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Comment by minimaxir | Hacker News Reader

From a financial analyst on Bluesky: https://bsky.app/profile/peark.es/post/3mzdkyxzzns2w

> Okay so Q3 ARR at $67.8bn versus $46.2bn for Q2, +47% QoQ. Turns out tokenmaxxing's end over the summer slowed revenue growth versus an absolutely torrid 100%+ growth rate in Q1/Q2 but 46% sequential is still eye-popping

> Operating margins (GAAP) went from 8% to -3$, with a -28.5% QoQ incremental operating margin. $SPCX compute coming online is the reason.

> Bottom line after seeing this Q3 update: the basic takeaways from the original S-1 don't change, but fears that they were excluding Q3 because it was a disaster were definitely wrong. Do with this information what you will.

It's also worth noting that Q3 only has one week of Opus 5.5 (9/22 - 9/30) which may have changed the economics for Q4.

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> fears that they were excluding Q3 because it was a disaster were definitely wrong

That's a very generous reading. Anthropic's entire growth narrative is the rapid growth over the previous 12 months, from near-enough zero to $100bn+ this year. Now we see that actually growth is levelling off and that their revenue was ~$5bn/month over the last quarter, which is barely over their compute commitments, and nothing close to the $100bn+ leaked.

I guess if people thought Q3 would show negative growth rate, sure, it isn't a disaster, but their growth rate slowing so much is surely very bad and matches all the concerns commenters had.

And this is Anthropic! Anthropic are the financial success compared to OpenAI. OpenAI are doing much worse, so this does not bode well for OpenAI either.

Very generous indeed. Here is the updated chart. The downward movement should not be overlooked.

https://x.com/billylo/status/2117276235852345425?a=4-pjgf1Ox...

A single downward point for one quarter is not a "trend."

I did not suggest a downward trend. (It's a trend graph)

People will point out that +46% is still good, but this is like measuring the escape velocity of a projectile that's still at 1000 feet. It's not that the projectile isn't going very fast or won't get very high, it's that if you want to have enough momentum to break out of Earth's gravitation pull you can hardly afford any deceleration.

Businesses aren't projectiles

Their forward pricing prices in all expected growth... so if they don't have accelerating momentum that reduces expected price.

The point being made here I think is that the same can be expressed in natural english language that does not pretend to be a physics class for some reason.

That reason possibly being to grant legitimacy to an otherwise mostly illegitimate and equally mostly fictional branch of the economy (that whole MBA cluster).

You're now talking about the expected trajectory.

Really, you're talking about expectations ("expected") of the expected ("price") trajectory (actual business performance).

If the above comment was intending to say "chart go up steeper make price higher, chart go up less steep make price lower", then no dispute there. But that carries virtually zero predictive information about whether the business will achieve "escape velocity" (whatever that means).

You absolutely cannot predict Anthropic's fate based on their growth rate slowing from Q2 to Q3. Obviously.

You can predict the resting place of a projectile with information like this. You cannot do so with a business, especially one as dynamic as Anthropic in an environment as dynamic as today's.

Someone needs to tell that to the AI startups.

Analogies however are: they often fly over people's heads.

The analogy fails at precisely the thing it's attempting to do.

It's saying "like a projectile, you can predict the outcome based on just a sliver of data"

That is literally not true.

But they do have S curves. If you're on the shoulder of the S curve while your spending commitments are accelerating, that won't end well.

Presupposing where they are on "the" S curve is itself presupposing the conclusion, duh.

Most businesses are stacks of S curves (except when they're not).

AGI is supposedly the literal be all and end all. It's a bit embarrassing for the singularity to have an S curve.

Mathematically they can work very similarly though because you have a revenue growth rate, and margin. The question is can that revenue/margin reach break even before you run out of runway (the expected sum of all rounds of investing) .

The main difference I would concede is that gravity, mass, forces, awind drag etc are much easier to model.

Sure they can work very similarly. But they can also not behave very similarly.

Businesses can have stalled growth, degrading margins, etc. etc. and then simply... reverse it. They can raise more money. Their competitors can get regulated out of existence. They can do a literal infinite number of things that cannot be factored into a model like "a projectile."

That's why the projectile analogy is stupid as fuck. It suggests you can presuppose the conclusion by presupposing the conclusion.

It's a model that helps you make present tense valuations of potential futures.

No one said it literally is a projectile. It's an analogy and model. The similarities are in the present tense maths. It's presumed and beyond having to be stated that businesses exist in a complex set of variables all of which could change and might not be as predictable as the valuation maths.

You're not wrong, you're just not adding anything to the conversation that any but the most uneducated do not already know and acknowledge.

And the analogy is literally not useful in any way whatsoever.

