Sources: Anthropic told investors that distillation accounts for 5% to 7% of its revenue; its rapid but slowing revenue growth could weigh on its IPO valuation

Anthropic's disclosed revenue breakdown may affect how investors perceive its core AI product value versus its infrastructure utilization.

Anthropic reported substantial revenue growth in its third quarter, with revenue increasing 45% to $16.8 billion from the previous quarter. This follows first-quarter revenue of $4.7 billion and second-quarter revenue of $11.6 billion. The AI company informed investors during a pre-IPO meeting that distillation accounts for 5% to 7% of its total revenue. Anthropic also stated it was profitable on an adjusted basis in the third quarter. The company is preparing for a highly anticipated IPO, which is expected to occur after the November US midterm elections, and is targeting a valuation exceeding $2 trillion. This public debut will serve as an early indicator of investor interest in unprofitable AI companies focused on scaling operations. Anthropic's significant investments include a decade-long commitment of at least $518 billion for cloud services and infrastructure.

Anthropic's disclosure that 5% to 7% of its revenue stems from distillation offers a clearer financial picture beyond top-line growth, potentially impacting how investors assess the company's scalability and reliance on infrastructure costs for profitability. This detail becomes crucial as the company seeks a valuation over $2 trillion, especially given its significant infrastructure commitments. Investors will scrutinize whether this revenue stream is sustainable and how it contributes to overall financial health.

The company's rapid revenue growth, while impressive, is slowing, which could influence its IPO valuation. Anthropic's pre-IPO meeting highlights the intense investor focus on AI companies' ability to outrun the enormous costs of developing and operating advanced AI systems. With rivals like OpenAI also preparing for public listings, Anthropic's debut is a key test for the sector's profitability narrative and investor appetite for speculative, high-growth AI ventures.