baseball will be de facto faulty because the two systems are nothing like one another. The most basic assumption of projectile analysis (that energy is not added in-flight) is the opposite of the most basic assumption of a business (that they are actively profit-seeking).
The analogy adds nothing except ambiguity at best and active falsehoods at worst.
>It implies that you can know Anthropic's outcome from this slice of data.
No it doesn't. All I said was that given how little we have to go on and how early in the process we are, a minor 2nd or 3rd derivative slowdown isn't a positive signal. All indications are they they need additional orders of magnitude in revenue fairly soon.
I also never said that it wasn't self-propelled. I was starting to write about waiting to see if another stage of propulsion comes online but I deleted it.
Analogies however are: they often fly over people's heads.
The analogy fails at precisely the thing it's attempting to do.
It's saying "like a projectile, you can predict the outcome based on just a sliver of data"
That is literally not true.
Do you respond to every metaphor this way?
Bad, misleading, and uninteresting ones, yeah pretty much.
Businesses also aren't financial statements. These are abstractions we use to understand and communicate about the world.
Correct. Which is why making a physical claim about a 2nd order derivation of a super dynamic system is goofy and misleading.
But they do have S curves. If you're on the shoulder of the S curve while your spending commitments are accelerating, that won't end well.
Presupposing where they are on "the" S curve is itself presupposing the conclusion, duh.
Most businesses are stacks of S curves (except when they're not).
AGI is supposedly the literal be all and end all. It's a bit embarrassing for the singularity to have an S curve.
Someone needs to tell that to the AI startups.
I think that's an unnecessarily pessimistic take. The way I look at it the industry did not wake up to how big this was until Q4 and so it makes sense that you would see astronomical growth in q1 and Q2 as everybody woke up and started adopting. Seeing the growth Taper down to a 4.5x annualized rate which to your point will only continue to taper but it's still mind-boggling at this scale ... you just don't have anything else like this in the economy. This is like hyperscaler Revenue scale achieved in 15 years being achieved five times as quickly. At this rate Anthropic will exceed AWS Revenue within a year
>At this rate Anthropic will exceed AWS Revenue within a year
And in 10 years it will be worth the entire Earth's economy.
It is a lot easier to switch model providers than it is to switch cloud providers. And the open weight models from Chinese Labs make Claude a lot more of a commodity than any service provided by AWS.
> At this rate Anthropic will exceed AWS Revenue within a year
Well that’s the point. They’re not continuing at that rate of growth.
10x year over year couldn't continue for long--they were what...3.5 years from exceeding US GDP?
47% quarterly growth is still 4.5x annual growth, which would put them at $300+ billion revenue in a year. This is still unprecedented growth for a company of this size.
The negative perspective depends on assuming that the 47% quarterly growth is going to continue dropping soon. And it is going to drop, since it's only a bit more sustainable than last year's growth. The question is how many hundreds of billions they're making a year when it levels off.
Very generous indeed. Here is the updated chart. The downward movement should not be overlooked.
https://x.com/billylo/status/2117276235852345425?a=4-pjgf1Ox...
A single downward point for one quarter is not a "trend."
I did not suggest a downward trend. (It's a trend graph)
If we assume LLMs will continue to advance at a pretty rapid pace (relative to the current rate of advancement; so, same or faster), all these numbers look good to me.
Some people just start out with wanting LLMs/AI/Anthropic to fail or be scams and consistently try to fit any new evidence pegs into those unchanging hypothesis-shaped holes. This group ideologically despised LLMs from the start and needs them to be fake.
Lots of people making the financial case against Anthropic are not anti-LLM. I think the technology is great, interesting, powerful, innovative etc etc etc my issue is with the garbage business that Anthropic and OpenAI are building and the nonsensical ideas people have about business in general. Technology is exciting, business is not, business is boring. Money come in, money go out. Selling technology, no matter how exciting it is, does not change the nature of business.
And yet one can argue that the "garbage businesses" you label are the ones doing their best at matching market demand. See how well things are going for other entrants, like Google, Microsoft or Meta. Putting Copilot in every app makes a whole lot less sense than Cowork, Codex and the like. They just are doing worse things while attached to traditional money fountains, like ads in social media and search.
