Anthropic's revenue is exploding, so why are investors bearish?
On the show In the Loop, host Ejaaz Ahamadeen discusses the latest news about Anthropic ( ANTH.PVT ). Revenue for AI startups rose 45% in the third quarter to $16.8 billion, even as investors remain positive about the stock. Ahamadeen explains what this could mean for the AI startup.
Speaking of companies going public, Anthropic is expected to have a huge initial public offering, or IPO, at a valuation of $2.2 trillion. Its IPO roadshow is set to begin on November 1, about two weeks from now. The company is expected to release a document called an S-1 prospectus. This will explain its finances over the past year and a half to two years and make the case for why investors should buy its shares.
But recently, people have started to feel differently about Anthropic. I'm showing a post by Andrew Curran about a meeting between Anthropic and investors. At the meeting, the company shared some financial figures. The biggest number was that Anthropic's revenue in the third quarter rose 45% to $16.8 billion.
To understand how big that is, look at the earlier numbers. Anthropic made about $4.3 billion in the first quarter of this year and $11.5 billion in the second quarter. That means revenue more than doubled from the first quarter to the second.
Revenue then rose another 45% in the third quarter. But investors see this as a sign that growth is slowing down. That view may be understandable, but it seems surprising given how much money the company is bringing in. Anthropic is on track to reach an annual recurring revenue, or ARR, of about $116 billion in the fourth quarter.
That is far above the $10 billion that Dario had predicted at the start of the year. Anthropic is clearly one of the fastest-growing companies in the world. Yet investors still see reasons to worry because the company had promised to keep growing its revenue, and its growth rate now appears to be slowing. Some people think this is happening because Anthropic is losing its share of the business market to its competitor OpenAI, which has launched
a very good coding model called Codex. Over the past six months, Codex has improved a lot, and some users have switched to it. But I think this concern is not a big deal. I'm showing a post by John Dunnigan about Anthropic agreeing to license technology from a company called Opaque Systems.
Opaque Systems helps companies train AI models on private information, such as business data, while keeping that information encrypted and secret. This should help businesses feel safer using AI models in the cloud because they can better protect their data from being accessed or taken by others. I don't think this is a major concern. Anthropic's revenue is still rising very quickly. If its performance looks weaker after adjustments, or for some other reason, I think it may be because the company has to spend so much money to get the computing power it needs.