Anthropic Valuation Falls $500 Billion as Growth Slows

Anthropic, the developer of the Claude artificial intelligence model, is facing questions over slowing growth. Revenue rose steadily through the third quarter of this year, but the pace of expansion fell sharply. Investors have lowered their valuation of the company amid the controversy, which comes as Anthropic prepares for an initial public offering as early as next month, according to reports. Market watchers said doubts that had been building around the company surfaced all at once with the latest earnings disclosure.

The biggest concern in the market is the marked slowdown in Anthropic's revenue growth rate, according to foreign news reports compiled as of the 15th. Anthropic recently told investors that third-quarter revenue reached $16.8 billion, extending gains from $4.8 billion in the first quarter and $11.6 billion in the second, the Financial Times and other outlets reported. The quarterly revenue increase was $5.2 billion in the third quarter, down more than $1 billion from $6.8 billion in the prior period. The revenue growth rate fell to 45% from 142% over the same period, a drop of 98 percentage points.

Anthropic sought to reassure investors by pointing to an adjusted operating margin of 11%, but some investors have begun discussing a valuation of around $1.5 trillion for the company, Reuters reported on the same day. That marks a 25% reduction from the previous valuation of $2 trillion.

The loss of customers, partly by choice and partly not, is another factor. Meta and Microsoft switched to their own models or cheaper open-source alternatives to cut the high cost of Anthropic's Claude, The Information reported on the 6th.

Anthropic has cracked down on what it says are efforts by DeepSeek, Alibaba and others to copy its models through distillation, a technique that collects responses from another model and uses them for training. At the latest investor briefing, Anthropic said distillation-related revenue accounted for 5% to 7% of its total and that it had cut this significantly in the third quarter — an explanation that backfired. Business Insider noted that protecting its own technology had hurt revenue growth.

Anthropic's method of calculating annualized revenue, which multiplies a given month's revenue by 12, has also come under renewed scrutiny. As of July this year, Anthropic's annualized revenue stood at $65 billion. With monthly revenue rising 57% to 58% in April and May, investors expected full-year revenue to reach $100 billion to $120 billion even if growth slowed to 9% to 10% for the remainder of the year. That projection underpinned the company's $2 trillion valuation. The latest briefing, however, confirmed that the growth rate had instead declined. Market research firm SemiAnalysis lowered its annualized revenue estimate for Anthropic to about $74 billion based on the newly disclosed results. Critics also say the differing revenue formulas used by Anthropic and rival OpenAI are a tactic that prevents comparison between the two privately held companies.

A lukewarm market response to Anthropic's IPO could weigh on the broader AI market. Investors see the near-term outlook for the AI market as hinging largely on whether Anthropic's IPO succeeds and on OpenAI's planned listing next year.