You can be bullish on LLMs profoundly transforming society while being bearish on the economy "digesting" this new technology fast enough to justify the incredible capital spending necessary to power it.
It doesn't matter how much they "continue to advance at a pretty rapid pace", if the economy has no actual demand for the new capabilities. Even if we accept the premise that LLMs can produce good code at scale now and automate most software development work, then what? As *an industry*, the bottleneck was that we needed people to write code, and that bottleneck has been removed since ~Opus 4.6. Where is the industry now bottlenecked which requires some significant quantum leap in model capability?
Don’t bother - these knuclkleheads don’t understand nuance and despite much of their devices being manufactured in China - they struggle to accept Chinese offerings can take significant market share.
>If we assume LLMs will continue to advance at a pretty rapid pace
Why assume that?
So much money have been given to that handful of companies and to that field, that it's pretty much guaranteed to plateau (it's not some small but growing market with lots of room to grow. It's already taking as investment a huge chunk of the economy, and the returns don't seem to justify it).
Most of it is a pre-IPO hype and a circular financing loop between Nvidia, Oracle, Amazon, and the AI players anyway, so the real returns are even worse.
No there are just numerate people pointing out ANT/OAI need to make X $$$ to make Y $$$ spend make sense. The financials are separate from model capabilities, they can cure cancer and invent big dick pills and still go out of business if their balance sheet is fucked.
I don't really follow how LLMs advancing leads to OpenAI or Anthropic being successful businesses? Those seem like orthogonal outcomes.
If you have no theory of how to value a company any number looks good.
>If we assume LLMs will continue to advance at a pretty rapid pace (relative to the current rate of advancement; so, same or faster
https://xkcd.com/605/
> Now we see that actually growth is levelling off ...
I really don't understand how could it be otherwise? They're planning to IP at a valuation representing 5% of the US GDP and, unlike NVidia, they are neither selling shovels in a goldrush nor a business with decades-old proven track of records.
Are people really going to buy ANT thinking it'll 10x to 50% of the US GDP?
Aren't there better stocks to YOLO on if you think you could maybe 10x? And if you want something safe instead of YOLO'ing, aren't there plenty of companies much safer and much more boring to invest in than something IPO'ing at 5% of the US GDP?
Isn't the entire Anthropic narrative based on infinite growth? How is infinite growth sustainable?
> Aren't there better stocks to YOLO on if you think you could maybe 10x?
This is why any [consumer] investment in ANT is bad. If ANT goes 10x then congrats, we [the citizens] are in a crisis. If ANT goes 1/10x then congrats, holders of ANT are in a crisis.
Disagree on the tokenmaxxing end. People are still doing it (and I'd argue more people are doing it due to wider adoption). Its just that most low hanging coding adoption has reached saturation point very quickly (which is genuinely impressive).
Now, they need to unearth new use cases and saturate them to keep the momentum going. Its unclear if they have found these opportunities and can turn them into sustained growth.
No they are not. Big tech companies started capping AI usages already and those are their major clients.
Correct, and most every company is optimizing around model routing, with many including much cheaper open weight models.
Within large tech companies the era of "spend the most money on the smartest model running on its maximum effort, always" is dead.
Yeah I think for the last 3 months or so, the only ones that are still token maxing are the ones on subscriptions.
Doesnt matter at this stage of growth what financial analysts say because they havent seen anything similar in their lives :) Large corps are going to really be the deciding factor, in what ANTs next years revenue is going to look like. And right now inside large corps there are literally hundreds to thousands of different experiments running and no one knows what is going to click.
The takeaway is there is no moat and people will switch to competitor model in a heartbeat.
That's not the takeaway of this analyst or anyone I have heard.
This is specifically about the end of tokenmaxxing and how much worse the growth rate would look after the Q3 numbers came out.
(I do think moats are shallow, and I personally switch away from Anthropic every few months for a while, but I've been coming back. All software moats have been made more shallow now, affecting the entire investment landscape.)
The product doesn't have a moat, but anthropic's branding and enterprise focus seems to be quite valuable.
Models are not a moat for sure.
