We are at a pivotal moment for the AI bubble. Anthropic announced $16.8B of Q3 “revenue”, an increase of $5.2B over Q2 (which was up $6.9B from Q1). Extrapolating from the Q3 slowdown, I don’t think they hit their $100B ARR target by year end. Turns out Dario’s doomer talks have been pacing…revenue growth.
So why is revenue added per quarter slowing down? We likely hit peak average per token pricing in June when Fable was released. Opus 5.5 is honestly too good and thus cannibalizing their own pricing (same for Sol 6.1 vs Astra). The frontier labs needed to release these models in response to competition (from each other, but also open models). So the Q2 growth surge was a lucky mix of both token explosion (agents taking off) and avg price per token increasing. For the foreseeable future, my belief is the equation will be continued token growth but avg price per token decreasing.
The irony is the hourly price per GPU continues to increase due to the incredible demand/supply imbalance. I don’t see this changing in the next 12 months unless there is demand destruction.
Of course, if OpenAI or Anthropic can’t raise more money to fund their $1T in GPU commitments, then that would send a shockwave of demand destruction (and an ensuing lender panic).
So we are at a pivotal moment. Anthropic’s IPO needs to go well in order to keep the bubble inflated. The growth trend isn’t enough to justify $2T valuation unless they release frontier capabilities that increase the token mix back toward the frontier pricing.
Let’s see how the next month plays out.