Is Anthropic overvalued?

**Shrehith Karkera** (0:00)
Hello folks, you're tuned in to Finshots Daily. Anthropic could go public as early as the end of this month or next. So in today's Finshots, we thought we'd give you a pre-IPO sneak peek into Anthropic's business and the debate around its valuation.
Before we head to the story, here's a quick word from Team Ditto. We're hosting a free two-day insurance masterclass that helps you build real financial security by understanding health and life insurance the right way. Right from understanding how to protect your family, choosing the right cover amount, and knowing what truly matters during a claim, to how hospitals process claims, the mistakes bios usually make, and how to choose a policy that won't disappoint you when you need it the most. We will explain it all in plain language. Head to the link in the description and save your spot. Now, to the story.
When Anthropic raised money in its latest funding round a few months ago, it was valued at $965 billion.
That made it the most valuable private AI company in the world, overtaking even OpenAI, which was valued at $852 billion after its latest funding round. Which is pretty ironic, because Anthropic was founded by several former OpenAI employees, including CEO Dario Amode, who left OpenAI to build a rival AI company. But if you've been following the news lately, you've probably seen the chatter about Anthropic going public. The company confidentially filed a draft IPO proposal with the US. Securities and Exchange Commission, which is the SEC, in June. And the valuation being discussed now is a staggering $2 trillion.
Yes, you heard that right. That's more than double its valuation, less than three months after its latest fundraise. So how did Anthropic get here? And is it really worth $2 trillion?
To understand that, we first need to go back to basics on how the company actually makes money. Well, in one simple line, Anthropic makes money by selling access to its AI models. For starters, there are developers and companies that pay to use Cloud through Anthropic's API. API stands for Application Programming Interface. But all you really need to know is that it lets companies plug Cloud's AI models directly into their apps and products.
And they pay Anthropic based on how much they use those models. Then, there is Cloud Code, its AI coding tool, which has quickly become a major source of revenue. Enterprise customers alone account for more than half of Cloud Code's revenue, with companies such as Netflix, Spotify, KPMG, L'Oreal and Salesforce among its customers. Anthropic also makes money from paid Cloud subscriptions for individuals and businesses. And finally, it has large partnerships with companies such as AWS, Google and Microsoft, which help distribute Cloud to millions of users and enterprises. Putting it all together, and Anthropic has several different ways to turn its AI models into revenue. And it has a lot of revenue. Anthropic's annualized run rate is roughly $65 billion, about seven times what it was at the end of last year. For context, OpenAI's latest annualized revenue is around $40 billion.
But here's precisely where the problems begin. Because you see, Anthropic reports revenue on a gross basis. In other words, if a customer pays for Claude through a reseller partner, Anthropic records the entire amount as revenue. But it doesn't keep all of it, right? A portion of it has to go to the companies helping distribute its AI models. So the money Anthropic reports, you could say, is inflated. And that becomes a pretty big problem when you consider the valuation being discussed. If Anthropic goes public, it would be valued alongside some of the biggest technology companies in the NASDAQ 100 These companies typically trade at around 34 times their trailing earnings, the profits the companies earned in the last 12 months, or 25 times their expected earnings, which is their expected profits over the next 12 months. That means that Anthropic would need to make annual profits of roughly about 59 to 79 billion dollars to support a 2 trillion dollar valuation at those multiples. But as you've seen, Anthropic's annualized revenue run rate itself is less than that. And the company has only just started making an operating profit. In the second quarter of 2026, it reported an operating profit of 559 million dollars for the very first time. And that number also comes with plenty of question marks. For starters, if you annualize that operating profit, it would be around 2 billion dollars. And operating profit isn't even the same as final net profit. It's what the company makes after deducting expenses such as salaries, research and compute, but before accounting for things like interest and debt and taxes. And for a huge AI company like Anthropic, consistently generating those final profits won't be easy and may not even happen until 2028 That's because it's spending on things like multi-year compute commitments with cloud providers such as Amazon and Google, GPUs, data centers and related infrastructure. This is likely to keep increasing as the business grows. So, Anthropic may be generating revenue, but turning that revenue into the kind of sustainable profits needed to justify such a gigantic valuation is a very different challenge. Which begs the question, why on earth is Anthropic expected to be valued at such a huge price tag? Well, the thing is, Anthropic's revenue has been growing incredibly quickly. If you look at the numbers, the company made about $9 billion in revenue in 2025 Now, the expectation is that it could reach annualized revenue of about $65 billion, and that could potentially grow to $100-120 billion by the end of the year. And the biggest reason for that is pretty straightforward.