Anthropic faces high costs and falling prices ahead of record IPO

The path to a record debut

Anthropic is currently positioning itself for a record-breaking stock market debut after five years of rapid growth. The San Francisco-based firm has reached a valuation of approximately $1.5 trillion, though this figure has cooled from a $2 trillion valuation floated by shareholders in mid-August. This cooling follows a significant slowdown in growth, which dipped from a 145 percent increase in the second quarter to a 45 percent rise in the third quarter.

The company's financial health is uniquely tied to its AI tools, which generate substantially all of its revenue. Unlike major tech giants like Google or Meta, Anthropic does not have an advertising empire to rely on if its primary business falters. It also lacks a cloud computing division similar to those owned by Microsoft or SpaceX, making its reliance on AI model sales particularly concentrated.

Investors are watching these metrics closely as the company prepares to go public. The firm is navigating a complex environment where it must prove its long-term viability to Wall Street. While it has successfully boosted sales with every new version of its Claude model, the path forward remains fraught with structural risks that the company has explicitly detailed in its prospectus.

The threat of commoditization

One of the primary risks Anthropic identifies is the narrowing gap between different advanced AI models. The company warns that the degree of differentiation among these models may decrease as technology matures. This trend toward commoditization means that it becomes harder for a single provider to maintain a unique competitive advantage over others.

This pressure is being intensified by the rise of open AI models, which are accessible for anyone to download and modify. Research from Epoch AI suggests that these open models are trailing behind closed models, like Claude or ChatGPT, by an average of only about four months. This rapid parity allows for cheaper alternatives to emerge quickly, challenging the dominance of paid, proprietary services.

Specific examples of this competition include models like Kimi K3.1 Pro from the Chinese company Moonshot. This model costs half as much as Claude Opus 5.5, which is Anthropic's current flagship offering. Furthermore, Anthropic admits that its own safety measures might slow its capability gains compared to competitors who do not adopt similar constraints. Despite these hurdles, the company reports that over 80 percent of its income during the last quarter was generated by models released in the previous six months.

Collapsing prices and usage

As AI products become more similar, the market is responding with aggressive price cuts. According to Morningstar, the cost of having AI process the same amount of text at a high performance level has plummeted 97 percent. This drop represents a move from $17 at the end of 2024 to just 50 cents today, illustrating the rapid deflation in the AI sector.

Anthropic and its primary rivals have already begun implementing these cuts to remain competitive. Anthropic reduced the price of Claude Opus by 20 percent in September, while OpenAI slashed the price of one of its flagship models by five times in July. These price points are already influencing how developers choose which models to use for their specific applications.

The impact is visible on developer platforms like Vercel, which routes requests across various AI models. In August, more than half of the text handled by the platform was processed by open models, a sharp increase from just 13 percent in April. However, even with these price drops, Anthropic still captured nearly two-thirds of the total spending on that platform, suggesting that high demand may continue to offset lower per-unit prices.

The infrastructure 'triple whammy'

While prices for users are falling, Anthropic's costs are largely locked in due to the massive infrastructure required to train and run models. To stay ahead, each new Claude model must be larger than the previous one, requiring more data and significantly more computing power. Consequently, Anthropic has pledged to spend at least $417 billion to lease chips and servers beginning in late 2025.

This expenditure represents a massive financial burden, totaling nearly 13 years of sales based on the company's first-half 2026 pace. The total commitment could nearly double if the company includes its planned or cancellable contracts. Anthropic warns that these payments are due regardless of the state of the business, creating a high-stakes environment for its upcoming public listing.

The International Monetary Fund has expressed concern over a 'triple whammy' affecting the broader industry due to these intertwined investments. Because Google and Amazon act as shareholders, suppliers, and resellers for Anthropic, a lack of profitability could lead to falling stock prices, difficult-to-repay debts, and unfulfilled revenue promises. This interconnectedness means that a struggle for Anthropic could have ripple effects across the entire tech ecosystem.