Anthropic is working hard to create a vertically integrated stack from model to harness to productivity apps. That may or may not work, but it’s clear they see models as a value add for integration and not a product that can be a moat in themselves.
harness is not a moat. CC is great, I mix it with codex with my own vibe coded messaging and hierarchy layer. Lately there are more CC because of Opus5.5 but Codex caught back up with Sol-6.1;
Codex also wins by consuming a lot less memory.
I disagree. Our devs use Claude for coding. When OpenAI had Astra, no one switched even though the company allowed OpenAI models.
I use Claude Opus at work and DeepSeek v4.1 Flash on my personal projects. For the kind of work I'm doing, they're basically interchangeable and DeepSeek costs 3% what Claude does.
https://openrouter.ai/compare/anthropic/claude-opus-5.5/deep...
We have Copilot and can select between various OpenAI and Anthropic models, and when I accidentally select the “wrong” one it takes me awhile to notice.
what if the alternative is much cheaper?
Arguably, it was cheaper.
By the way, we get way more value from our Anthropic subscriptions than any Chinese subscription.
How do you define value?
Opus 5.5 is great, but you are kidding yourself if Deepseek 4.1 flash isn't as good as good for 99% of coding tasks. Anthropic (and OpenAI) are between a hammer and an anvil in terms of good enough local models being able to run performantly on current and next gen Apple hardware.
Your dev’s are not representative of everyone bozo.
Your posts are irrelevant.
Does this person not own a calendar? Q3 numbers still polluted by expensive tokenmaxxing, which wind down late Q2 / early Q3 i.e. mid year budget review which will take rest of year to unwind. Q3 numbers = more mirage of tokenmaxxing tail and velocity = lagging indcator of tokenmaxxing end. Q3 also when fable tier coding commoditized and everyone doing a deepseek on cheap inference. The latter is what will kill ANT hardest, they signed up for 100s of billion of none cancellable compute contracts last year based on projected demand x expensive token cost, but demand / growth is less than token max timeline while inference cost getting cheaper. They have fixed, exorbitant costs, and operating margins negative for Q3, and Q3 just beginning of full price war. TLDR they will likely be vastly overpaying for compute. If turns out jevons isn't people using more expensive tokens on more expensive compute, but more cheap tokens on less compute, then ANT's entire balance sheet breaks.
>Q3 numbers still polluted by expensive tokenmaxxing, which wind down late Q2 / early Q3 i.e. mid year budget review which will take rest of year to unwind.
Evidence? I was told by a lot of people that token use was going to start to slow down 5 months ago because of "the end of tokenmaxing."
openrouter still showing weekly token usage higher than ever: https://openrouter.ai/rankings
People PREDICTED token maxx was a fad/trend Q1 while it was underway, but companies asking employees to cut back was late summer, i.e. Q2/Q3 transition. And the argument isn't end of token maxxing its end of EXPENSIVE tokenmaxxing, i.e. tokens pushed at $$$ and volume that can make ANT numbers square. They're not precisely because people can now maxx on cheap commoditized tokens. The market for premium tokens (at least in SWE) got kneecapped, there's only so much demand for smart/fast.
>People PREDICTED token maxx was a fad/trend Q1 while it was underway,
No, a lot of people like Gary Marcus said it had specifically already ended in May/June. Why is this time different?
>Tokenmaxxing is over. https://finance.yahoo.com/sectors/technology/articles/tokenm...
>Tokenmaxxing is dead, long live valuemaxxing https://www.ibm.com/think/insights/tokenmaxxing-dead-long-li...
>Token Maxxing, April 2026-May 2026, RIP https://x.com/GaryMarcus/status/2057610132742156603?lang=en
Yes look at the dates... end of Q2, i.e. start of Q3, things take time to unwind. Marcus tweet MS cancelled contract, but doesn't say when terms end, but they almost always unwind over following monthS not ASAP. Real world works on a lag / budget cycles not how fast tweets / articles get published.
> Okay so Q3 ARR at $67.8bn versus $46.2bn for Q2, +47% QoQ. Turns out tokenmaxxing's end over the summer slowed revenue growth versus an absolutely torrid 100%+ growth rate in Q1/Q2 but 46% sequential is still eye-popping
There is an unbelievably enormous difference in 100% vs 47% -> and when you look at the 2nd derivative this is REALLY REALLY REALLY bad.
