alt Hacker NewsAnthropic's growth just flattened
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Everyone is really tightening usage now because of all the slopmaxers who burned millions of dollars of tokens and achieved nothing.
This piece was published in mid-October based on rumored numbers.
Anthropic released their Q3 numbers today which show:
- $16.96B in revenue Q3
- Up 47% quarter over quarter (Q2 was $11.6B)
- Up >1000% year over year
I wouldn't say their growth "flattened"? Their price drops in September dramatically increased Claude token consumption per OpenRouter
Sources: https://www.anthropic.com/news/s1-sec; https://openrouter.ai/anthropic
I know this is tech sector funny money and we do just disregard profit and judge companies on revenue alone, but the 5.5 models that just released are quite a bit cheaper than the 5.0 tier.
I wouldn't really be surprised if better model efficiency was part of the reason for a revenue stall, but I would also expect their costs to have dropped a fair bit too (although I have no idea whether that corresponds to an actual cost reduction or if it's all tied up in hardware and land that they already bought and will need to hit more utilisation of now.)
It's fun to note that nobody mentions AGI in these threads anymore.
If the hypothesis is that "everyone is tightening spend on usage", then anthropic is boned, if that holds true. Look at the price to performance for any benchmark and compare OAI and Anthropic, and this would be a pretty clearly terrible reality for Anthropic. OpenAI absolutely blows Anthropic out of the water when it comes to cost, if you pay per token.
The real question is how many people haven't figured out how to use AI to make their job easier/more productive.
Especially with this latest crop of models, they seem to be pretty damn competent in classic engineering rather than just software engineering.
AI growth is unlikely to be linear. We have seen a lot of hype in the last 12-18 month that give us ideas like "tokenmaxxing". But this is the same cycle that we have been before: hype -> disillusionment -> someone figures out a better way to use it -> next hype phase starts.
As it stands, even the people closest to this technology have barely figured out how to use it effectively.
As an investor, what's the moat here? Being 6 months ahead of China's open source/weight models?
OpenAI's Astra released on Sept 3 and Opus 5.5 released on Sept 22.
Most likely the combined revenue growth continued just as fast, but OpenAI took a lot of market share with a model that's ~as good.
If true, then the current market sentiment is too pessimistic because demand for AI (and chips) has continued growing.
I think the next cycle of growth will be from increased subscription pricing? Thats what the streaming companies did - start low, keep increasing forever. OpenAI already merging codex / chat and I think most people will have to buy that min subscription or even the higher tier. I am already at the $100/month
I am not saying its a must, but those who are reaping the benefits in someway will end up spending more I guess?
I feel like a lot of this could be explained by how good Opus 5.5 is compared to Fable. People don’t need Fable for most tasks.
They'll be competing on price now with openAI, google, and Amazon eventually.
AI is just a compute commodity with a value add.
This is fine. Not only are we happy with growth now, but we want growth of growth?
Flattened might be an exaggeration but they lost many a customer with boneheaded decisions like blocking subscription access to OpenCode. I don’t think they’re past the point in their growth curve where tinkerers don’t matter anymore. Again, definitely not flattened but not as parabolic as they could be.
I don't see the issue. If the market is saturated by them, the slowdown seems to indicate to me that it has reached (at least transiently) its intended audience. If the end goal is that every person on earth has a claude subscription (or whatever your choice is) then yeah that is worrying, but I don't deem that realistic.
my simplified take is the headwind is on two ends - smaller models being sufficient enough & open weight models then second utility of 'a.i' is maximal when deployed with humans i.e engineers applying a.i on top of current applications putting an agent layer on top.
the second part is not sexy - but we see all a.i labs having fde arms e.g ode, microsoft frontier company etc but then again that's the part you can't hype.
The conclusion that this is a bubble seems arbitrary and disconnected from the several true facts outlined in the article. Anthropic's growth _is_ slowing, albeit still strong at ~47%. They do have enormous compute obligations, and it will require a lot of growth to meet them. However, they also increased revenue per dollar spent on compute from $0.40 to $2.08 in five quarters and hold $131.7bn in cash.
