Peaked at #3 Now #8
Anthropic turns cash-flow positive
Gavin Baker says third-party data shows Anthropic turned free-cash-flow positive in Q3 and reaccelerated in October on Opus 5.5, and may stop disclosing ARR.
Key points
- KobeissiLetter reported Anthropic posted Q3 2026 revenue of $16.8 billion, up nearly +50% from $11.5 billion in the prior quarter, per FT, and told investors it posted a profit for the quarter as it prepares to launch its $2+ trillion IPO as soon as next month.
- DeItaone reported Anthropic's quarterly revenue rose 45% to $16.8 billion, slowing from triple-digit growth in the previous quarter, and AI stocks fell in premarket trading with AMD, Micron, Sandisk, Seagate and Western Digital down 3–4%.
- simonw cited 'Anthropic told investors on Wednesday distillation accounted for 5 per cent to 7 per cent of revenue,' noting that if true and Q2 revenue was $11.5B, that is more than half a billion dollars spent by other labs to distill Anthropic's models.
- GavinSBaker said Anthropic was FCF positive in Q3 and reaccelerating in October on Opus 5.5 per third party data, with unit economics better than expected given positive FCF with 75% of their compute going to training, all per public reporting.
Key points and the reaction summary are written by AI from the posts on this page. Check the original post. How we use AI
Original post
TLDR; we will probably never get another ARR number from Anthropic, which is healthy. Should force the market to move away from extreme focus on Anthropic/OpenAI ARR numbers to hyperscale growth rates, which are a much better metric for AI at this point given they capture Muse, Grok, Gemini and Open-Source.
Anthropic FCF positive in Q3 and reaccelerating in October on Opus 5.5 per third party data. Roadshow in several weeks will happen after this has been widely confirmed. Unit economics much better than expected given positive FCF with 75% of their compute going to training. All per public reporting.
OpenAI continuing to grow at the same pace per Sarah Friar interview after they took share vs. Anthropic in Q3. Means the sum of Anthropic/OpenAI growth is accelerating from the Q3 pace. OpenAI probably hits FCF positive in the next few months.
Open-source growing much faster than either Anthropic or OpenAI. Modal tripled since May and is 15x YoY per yesterday’s announcement. Open-source tokens generate more revenue and profit for the hyperscalers/neoclouds than frontier tokens. *Every* open source inference cloud I am aware of is growing faster both sequentially and YoY than either Anthropic or OpenAI. And their combined compute spend is becoming material.
Third party data pointing to hyperscalers continuing to accelerate in Q3. All report in the next two weeks. Acceleration should continue in Q4 and Q1 as installed base of compute slowly reprices higher closer to spot and new capacity comes online at higher prices. Continued acceleration in hyperscalers should help address external funding concerns.
10 year yield down in a straight line over the last 24 hours.
Some risk of escalation in Iran next few days, but earnings and mid-terms probably outweigh taking an ultra long-term view and looking out 30 days.
Biggest risk imo remains cyber and OpenAI/Anthropic dominating the model layer. Fragmentation, competition and lower margins at the model layer are good for everyone else in the ecosystem and for America.
Slower for longer is much better than an overbuild and an actual bubble.
Top replies on X
Reaction on X: Most replies questioned the profit claim, saying it was on an adjusted basis or excluded major expenses, with one calling it unchecked financial mania that will leave regular investors holding the bag, and another calling a $2 trillion valuation reasonable for a company with $16 billion in quarterly revenue pure mania.
Sign in to see 5 top replies from X
From @MauiBoyMacro, @BowTiedBuildr, @EmilyandMe2 and others. Spam removed, with English and Chinese translations.
Discussion 0
Sign up Sign in to join the discussion
No comments yet. Start the conversation.