I mean, the growth is astounding and incredible. It does not bode particularly well for a ~$2T valuation.
This is the correct analysis here. 47% QOQ growth IS objectively amazing. But it's not enough for a $2T valuation.
From a loud AI booster on Bluesky. Man, I am relieved now, the science is settled.
Booster is an exaggeration.
> It's also worth noting that Q3 only has one week of Opus 5.5 (9/22 - 9/30) which may have changed the economics for Q4."
An average random dev here: I switched to Opus 5.5 and forgot about all other (paid) models.
We desperately need to ground these discussions in actual numbers.
This should help build some intuition and establish a baseline for what the $2T valuation means.
If you buy at $2T Anthropic needs to be worth about $3T by 2030 for a normal market return. That's ~25x P/E and ~$120B/year of profit.
That could be something like $400B of revenue at 30% net margins, $300B at 40%, or $600B at 20%.
It would take 1.7x revenue growth a year to get from today’s $68B run-rate to $400B by 2030. Anthropic's current growth rate is ~4.7x a year. Anthropic doesn't need to maintain that, they basically just need to prevent it from absolutely collapsing and hope margins hold up against open weight models.
You could look at this and say "yeah that's plausible" or "I highly doubt they achieve that" but it's hyperbolic to say its actually impossible they can meet this valuation, definitive proof of bubble, cant be worth this unless they can create God, etc.
> [Anthropic] basically just need to prevent it from absolutely collapsing and hope margins hold up against open weight models.
There are so many variables involved that are outside their control. If GPU/RAM demand dries up (or supply increases), for example, local models are suddenly a threat in addition to hosted open weight models.
The quality there is already good enough. I've been 100% local for personal projects since Qwen3.8 Flash dropped. It's not as nice an experience as Claude I use for work, but it gets the job done and I fully control my data and can do whatever I want with it.
You just made me wonder if part of the buy-up of RAM by OpenAI and other spend on GPUs and datacenters is literally trying to weaken the value proposition of open weight models.
Not just against open weight models and not just on hardware I think. Also on token subsidies etc. OpenAI and Anthropic both seem to be aiming to outspend everyone else, so that they can be the last ones standing. It is a risky move, especially since everyone else includes Google and Microsoft, players that have both existing surplus cashflow, solid warchests, and excellent distribution channels. But all outcomes are open still...
Interesting. Their revenue has "only" gone up 47% in Q3, compared to doubling revenue in most previous quarters. Meanwhile their "compute and infrastructure" cost has increased by 77% compared to Q2
Maybe they tried too hard to get good Q2 numbers, making revenue happen earlier and expenses later, and that now makes Q3 look worse? Either way, this does not look great
It still doesn't look anything like a death knell. There is a point where you approach market saturation and the growth curve follows a sigmoid. Have you ever tried folding a piece of paper ten times?
I agree. Their financials are fine. They look like a company that has solid foundations, with room to grow but close enough to profitable that they can survive the end of the AI boom
But are they still a 1.5T USD company if their growth is already slowing this much?
They clearly mention the cost increase in the amendment - it's because of the spot pricing of gpus (likely SpaceX). Their demand exceeded so much they had to quickly find some gpus at _very_ expensive prices
And they say that this will likely continue to grow until 2027 (when the long term commitment compute comes online, which comes with opposite problem .. will there still be enough demand)
We’ve known for a long time they goosed Q2, and we even know how.
Apparently you’ve missed all of Ed Zitron’s reporting?
When was the last time Ed Zitron got a prediction/claim correct?
Required reading if you're citing Zitron: https://danluu.com/zitron/
Funny how no one ever disputes his facts, only his predictions. He can easily be wrong on the predictions, while still being correct about the facts, i.e. their financials are shit and completely unsustainable. I don't care at all about his predictions, and am very interested in his fact-finding.
Can we all please stop acting like revenue is somehow an indicator of a successful business?
If you are trying to indicate that revenue is somehow not a key indicator of a successful business, or that somehow revenue growth is not the primary indicator used to derive Anthropic's eye-popping valuation for IPO, then I think you have lost the plot.
Revenue alone is not enough as we saw in the dot com crash. Scalable, profitable growth is required.
