Anthropic’s Rapid But Slowing Growth Could Weigh on IPO Valuation

Anthropic reported rapid-but-slowing revenue growth in a meeting with potential investors in its planned initial public offering, leaving some attendees expecting the company will need to keep its valuation target in check.

At a private investor meeting Wednesday in San Francisco, the company said revenue hit $16.8 billion in the third quarter, according to people briefed on the numbers. That was a jump of about 45% from the second quarter. The figure was more than 3.6 times the company’s revenue for all of 2025. But it also represents a slower growth rate than Anthropic’s second quarter, when fevered demand for its Claude Code product drove revenue up by more than 140% from the first three months of the year.

Anthropic also said it had an adjusted operating margin of 11% for the year through the latest quarter, one of the people said. While that figure excludes major costs such as stock compensation, it suggests the company is having some success in moving toward profitability.

At the same time, the company acknowledged some challenges, the people said. It estimated 5% to 7% of its revenue comes from distillation—a practice that involves other companies using Anthropic’s AI to glean data on how it works so they can train their own models.

Anthropic has repeatedly accused Chinese AI labs of distilling its models and has said it is working to fight those efforts. The company told investors Wednesday that distillation revenue will decline and continue to weigh on its numbers in the current period, the people said.

Overall, the readout offered a bit of a mixed picture for a company whose record-setting growth rate this year has raised expectations to extraordinary heights. The investor meeting came as economic and market forces already are weighing on Wall Street sentiment toward AI companies.

Such concerns have started to cool once-red hot sentiment about Anthropic’s giant IPO. Anthropic’s private valuation ballooned to $965 billion in May from less than $20 billion two years ago. And while investors still expect the offering to succeed, the revenue figures were met with some disappointment by some potential investors, who thought it should prompt Anthropic’s bankers to lower valuation expectations to perhaps even less than $1.5 trillion in the IPO, rather than the $2 trillion that some bankers have floated privately.

Anthropic’s IPO—expected to take place next month before the Thanksgiving holiday—will be by far the biggest test of investor attitudes toward an AI boom that has powered the U.S. stock market and the economy for several years. Investors have already soured on the prospects and valuation expectations of some other companies connected to that boom.

Borrowing costs have jumped and shares in some publicly listed AI data center operators have fallen recently. Firmus Grid, an AI data center company backed by Nvidia, last week pulled what would have been Australia’s biggest IPO in almost 30 years, citing market volatility, and other AI cloud company’s offerings are also hitting headwinds.

While demand for Anthropic’s Claude Code and Cowork tools for businesses have enabled it to surge past rival OpenAI in revenue this year, competition is intensifying. OpenAI has beefed up its own enterprise AI offerings and undercut Anthropic on price.

OpenAI and rivals including Google and Meta Platforms have come out with new AI models that rival the performance of Anthropic’s models in some categories, and some businesses—increasingly concerned about surging AI costs—have been turning to cheaper options including open source models.

In Wednesday’s meeting, Anthropic notably didn’t provide an update for its annualized revenue, a measure of monthly sales multiplied by 12. That figure, which hit $65 billion in July, has been closely watched as a growth barometer but has also come under scrutiny—in part because of confusion over the number for OpenAI.