It implies that you can know Anthropic's outcome from this slice of data. That is literally not true in any way at all.

Like it's not even remotely or analogously or roughly true.

Anthropic behaves like a high-growth business with a quarter of slowing growth. It does not behave like a baseball. Any conclusions you draw from analyzing it as a baseball will be de facto faulty because the two systems are nothing like one another. The most basic assumption of projectile analysis (that energy is not added in-flight) is the opposite of the most basic assumption of a business (that they are actively profit-seeking).

The analogy adds nothing except ambiguity at best and active falsehoods at worst.

>It implies that you can know Anthropic's outcome from this slice of data.

No it doesn't. All I said was that given how little we have to go on and how early in the process we are, a minor 2nd or 3rd derivative slowdown isn't a positive signal. All indications are they they need additional orders of magnitude in revenue fairly soon.

I also never said that it wasn't self-propelled. I was starting to write about waiting to see if another stage of propulsion comes online but I deleted it.

Okay, well if you weren't suggesting you can predict the outcome based on this slice of data, then "projectile" is a really stupid analogy. The defining characteristic of a projectile is that you can do this.

Do you respond to every metaphor this way?

Bad, misleading, and uninteresting ones, yeah pretty much.

Businesses also aren't financial statements. These are abstractions we use to understand and communicate about the world.

Correct. Which is why making a physical claim about a 2nd order derivation of a super dynamic system is goofy and misleading.

I think that's an unnecessarily pessimistic take. The way I look at it the industry did not wake up to how big this was until Q4 and so it makes sense that you would see astronomical growth in q1 and Q2 as everybody woke up and started adopting. Seeing the growth Taper down to a 4.5x annualized rate which to your point will only continue to taper but it's still mind-boggling at this scale ... you just don't have anything else like this in the economy. This is like hyperscaler Revenue scale achieved in 15 years being achieved five times as quickly. At this rate Anthropic will exceed AWS Revenue within a year

> At this rate Anthropic will exceed AWS Revenue within a year

Well that’s the point. They’re not continuing at that rate of growth.

>At this rate Anthropic will exceed AWS Revenue within a year

And in 10 years it will be worth the entire Earth's economy.

https://imgs.xkcd.com/comics/extrapolating.png

It is a lot easier to switch model providers than it is to switch cloud providers. And the open weight models from Chinese Labs make Claude a lot more of a commodity than any service provided by AWS.

> Now we see that actually growth is levelling off ...

I really don't understand how could it be otherwise? They're planning to IP at a valuation representing 5% of the US GDP and, unlike NVidia, they are neither selling shovels in a goldrush nor a business with decades-old proven track of records.

Are people really going to buy ANT thinking it'll 10x to 50% of the US GDP?

Aren't there better stocks to YOLO on if you think you could maybe 10x? And if you want something safe instead of YOLO'ing, aren't there plenty of companies much safer and much more boring to invest in than something IPO'ing at 5% of the US GDP?

Isn't the entire Anthropic narrative based on infinite growth? How is infinite growth sustainable?

> Aren't there better stocks to YOLO on if you think you could maybe 10x?

This is why any [consumer] investment in ANT is bad. If ANT goes 10x then congrats, we [the citizens] are in a crisis. If ANT goes 1/10x then congrats, holders of ANT are in a crisis.

10x year over year couldn't continue for long--they were what...3.5 years from exceeding US GDP?

47% quarterly growth is still 4.5x annual growth, which would put them at $300+ billion revenue in a year. This is still unprecedented growth for a company of this size.

The negative perspective depends on assuming that the 47% quarterly growth is going to continue dropping soon. And it is going to drop, since it's only a bit more sustainable than last year's growth. The question is how many hundreds of billions they're making a year when it levels off.

If we assume LLMs will continue to advance at a pretty rapid pace (relative to the current rate of advancement; so, same or faster), all these numbers look good to me.

Some people just start out with wanting LLMs/AI/Anthropic to fail or be scams and consistently try to fit any new evidence pegs into those unchanging hypothesis-shaped holes. This group ideologically despised LLMs from the start and needs them to be fake.

>If we assume LLMs will continue to advance at a pretty rapid pace (relative to the current rate of advancement; so, same or faster

https://xkcd.com/605/

Yes.

>If we assume LLMs will continue to advance at a pretty rapid pace

Why assume that?

So much money have been given to that handful of companies and to that field, that it's pretty much guaranteed to plateau (it's not some small but growing market with lots of room to grow. It's already taking as investment a huge chunk of the economy, and the returns don't seem to justify it).

Most of it is a pre-IPO hype and a circular financing loop between Nvidia, Oracle, Amazon, and the AI players anyway, so the real returns are even worse.

