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It’s beginning to look like Anthropic waited too late to go public. Third-quarter revenue numbers disclosed to investors on Wednesday implied that its growth has slowed from the second quarter, which we reported is likely to put a ceiling on its IPO valuation. Anthropic might have been better off going public in June, when its growth was still spectacular. (Of course, a June IPO might have been impractical given that that’s when SpaceX went public.)
As things stand now, Anthropic’s slowing growth may remind investors of a longstanding question surrounding the company: How much of a moat does it really have? Yes, its AI models are as good as they get, but increasingly, businesses don’t need really expensive frontier models. As we wrote earlier this week, developers are increasingly opting for other models that are good enough for most tasks. Anthropic’s aggressive pricing has prompted companies such as Microsoft to cut its spending on the former’s models, we reported 10 days ago. (This trend seems to be spreading).
And there are lots of alternative models available, mostly open source. TrustedRouter—a storefront for businesses wanting to tap any AI model—lists 665. And in China, at least, more companies are developing their own models, including Xiaomi, a smartphone maker, and Meituan, a food-delivery firm. That could easily happen here. Another problem: Given the growing safety concerns about state-of-the-art models, Anthropic’s ability to even release its best models is diminishing, as my colleague Stephanie Palazzolo pointed out in August.
Layer on the $500 billion–plus in commitments Anthropic has taken on to secure computing capacity over the next decade, and the risks in owning its stock begin to mount. Our story on Wednesday night said investors thought Anthropic’s IPO valuation should be closer to $1.5 trillion than the $2 trillion bankers had floated in the past. “This IPO will need to price to sell,” said Jared Carmel, managing partner of Manhattan Venture Partners. He expects the company to go public at a valuation of $1.4 trillion to $1.5 trillion.
That’s still a big number for a company that is not quite six years old. It would make Anthropic the ninth-biggest tech company by market value, below Broadcom and above Tesla. But it may well turn out to be Anthropic’s peak.
Apple’s Value
Growing questions about the value of frontier AI models suggest big tech firms such as Apple made the right bet in avoiding the costly race to develop their own models. It’s likely no coincidence that Apple stock has now risen more than twice as much as other big-name tech stocks so far this year.
As of Thursday’s close, Apple shares were up 26% for the year so far, while Alphabet, Amazon, Meta Platforms and Microsoft were each up 10% to 12%. Even more striking, Apple is the only one of that group to have seen its valuation, measured as a multiple of profits or sales, rise this year, according to Koyfin data.
And yet Apple is growing more slowly than the other big tech firms. But given that most of those others are pouring a fortune into capital expenditures for AI data centers, Apple is increasingly looking like a healthier bet (as we predicted).
In Other News
• Apple is preparing to release its Apple Intelligence on-device AI service in mainland China in December, ending a lengthy wait caused by regulatory hurdles, Bloomberg reported Thursday.
• Portland, Ore.–based startup Mueon raised $65 million to develop a new way to arrange AI server rack components. The company says its design could fit up to 10 times more computing capacity into the same amount of power as existing data center setups. This approach could ease constraints on global power and data center capacity for AI chips.
• Taiwan Semiconductor Manufacturing Co. said Thursday it will build another 3-nanometer chip factory in the Taiwanese city of Tainan, with production set for the first half of 2028. The move signals confidence that strong AI chip demand will last for years.
• CoreWeave and Broadcom have objected to a request from OKXICE, a joint venture between crypto exchange OKX and Intercontinental Exchange, to list and trade their stocks on blockchain, joining a growing list of companies pushing back against crypto versions of their stocks.
• Anthropic has now begun embedding AI evaluators within the company to assess and publish reports on safety practices and risks, Anthropic said in a blog post on Thursday. They’ll use company computers, office space and have access to internal tools and systems.
Today on The Information’s TITV
Check out today’s episode of TITV in which Akash Pasricha speaks with Grace Kay about her reporting on Cursor’s data security concerns.
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