That is true, but not even really connected at all to the comment I was replying to. Revenue is indeed an indicator of a successful business.
Additionally, the Anthropic S-1 does indeed show scalable profitable growth. This is perhaps the most shocking thing in the S-1, to me.
No, not when that business spends more than it makes to bring in that revenue.
A better way to phrase your thinking might be that revenue is an indicator of demand.
The issue here is that they've not really tested what happens to demand when the prices moves to where it needs to be to cover the cost of keeping the lights on.
The dot-com era had a lot of companies with high valuations and zero revenue. That was the main problem.
If you go just by operating income, they showed they can be profitable in Q2, and the operating loss in Q3 is fairly small (in relative terms. For every 32 dollars in revenue they lost one dollar). They haven't shown wild profits, but nobody expects them to. Any money they make has more value when it's reinvested into growing their market share and growing the market, making next quarter's numbers look better. And imho they have solid enough financials that they can make the bleeding stop if the money faucet turns off
All of that isn't very newsworthy though. We knew all that from the Q2 numbers. What is interesting is that reinvesting all their profits to make the number go up in the next quarter didn't work as well this time as it did all the other times
I'm unconvinced they have a moat that will allow them to ever show wild profits though. They are constantly 6 months ahead of open weight models. Their potential customers are perfectly able to wait them out. They'd need a government enforced cartel against open weights at this point for me to not view the IPO as a plain and simple cash out.
Some of my nephews ran a hugely successful pokemon card selling business (for ten year olds). I later found out that their mom was buying all their card packs for them to open and sell.
They stopped when the free packs stopped coming and they needed to finance their own.
Revenue is the one number that indicates how interested customers are in your product. What would you have us measure, then?
There is no company on earth that can run on customers being interested alone, you also need to offer a product they can afford at a prices that generates profit.
Right now, I could start a business selling gold bars for $1 a piece. There would be more people interested in that than Anthropic.
Yes, revenue shows people's interest and willingness to pay for the product. That's exactly what it is.
ANT also has positive gross margins, so they aren't selling gold bars for $1.
I don't understand why people on HN treat ECON101 like some fringe theory every time this is discussed. This is basic stuff.
I like keeping an eye on OpenRouters view of the market: https://openrouter.ai/rankings#market-share
Since the start of the year the market has shifted from 50/50 split (closed v open weights) to 30/70 (70% of usage they see through their platform - is now open weight)
DeepSeek V4.1 Flash 1017 sees 5x the weekly token usage through OpenRouter than the closest closed weight model (GPT-6 Luna)
Even though OpenRouter is only one limited view of the market - those trends should be worrying to potential investors.
I'm not saying that OpenRouter isn't worth looking at but it, obviously, shows a much smaller slice of LLM market and it's going to, obviously, trend towards open models since those are the only model where there is any competition for inference pricing. No one is undercutting Luna because they can't really.
OpenRouter could so 90/10 split and it still wouldn't mean open models are beating (in usage) closed models.
This view will ALWAYS overweight open models. The closed ones are being used in their own harnesses via direct API connections that OpenRouter will never have visibility to.
How do you explain the trend changing since start of the year if that were the case? Closed source models were leading open weight ones before Jan 26
Let's say I'm starting a shitty cash-grab SaaS that needs some kind of "Ask Jenny" feature. Is the standard practice to sign up directly with a Claude/OpenAI API account?
We need token monitor apps to reveal the less biased stats.
The sentiment they are trying extraordinarily hard to create is that in the long run Anthropic will be the only one with any AI worth anything.
That makes any loss or risk reasonable.
It's great propaganda, so great that they have themselves started believing it with certainty. This is one of the self owns that brought down the USSR :)
Of course they could be correct too, time will tell.
Beyond it being propaganda, they're trying to work the regulatory capture angle to pressure lawmakers to pass safety regulations that would functionally ensure a market in which there are under a dozen players legally capable of competing.
And of course, obviously untrue to anybody paying any attention to the rapid progress in open weight models. The IPO will be a cash out for insiders and leave the typical institutional investors with the bag.
It could be untrue, but it's not obviously untrue.
The open weight models right now are nowhere close to ..say.. Fable 5.1
They could catch up if Anthropic reaches some sort of a plateau and they manage to keep improving, but there's no reason to be certain about that happening.