Lots of people making the financial case against Anthropic are not anti-LLM. I think the technology is great, interesting, powerful, innovative etc etc etc my issue is with the garbage business that Anthropic and OpenAI are building and the nonsensical ideas people have about business in general. Technology is exciting, business is not, business is boring. Money come in, money go out. Selling technology, no matter how exciting it is, does not change the nature of business.

And yet one can argue that the "garbage businesses" you label are the ones doing their best at matching market demand. See how well things are going for other entrants, like Google, Microsoft or Meta. Putting Copilot in every app makes a whole lot less sense than Cowork, Codex and the like. They just are doing worse things while attached to traditional money fountains, like ads in social media and search.

If you have no theory of how to value a company any number looks good.

You can be bullish on LLMs profoundly transforming society while being bearish on the economy "digesting" this new technology fast enough to justify the incredible capital spending necessary to power it.

I am actually somewhat bearish on adoption/propagation. I would be expecting much larger numbers than these if I were bullish on it.

It doesn't matter how much they "continue to advance at a pretty rapid pace", if the economy has no actual demand for the new capabilities. Even if we accept the premise that LLMs can produce good code at scale now and automate most software development work, then what? As *an industry*, the bottleneck was that we needed people to write code, and that bottleneck has been removed since ~Opus 4.6. Where is the industry now bottlenecked which requires some significant quantum leap in model capability?

Don’t bother - these knuclkleheads don’t understand nuance and despite much of their devices being manufactured in China - they struggle to accept Chinese offerings can take significant market share.

Not if Anthropic consistently stays 6+ months ahead of all labs besides OpenAI.

Opus 4.6's coding ability is nowhere near as good as Opus 5.5's. Some model next year will almost certainly be significantly better at coding (and planning, and designing, and ideating) than Opus 5.5.

You're narrowly focused on writing code. What about when they can run entire firms themselves, better than the average human CEO could? What about when we have models way, way, way better than Opus 4.6 and 5.5?

The point is we will eventually very likely have AI systems that can do everything. Everything. Anything and everything a human can do with - or even without - a computer, and then better than anything or everything a human can do, including in terms of creativity and innovation and novelty and insight. Obviously I don't know when that might possibly be, and it's not happening next year or something, but you can't just pretend like we hit the cap on the technology.

> What about when they can run entire firms themselves

That would mean the whole idea of free markets will be rendered obsolete, instantly destroying the idea that investing in Anthropic is sensible.

I don't really follow how LLMs advancing leads to OpenAI or Anthropic being successful businesses? Those seem like orthogonal outcomes.

They're certainly correlated, even if one might quibble about the coefficient.

No there are just numerate people pointing out ANT/OAI need to make X $$$ to make Y $$$ spend make sense. The financials are separate from model capabilities, they can cure cancer and invent big dick pills and still go out of business if their balance sheet is fucked.

Yes, but their balance sheet seems fine to me.

Disagree on the tokenmaxxing end. People are still doing it (and I'd argue more people are doing it due to wider adoption). Its just that most low hanging coding adoption has reached saturation point very quickly (which is genuinely impressive).

Now, they need to unearth new use cases and saturate them to keep the momentum going. Its unclear if they have found these opportunities and can turn them into sustained growth.

No they are not. Big tech companies started capping AI usages already and those are their major clients.

Yeah I think for the last 3 months or so, the only ones that are still token maxing are the ones on subscriptions.

Correct, and most every company is optimizing around model routing, with many including much cheaper open weight models.

Within large tech companies the era of "spend the most money on the smartest model running on its maximum effort, always" is dead.

The takeaway is there is no moat and people will switch to competitor model in a heartbeat.

That's not the takeaway of this analyst or anyone I have heard.

This is specifically about the end of tokenmaxxing and how much worse the growth rate would look after the Q3 numbers came out.

(I do think moats are shallow, and I personally switch away from Anthropic every few months for a while, but I've been coming back. All software moats have been made more shallow now, affecting the entire investment landscape.)

Models are not a moat for sure.

Anthropic is working hard to create a vertically integrated stack from model to harness to productivity apps. That may or may not work, but it’s clear they see models as a value add for integration and not a product that can be a moat in themselves.

harness is not a moat. CC is great, I mix it with codex with my own vibe coded messaging and hierarchy layer. Lately there are more CC because of Opus5.5 but Codex caught back up with Sol-6.1;

Codex also wins by consuming a lot less memory.

Coding harness is not a moat, but Anthropic’s productivity integrations are starting to be at my company. Surveys, checklists that Claude and people collaborate on, draft documents where you @ Claude to ask for revisions.

