Talk of a $3tn Anthropic valuation shows how markets are changing

Two months is a long time in today’s market. For Anthropic, it has been enough time for $1 trillion (€860 billion) to become $2 trillion, and perhaps even $3 trillion.“The AI bubble question: is Anthropic justified at $1tn?” was the title of a Stocktake column in mid-June. The question now seems quaint, given the Financial Times is reporting that investors now expect a valuation of $2 trillion or more in an October initial public offering.Anthropic’s revenues are certainly soaring, with the FT reporting that investors expect its revenue run-rate – extrapolating recent sales over a full year – to reach $100 billion-$120 billion by the end of 2026.In June, Stocktake cited economist Noah Smith’s argument that $1 trillion did not look excessive. Then, Anthropic’s annualised revenue had risen from $5 billion the previous September to $47 billion, so $1 trillion implied a valuation of about 20 times sales. READ MOREThat was defensible, Smith suggested, for a firm boasting “more impressive revenue growth than any company in history”.Perhaps a $2 trillion-$3 trillion valuation could be defended on that basis. If annualised revenue hits $100 billion, it would mean about 20 times sales at $2 trillion and 30 times at $3 trillion (and less if revenue reaches $120 billion).Certainly, one bull quoted by the FT sees little reason for restraint. At the “incredibly low end”, they argue, Anthropic’s huge annual growth would justify 30 times revenue, implying a $3 trillion valuation. That is, $3 trillion isn’t just defensible, it’s cheap.You don’t have to be a dyed-in-the-wool value investor to feel uneasy about this train of thought. Not long ago, a stock trading at 30 times earnings was considered expensive, but now 30 times sales is discussed almost casually.The words “profit”, “earnings” and “cash flow” don’t appear once in the FT report – the discussion is almost entirely about revenue.Of course, revenue is not profit. Anthropic’s revenue growth is indeed extraordinary, but it is striking how little attention is being paid to the question of how much of that revenue will eventually become sustainable profit.