It's more accurate to say Anthropic intends to scam retail investors by claiming they will have the only A.I. worth anything.
Then if all goes well next year OpenAI will scam retail investors by claiming they will have the only A.I. worth anything.
Genuinely think google + Meta might be the only companies to make a profitable AI product at this rate.
Google currently appears (by their latest numbers) to be sacrificing the only substantially profitable portion of their business to attempt to create that reality.
You're assuming costs remain high.
Pretty much every technology in history is available at several orders of magnitude lower cost than the first few years of it being invented.
AKA eventually everything runs on a potato.
How much of a potato? You think we will eventually be able to run inference on a rasp pi?
> You think we will eventually be able to run inference on a rasp pi?
Not today's raspberry pi, but the equivalent of it absolutely. I don't work in it, but have a number of friends who are involved in LLM development - the "breakthrough" optimizations are obvious work in hindsight. We are still in the very early innings of optimizing both hardware and software techniques. The recent market imbalance has blurred the idea that hardware simultaneously gets both cheaper and much better, but no one serious expects that to stop on a longer timeline.
Going beyond the "my watch has more computation power than NASA at the moon landing" - speech-to-text used to be unreliable tech that needed datacenters backing it as recently as the early iphone, and now runs in near-realtime on smartphones that cost about the same. A ~$50 processor running in my closet does realtime person/vehicle/package detection on my front door camera reliably.
Whatever you can buy for inflation-adjusted-45$ in ~2035, almost surely.
Possibly. 1.58-bit models already run on CPUs https://github.com/microsoft/BitNet They're not good exactly but they are surprisingly better than you might think.
https://huggingface.co/microsoft/bitnet-b1.58-2B-4T#evaluati...
Meta? They're not even in the game. They don't provide inference to anyone. I think NVIDIA or any other hardware players that want to step up and take the bags of money awaiting them are the only actual winners. They also win when we inevitably move to local AI for many use-cases.
Meta provides inference to itself, and the 3.58 billion DAUs across its services.
https://searchengineland.com/guide/facebook-users
This is them working within their existing market. This isn't the new market that the valuations for companies like Anthropic are operating in.
Meta are using AI internally to target and sell ads more effectively.
Consider: if you had built a hyperintelligent stock-trading AI, would you:
- Charge $0.70/M tokens for other people to ask the bot what stocks to buy.
- Get rich following the bot's trade advice and never tell anyone about your bot.
> Get rich following the bot's trade advice and never tell anyone about your bot.
The fun thing about open markets is the market will punish you for this with second order effects and it's in your best interest to get some whales on the bandwagon.
This is the existing ad market with the existing TAM. Not the AI market.
"It's not about how much you earn. It's about what you're worth. And who's worth the most? Companies that lose money." ~ Russ Hanneman
the only revenue stream google has is selling user data & ads. always has been, always will be
It’ll only be profitable because they’ll enshittify it with ads.
They also have the second mover advantage and the financial stability to put it to good use.
Hate all you want on those two (I certainly do) but they are incredible at monetization
"Just don't look at those cheap af Chinese models pls"
I am not sure how the IPO is going to go.
Tokens themselves are already a bit of a commodity, and the margins are gonna be fierce on these as there is not a whole lot of lock in.
Would Anthropic and OpenAI position themselves using their extra tools, their ai agents, presentations, docs. Are they nice; yes. However, that doesn't make a 2T company. It reminds me a bit of Dropbox, a truly great product, however, they're differentiation is simply not there. I think the momentum is there for the IPO to go decent, but it feels like the company is on such unstable ground that the fallout could be catastrophic.
I think the unstable ground comment applies to all purely AI companies.
Google's strategy right now seems great.
Agree. Was starting to look seriously into Google's AI stuff last night.
Owning the best search index and being able to retrieve content immediately straight out of their index seems like such a massive competitive advantage.
FWIW, from my prompt last night: https://chatgpt.com/share/6ae8d441-8c44-83e9-980c-b14a2ed846...
The market is completely divorced from fundamentals at this point. Just look at Musk's companies. Neither Space X nor Tesla have the fundamentals to justify even a fraction of their valuations, yet here we are. Anthropic wants in on the same bags.
