Anthropic's reported Q3 revenue not a sign of AI slowing down, Wedbush says

While Anthropic's (ANTHRO) reported third-quarter revenue may have disappointed some investors, Wedbush Securities believes there is more to the story and not an indication of a slowdown in artificial intelligence spending.

“We can see how this result could be construed as worrisome given the slowing sequential growth or even some suggestion that Anthropic had already achieved a $65bn annualized run rate at the end of July,” Wedbush Securities analyst Matt Bryson wrote in a note to clients. “At the same time, we'd also note that 1) annualizing revenue trends around very short time frames can be misleading (particularly when they are based on third hand commentary) and 2) last quarter saw more competition from alternatives to Anthropic (whether Muse or even CoPilot) and Anthropic still grew 45% sequentially despite such significant growth numbers.”

“Net, we haven't seen any indications that overall hardware demand is slowing (on the ground at OCP this week) and while we understand the various concerns that are driving negative sentiment (rising financing rates, slowing foundation model growth, etc.), these issues don't appear to be affecting AI demand (GPU rental prices keep moving higher; even for old systems) or supply chain dynamics,” Bryson added.

Anthropic (ANTHRO) reportedly told investors its third-quarter revenue stands at $16.8B as it prepares for a highly anticipated initial public offering expected in November.

Led by CEO Dario Amodei, Anthropic also told investors it was cash-flow positive, generating $1.70 in revenue for every dollar spent on computing power during the third quarter, according to the Financial Times. Investors expect Anthropic to reach $110B in annualized revenue by year-end, according to The Wall Street Journal.

Anthropic added that it was profitable after making certain adjustments and said its gross margin was 85% after making certain adjustments.

The artificial intelligence giant, which makes the Claude chatbot, could aim to raise more than $100B in a public listing.