Wall Street Sees an AI Warning, but Wedbush Disagrees

Amazon AMZN backed Anthropic's reported third-quarter revenue may have disappointed some investors, but Wedbush Securities says the numbers do not point to a broader slowdown in artificial intelligence demand.

Anthropic reportedly told investors that Q3 revenue reached $16.8 billion, up about 45% sequentially, as the Claude developer prepares for a highly anticipated IPO.

Wedbush analyst Matt Bryson acknowledged that the result could look underwhelming against earlier reports suggesting Anthropic had already reached a much higher annualized revenue run rate.

But he cautioned against extrapolating too much from short-term annualized figures.

We can see how this result could be construed as worrisome given the slowing sequential growth, Bryson wrote, while adding that annualizing revenue over short periods can be misleading.

The bigger point, in Wedbush's view, is that Anthropic still delivered 45% quarter-over-quarter growth despite intensifying competition from rival AI products.

The firm also says it is seeing no meaningful slowdown in underlying AI infrastructure demand.

Bryson pointed to continued strength in GPU rental pricing, even for older systems, and said supply-chain conditions remain tight.

Anthropic's economics also appear to be improving.

The company reportedly told investors it generated $1.70 in revenue for every dollar spent on computing power during the quarter, while adjusted gross margin reached around 85%.

Anthropic also said it was profitable on an adjusted basis.

Investor Takeaway

I think Wedbush's argument matters because the current AI debate is increasingly shifting from Is demand strong? to Is the growth still fast enough to justify the spending?

Anthropic's sequential growth may have slowed, but 45% quarter-over-quarter growth is still extraordinary at this scale.

More importantly, if GPU pricing remains firm and infrastructure utilization stays high, that suggests demand is still outpacing supply in important parts of the AI ecosystem.

For investors, the key things to watch are Anthropic's annualized revenue run rate, gross margins, compute efficiency, GPU rental pricing and hardware orders from major AI labs.

If Anthropic continues converting enormous compute spending into high-margin revenue, the current slowdown fears may prove premature.