Surprised these financials are not too dangerous to release.
They were, but then Anthropic got so much flack in the business press for omitting them publicly (while sharing them privately with potential subscribers) that the bad PR was as bad as the financials themselves.
Yea, my guess is they decided they would rather have the actual Q3 numbers (and any reactions to them) rather than anxiety about unreleased Q3 numbers priced into IPO performance.
Which was probably the right move. The S-1 didn't seem to really change the overarching economic and financial narratives about Anthropic (it seems like whatever people already felt before the S-1, they felt it even more after looking at it).
So I don't think there's going to be any problem with boosters metabolizing the Q3 numbers.
(Idk, maybe this was their plan from the jump.)
My guess is they already heard from big investors they weren't going to participate unless they had the numbers.
They asked Claude to evaluate the risk of annihilate the human race by releasing these reports.
It says "You're absolutely right!".
So they did release the reports.
Direct link to the prospectus: https://www.sec.gov/Archives/edgar/data/2130357/000162828026...
Consolidated financials are on page 23, quarterly numbers on page 160
If OpenRouter is a proxy, then their growth will pick up again in Q4: https://openrouter.ai/anthropic
In Q3, I think they struggled with the government ban on Mythos/Fable, Opus 5 not being so good, OpenAI models being more token efficient, and they decided to dedicate a higher percentage of compute to training.
The increase in token volume corresponds with a price cut. The S-1 revision already reflects what's going on financially. Anthropic is buying volume with margin. There's nothing wrong with that but we shouldn't expect profit to show back up as Anthropic's costs are increasing and have a fixed minimum. Given that OpenRouter users can switch models with the click of a button, what this demonstrates is that OpenRouter users are extremely price sensitive.
Yeah, I was thinking the same thing. Fable 5.5 is coming out soon as well.
Openrouter is a terrible proxy for frontier, token leaderboards are dominated by fast models like Deepseek 4.1 or Luna 6.
Yes, but the trend is pretty clear based on the link I posted.
Hahaha cringe.
It’s not possible at all that they had to cut prices to hold market share as folks switched some of their usage towards open models.
Utterly cringe takes.
Net loss of $23b in the third quarter is pretty bad right? Was that also due to the fair value of convertible notes?
About $22B of it, yes.
For those looking for the actual S1: https://www.sec.gov/Archives/edgar/data/2130357/000162828026...
and add'l discussion: https://news.ycombinator.com/item?id=50338510
and for those who want it converted to a legible PDF: https://enopdf.com/tools/edgar-to-pdf/?url=https%3A%2F%2Fwww...
The company is worth $200B at best. Where is the growth going to come from?
Claude has been pushed into every software org possible already by force. Companies will evaluate the actual benefits in 2027 and usage will go down.
There is no other product. It remains to be seen how long investment banks and influencers can spin the narrative.
Why do they have to go with the ridiculous gazillion dollar valuations? Is it really such a bad thing to be valued at "only" 400B or whatever more realistic number, why does it have to be in the trillions?
And still, so called stock owners get no voting rights.
You don't get voting rights at the casino, either.
the revised S-1 behind that $895B commitments figure says nine of the ten largest pharma cos, so it seems interesting that's what they seem to be basing off of
I have yet to see anyone releasing a nuanced report on all the metrics involved, everything I've found is short term or incomplete or misinformation, I am neutral, but the matter is complicated, they might pull it off, despite all the misleading marketing and Chinese competition and data center obstacles.
Too much sensationalist reports out there, cherry picked by all sides.
No wonder when they're STEALING ALL THE CONTENT.
See also: Ant: Can unprecedented revenue growth outrun irresponsibly large investment? <https://news.ycombinator.com/item?id=50326281#50335632>
> It reported a $104 billion net loss during the period, though most of that was due to the change in fair value of convertible notes and derivative liabilities.
Look, I've seen and I understand the arguments that the GAAP income adjustment for this kind of thing is fake, but a number of them seemed to take it for granted that it was a "one-time" adjustment. If it's going to keep happening I really feel like we ought to insist on a more comprehensive argument. The accounting principle must be generally accepted for a reason: what shenanigans could someone get up to by reporting net income without this adjustment, and how do we know Anthropic is not getting up to those shenanigans?
