Anthropic results may aid IPO but not AI trade, analysts say

Anthropic PBC’s third-quarter results may strengthen the case for its expected initial public offering, though signs that revenue growth slowed from earlier in the year are likely to deepen questions over the global artificial intelligence trade, according to some investors and analysts.

The company generated US$16.8 billion in quarterly revenue and positive free cash flow, with an adjusted gross margin of 85 per cent, according to people familiar with the matter, providing evidence that its AI investments are starting to pay off. The company is expected to make its debut no later than the end of the year.

The results come as global AI stocks struggle with rising bond yields, oil-driven inflation and funding concerns surrounding companies such as CoreWeave Inc. While Anthropic’s revenue underscores underlying AI demand, market participants say it may not be enough to revive investor enthusiasm in the broader trade, with signs of slowing monetization weighing on chipmakers and infrastructure suppliers.

Here is what some market participants are saying about Anthropic’s results.

“Anthropic’s latest numbers offer one of the first tangible confirmations that the AI boom is turning explosive growth into real profitability beyond the chipmakers,” said Hebe Chen, a senior market analyst at Vantage Global Prime. “The market isn’t disappointed by Anthropic’s impressive numbers — it’s increasingly concerned about the side effects of sustaining that growth.” She added, “The timing of the report is sharpening those concerns, as investors question how much more capital AI will consume, including through Anthropic’s upcoming IPO, in an already liquidity-squeezed market.”

Vey-Sern Ling, managing director at Union Bancaire Privee, said “Slowing monetization at labs like Anthropic can break the AI investment theme. The likelihood is growth will slow over time due to larger base, competition.” The IPO “may not command as high a valuation as hoped if the numbers are not strong,” he added.

Gary Tan, portfolio manager at Allspring Global Investments, said, “Third-quarter sequential growth remained exceptional, but the slowdown from the second quarter shifts the focus from headline revenue to revenue quality, margins and whether Anthropic’s massive compute commitments can generate adequate returns.” It also raises the bar for the global AI trade, “as investors increasingly demand evidence that compute spending can translate into sustainable profits,” he added.

Anna Wu, an investment strategist and founder of Floodlines Research, said, “Anthropic doing well helps CoreWeave’s demand, but it doesn’t solve the financing question,” with some of CoreWeave bonds yielding close to 15 per cent as a sign of growing funding concerns. Strong revenue growth and positive free cash flow “suggest a good company from a fundamental perspective,” she added. “The consistency and sustainability will still be tested.”

Hui Ling Loh, managing director at ACG Management Pte., said, “Despite sell side saying Anthropic’s numbers look neutral or OK, the sector is being sold off on multiple industry headwinds just like we saw after ASML’s guidance, which was good. Funding is in question for levered companies.” She added, “With United States AI stocks getting killed overnight, CoreWeave data centre-led worries and U.S. inflation print, the hype in Anthropic is in serious doubt now.”

Charu Chanana, chief investment strategist at Saxo Markets, said, Anthropic’s revenue looks “really strong but that’s not enough for now. The market has moved from simply rewarding growth to asking much tougher questions about funding, cost of capital and returns on that spending.” She added, “For Anthropic’s IPO, these numbers strengthen the growth story, but valuation will still be the big debate. … A valuation above US$2 trillion would be roughly 30 times annualized Q3 revenue, while investors will also have to digest the enormous infrastructure commitments required to sustain that growth.”

The revenue numbers “may reassure investors about the size of the AI opportunity, but they cannot remove the risk of a memory downcycle,” Chanana said.