I’m not convinced it’s durable or that Anthropic will be the ones to change the document habits people have decades in… but it is a mistake to only see these companies in terms of models and coding/chat harnesses. There is something a lot bigger there.

The product doesn't have a moat, but anthropic's branding and enterprise focus seems to be quite valuable.

I disagree. Our devs use Claude for coding. When OpenAI had Astra, no one switched even though the company allowed OpenAI models.

what if the alternative is much cheaper?

Arguably, it was cheaper.

By the way, we get way more value from our Anthropic subscriptions than any Chinese subscription.

Opus 5.5 is great, but you are kidding yourself if Deepseek 4.1 flash isn't as good as good for 99% of coding tasks. Anthropic (and OpenAI) are between a hammer and an anvil in terms of good enough local models being able to run performantly on current and next gen Apple hardware.

How do you define value?

We have Copilot and can select between various OpenAI and Anthropic models, and when I accidentally select the “wrong” one it takes me awhile to notice.

I use Claude Opus at work and DeepSeek v4.1 Flash on my personal projects. For the kind of work I'm doing, they're basically interchangeable and DeepSeek costs 3% what Claude does.

https://openrouter.ai/compare/anthropic/claude-opus-5.5/deep...

How does it change if you’re building via subscription?

Doesnt matter at this stage of growth what financial analysts say because they havent seen anything similar in their lives :) Large corps are going to really be the deciding factor, in what ANTs next years revenue is going to look like. And right now inside large corps there are literally hundreds to thousands of different experiments running and no one knows what is going to click.

> It's also worth noting that Q3 only has one week of Opus 5.5 (9/22 - 9/30) which may have changed the economics for Q4."

An average random dev here: I switched to Opus 5.5 and forgot about all other (paid) models.

Does this person not own a calendar? Q3 numbers still polluted by expensive tokenmaxxing, which wind down late Q2 / early Q3 i.e. mid year budget review which will take rest of year to unwind. Q3 numbers = more mirage of tokenmaxxing tail and velocity = lagging indcator of tokenmaxxing end. Q3 also when fable tier coding commoditized and everyone doing a deepseek on cheap inference. The latter is what will kill ANT hardest, they signed up for 100s of billion of none cancellable compute contracts last year based on projected demand x expensive token cost, but demand / growth is less than token max timeline while inference cost getting cheaper. They have fixed, exorbitant costs, and operating margins negative for Q3, and Q3 just beginning of full price war. TLDR they will likely be vastly overpaying for compute. If turns out jevons isn't people using more expensive tokens on more expensive compute, but more cheap tokens on less compute, then ANT's entire balance sheet breaks.

>Q3 numbers still polluted by expensive tokenmaxxing, which wind down late Q2 / early Q3 i.e. mid year budget review which will take rest of year to unwind.

Evidence? I was told by a lot of people that token use was going to start to slow down 5 months ago because of "the end of tokenmaxing."

openrouter still showing weekly token usage higher than ever: https://openrouter.ai/rankings

People PREDICTED token maxx was a fad/trend Q1 while it was underway, but companies asking employees to cut back was late summer, i.e. Q2/Q3 transition. And the argument isn't end of token maxxing its end of EXPENSIVE tokenmaxxing, i.e. tokens pushed at $$$ and volume that can make ANT numbers square. They're not precisely because people can now maxx on cheap commoditized tokens. The market for premium tokens (at least in SWE) got kneecapped, there's only so much demand for smart/fast.

>People PREDICTED token maxx was a fad/trend Q1 while it was underway,

No, a lot of people like Gary Marcus said it had specifically already ended in May/June. Why is this time different?

>Tokenmaxxing is over. https://finance.yahoo.com/sectors/technology/articles/tokenm...

>Tokenmaxxing is dead, long live valuemaxxing https://www.ibm.com/think/insights/tokenmaxxing-dead-long-li...

>Token Maxxing, April 2026-May 2026, RIP https://x.com/GaryMarcus/status/2057610132742156603?lang=en

Yes look at the dates... end of Q2, i.e. start of Q3, things take time to unwind. Marcus tweet MS cancelled contract, but doesn't say when terms end, but they almost always unwind over following monthS not ASAP. Real world works on a lag / budget cycles not how fast tweets / articles get published.

There is an unbelievably enormous difference in 100% vs 47% -> and when you look at the 2nd derivative this is REALLY REALLY REALLY bad.

I mean, the growth is astounding and incredible. It does not bode particularly well for a ~$2T valuation.

This is the correct analysis here. 47% QOQ growth IS objectively amazing. But it's not enough for a $2T valuation.

From a loud AI booster on Bluesky. Man, I am relieved now, the science is settled.

Booster is an exaggeration.

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