Keep in mind this growth has mostly been sustained by low-level business automations, coding, and chatbots. With the adoption of products like personal agents, e.g., Meta's Muse, I am pretty optimistic there will be demand and growth around this level will be sustained for a few quarters. Doubtful we will ever see another ~150% growth quarter.
And what is between June and September?
- Would you like to get paid a million dollars right now, or get paid a penny today that doubles everyday for 30 days.
- hmmm, why 30 days? Make it 60 days and I'll take the penny.
The effort needed to double everyday, or month is realistic at first. But then you can't just keep doubling without swallowing the universe along the way.
You can tell how desperate an argument is by how many derivatives they are using.
I thought growth has slowed due to crackdown on distillation
It's because everyone is talking about how the bubble will burst! When people talk about it a lot, they tend to believe it. Everyone just needed to give their computers to Sam so that no one could talk about the bubble, and then everything would be fine.
Main discussion:
Anthropic reports $17B in Q3 revenue, commitments of $895B in revised S-1
Insane to invest in that company on IPO
Insane
DRAM ...
If you ever wonder why Anthropic is going all out to try and fearmonger their way to an open weights ban, this graph will provide all the answer you need.
I think all numbers coming out of Anthropic are utterly meaningless until we can answer the question of "just how subsidized are those subscriptions?"
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I've been saying it for a while now but if someone sold me a box with model perf from ... I guess November 2025 then that's decent enough for my usage. Tool interaction is the magic, I don't need much if any more innate intelligence. Things are fast enough.
I wonder if Anthropic will "see the light" and stop trying to burn a bunch of money and sell a thing they already have (which is decently useful). Very ready to be proven wrong in any direction
I think one thing that could explain it is that some of the big tech companies might have been big customers of theirs, and now they have alternatives that, according to recent news, their employees are being pushed to use instead. Some of those reports mentioned internal usage getting cut in half. If this is true, it doesn't necessarily mean their growth has stalled.
Discussed here a few weeks ago: https://news.ycombinator.com/item?id=49997161
This is why Musk rushed consolidating xAI with Spacex and rushed to an IPO. And, why it was so important to him that Nasdaq and Russell rewrite their rules so he could dip into everyone's retirement accounts as quickly as possible. I don't think he's particularly bright, but he has an incredible cunning about how markets behave and how to manipulate those markets to his ends.
The writing was already on the wall about a lot of things WRT the AI market: 1. there's a limit to how much money will be thrown at it before investors expect a return, and that limit is fast approaching, 2. it's turning out "intelligence" is going to be a commodity and it's not much of a moat, 3. cornering the market on memory and GPUs (even if they sit in a warehouse for months or years before going online, as long as it drives up the price for competitors) only works if your competitors don't figure out how to do it more efficiently and on alternative platforms.
Spacex also soaked up a lot of the retail appetite for AI, even though it's an also-ran that barely qualifies, in terms of enterprise and government usage (and for good reasons, both technical and otherwise). Every other AI IPO is going to be facing a more pessimistic market, especially if we continue to be in a tough economic environment.
In short: They waited too long, now they're in a world where they've burned so much money people expect them to deliver something that no one in the AI industry probably can deliver: a monopoly-like hold on a huge percentage of the market, and to invent a bunch of new markets that aren't currently buying AI. They have to have a dominant position for this to work because they have to be able to set their price higher than is standard now, without everyone fleeing to other cheaper providers. And, when the market for memory and GPUs finally gets back to normal and supply catches up with demand, I'd wager a lot of companies, and even individuals, are going to get real serious about open models and self-hosting (unless prices remain competitive for the hosted models).
Opus 5.5 came out right at the end of the quarter, September 22. I'm confident that it caused more usage growth since then. I'm sure there are a lot of people rooting for their IPO to fail but they are still clearly in the lead on coding and will continue to do well until someone definitively passes them.