It’s like shareholder dilution from issuing more stock or stock options. Existing shareholders might have a smaller share of the company than they thought. The accounting is weird.
We aren’t shareholders, though, so why should we care?
>We aren’t shareholders, though, so why should we care?
They're going through an IPO, so unless this is a one-off thing, people reading this thread will become shareholders, either directly or through their pension pots.
Sometimes accounting is weird because it's necessary to prevent tricks. Why do all your held-to-maturity bonds become "tainted" and get revalued at market prices when you sell a couple, even though nothing has changed about them? Because any other rule would let a company which cannot in fact hold bonds to maturity get up to tricks and systematically overstate their assets.
So while yes, this does look a lot like shareholder dilution, that doesn't really satisfy the question of why it's not treated that way under GAAP. Perhaps GAAP is just wrong, or perhaps there's some possible tricks which Anthropic is provably not engaging in. What it's definitely not is a one-time adjustment now that it's happened in two consecutive quarters.
It's a good question: why are the GAAP rules what they are? It needs to be investigated, though.
The reason it happens in multiple quarters is likely that Anthropic's valuation has increased in multiple quarters. Every time Anthropic's valuation increases, the convertible bonds are worth more money. Other shareholders have "lost" money compared to what would have happened if Anthropic had sold regular bonds instead of convertible bonds. Except that no, the value of their shares is increasing too. An increased valuation is actually good for them.
That's how equity works. If someone owns 1% of a company and its valuation doubles, their share is worth twice as much and so is yours and we wouldn't even normally consider it to be diluting the other shareholders.
So the question is whether convertible bonds are worth more than regular bonds and the answer is, yes, absolutely, but they are partially equity, and it's the equity part that's increasing when the company's valuation is increasing.
And if the company's valuation went down then the value of the equity part of the convertible bonds would decrease. Maybe that would be a profit by GAAP rules?
> The bond market works best when there’s an end in sight, Lyman noted. Every AI investor believes there’s a light at the end of the tunnel. We just have no idea how long this tunnel is.[0]
It is like someone who loses repeatedly at Roshambo while saying: "Okay, then. Best two out of three- three out of five- four out of seven- five out of nine..."
[0] https://edition.cnn.com/2026/10/30/business/ai-stocks-bonds-...
Lol, pretty much exactly that. "Wait wait, I wasn't ready yet."
These are all supposed to convert to regular shares at or around IPO IIRC. If they're still pulling that crap after that point we'll know. There's an end date for those contracts that we're expecting
Release the weights instead
Anyone with successful portfolios here - should a retail pleb invest?
Only with money you can afford to have sit (hold) for 10+ years. The closest analogy we have dotcom bubble and crash. We don't know if we are in 1998 or 1999. For most investors who got in in 1999 and held, they didn't break even until 2007 or longer. Versus the investor that got in 1998, was break even in 2003.
Obviously the investors who bought in at the bottom did the best :-) Most people who are crying 'AI bubble' predicted 8 of the last 2 bubbles.
My personal opinion is ANT IPO is like the netscape IPO of 1995, its the start of the cycle not the end. Things are going to get really crazy over the next 3-5 years, the last year was just a warmup. I don't think people realize how much credit fiat dollars have been and can be created, and how $1T companies will be commonplace. I think humans have a mental block, where we think dollars are like rulers or other fixed measuring devices, so you can look at the same number at different periods of time and compare. credit backed currency completely warps our sense of scale when it comes to measuring things in dollars.
1T companies common place in the next 5 yrs? 20 yrs?
Do not FOMO.
It's not the same thing as early NVidia / Amazon / Google IPO: these companies didn't IPO at a value immediately placing them in the top 10 (by companies market cap) and certainly didn't IPO at values representing 5% of the US GDP.
Can it x2? x3? x4? Maybe.
Can it x100 and represent five times the US GDP? I don't think so (I know, I know, the US GDP would grow too).
I know ANT ain't SPCX, but look at what happened so far to SPCX's valuation.
Could it 1/100x? Yes.
Half of the revenue in the first 9 months of 2026 was in Q3? No one is going to believe that. Focus on the net loss of $23.29 billion in Q3, that's more instructive.