Anthropic's Growth Slowed, and Investors Pushed for a Lower IPO Value

Anthropic held a pre-IPO investor day at its San Francisco headquarters on October 14. According to Reuters, citing two people who attended, the company reported third-quarter revenue of $16.8B.

That is a 45% increase over the prior quarter. A day later, Reuters reported that some investors and prospective IPO participants had discussed a valuation of about $1.5 trillion. The company and its investors had previously floated a target of roughly $2 trillion.

What Anthropic Disclosed

According to attendees, revenue was $4.7B in the first quarter and $11.6B in the second. The company said it was profitable on an adjusted basis in Q3; Seoul Economic Daily, citing Reuters, reported it was also profitable in Q2.

Growth is holding up in dollars but slowing as a rate. Revenue rose by $6.9B in the second quarter and by $5.2B in the third. Reuters reported that some investors were disappointed by the slowdown.

Last year Anthropic posted an operating loss of more than $8B on revenue of $4.6B. It has committed to spend at least $518B on cloud, compute and infrastructure over the next decade. The company had not responded to a request for comment when the story ran.

How Growth Sets the Valuation

Revenue hit a record, yet the valuation under discussion fell. The market did not read this as a revenue story. It read it as a duration story.

At this scale, valuation does not pay for today's revenue. It pays for an estimate of how many more quarters growth will last. The calculation below shows how one slower quarter changes that estimate.

The paths are arithmetic, not forecasts. What they show is that a drop from 147% to 45% forces investors to weigh a world closer to Path B. The 25% cut in valuation is the price of that shift in odds.

Why Chip Stocks Felt It

Much of Anthropic's revenue goes to buying compute. That capacity comes from companies such as Amazon, Alphabet and Broadcom; Broadcom finances part of that rent itself.

IPO proceeds are one way to fund the $518B commitment. A lower valuation means less cash for the same stake, or a bigger stake sold for the same cash. In the hypothetical above the gap is $25B, about one and a half quarters of revenue.

According to Saxo's market wrap, Anthropic's results added to fears of an AI slowdown in Europe on October 15. ASML fell 5.7%, ASM International 8.6% and Infineon 8.0%. In the US, the Philadelphia semiconductor index fell for a seventh day, losing 12.4% over that stretch.

The Nasdaq 100, by contrast, erased an intraday drop of as much as 1.8% by the October 15 close. The selling centered on AI infrastructure, not the whole index; the equal-weight S&P 500 rose 1.4% that day.

The Part That Doesn't Fit

Not every attendee saw the same thing. In Reuters' first report, some attendees said they left optimistic about rapid revenue growth and the path to profitability.

The $1.5 trillion figure is a negotiating position based on anonymous sources, not a decision. No IPO price range has been set. Reuters reported the deal will likely come after the November 3 midterm elections.

What It Means for Investors

• The market priced the drop in the growth rate, not the record revenue; rates falling while dollars rise is a normal stage for any new industry.
• A lower Anthropic valuation means less cash raised, which reads as a demand worry for compute sellers Amazon, Alphabet, Broadcom and their chip suppliers.
• If the IPO range comes in below $1.5 trillion, the same worry carries over to OpenAI's listing, expected next year.
• The risk to this view: growth reaccelerating in Q4; analysts estimate the annualized revenue run rate could reach $110B by year-end.

This article is based on Reuters reports from October 14 and 15, which cite anonymous people who attended the investor day. It also draws on Investing.com and Seoul Economic Daily accounts of those reports. The quarterly revenue and valuation figures are not official company disclosures; Anthropic did not comment. Market moves are from Saxo's October 16 Asia market wrap. The scenario calculations are the author's.