It’s Time to Take Anthropic and OpenAI’s Wild Revenue Projections Seriously

Six months ago or so, when OpenAI and Anthropic projected how much revenue they would generate this year, the figures might have sounded crazy. 

Not anymore! This week, Natasha and I reported that Anthropic has passed $4 billion in annualized revenue, up from a $3 billion rate it was at just a month ago and about $1 billion at the start of the year. At that growth rate, the company should easily pass its “base case” projection of $2 billion in revenue for the year, and hitting $4 billion in actual revenue—the “optimistic case”—looks well within sight.

OpenAI is a similar story, having just passed $10 billion in annualized revenue. That makes its goal of generating $13 billion in revenue in 2025 also look more than reasonable—even without the guaranteed $3 billion sum that SoftBank promised to pay OpenAI annually for its products, starting this year.

While both companies are burning a tremendous amount of cash to develop and run their artificial intelligence, people clearly want what they are selling, and their recent growth gives us no choice but to take their financial projections for the next couple of years seriously. 

It’s easy to forget these companies were hardly generating any revenue at all in 2022. By 2027, the two companies optimistically projected a combined $85 billion in revenue. (Details here and here.) 

Both of these companies are growing for entirely different reasons, however, and that raises a number of interesting questions.

The driver of virtually all of OpenAI’s revenue is ChatGPT app subscriptions while Anthropic’s revenue is mostly coming from developers accessing its application programming interface—companies buying access to its models, which specialize in generating, debugging or reformatting computer code. 

Both companies’ projections imply that these growth drivers won’t change. So where does that leave us on the big question of where value will accrue in the AI “stack?”

Nvidia, for now, has a near monopoly on profits from AI, thanks to its specialized chips that no one seems to be able to emulate.

The next question is what’s more valuable: the AI models that power the likes of ChatGPT or the consumer and enterprise apps and features powered by those models e.g. ChatGPT, 365 Copilot, Perplexity, Cursor and Glean?

Clearly, ChatGPT is here to stay and that makes a strong argument for the value of apps that ordinary people or businesses pay for. But Anthropic has, for now, defeated the naysayers who argued that models will be commoditized.

Even so, it’s worth watching Anthropic to see if it shifts more focus to generating revenue from the app layer of the stack. If it goes that way, it will be because of its role powering Cursor, which sells an AI-powered integrated development environment for software engineers. 

Cursor’s revenue growth has been nothing short of astounding this year. And while that is directly contributing to Anthropic’s growth, Cursor is racing as fast as it can to wean itself off Anthropic models to improve its gross profit margins, which are probably not great right now.

Cursor’s success is almost certainly the reason Anthropic is doing its best Cursor impression these days: Anthropic in May made its own coding product, Claude Code, generally available and it seems to be going strong. 

Will Claude Code be strong enough to generate $15 billion in revenue Anthropic projected to earn from Claude enterprise subscriptions in 2027? Maybe not. 

But now that Cursor has hired away Claude Code’s leaders from Anthropic, the race is on.

Some investors think that AI coding models can be replicated by the likes of Cursor, thanks to the well-known techniques researchers use to get models to automatically generate lots of coding examples. However, making models that are good at more complex coding tasks, not just simple autocomplete, is more of an art than a science, researchers tell me.

That sort of work consists of teaching AI models how to perform coding tasks in an entire operating system of a computer, not just an isolated environment, and how to break down vague requests, like “can you fix this web server timing out on requests” into more manageable steps. 

Such work requires model developers to spend a lot of time with developer customers to understand their coding processes and then figure out how to turn those processes into training data. That’s why all eyes are on Cursor as it tries to develop its own coding models.

Here’s what else is going on…

Deals and Debuts

See The Information’s Generative AI Database for an exclusive list of private companies and their investors.

Lovable, which lets users without coding experience create apps with AI, is raising $150 million at a valuation of $1.8 billion, in a funding round led by Accel, with participation from 20VC and Creandum, the Financial Times reported.

Talon.One, which uses AI to help companies with customer loyalty programs, raised $135 million in funding led by Silversmith Capital Partners and Meritech Capital, with participation from CRV.

Wonderful, which develops multilingual AI for customer service, raised $34 million in a seed funding round led by Index Ventures.

Cyngn, which develops autonomous vehicles for industrial settings, raised $32 million in a recent funding round.

Dexter Energy, which uses AI to help energy companies forecast their energy needs, raised $27.1 million in a Series C funding round led by Klima, with participation from Mirova, ETF Partners, Newion and PDENH.

BetterYeah, which develops AI agents to help employees with tasks like visualizing data, raised $13.8 million in a Series B funding round led by Alibaba Cloud, with participation from Maintrend Capital, Tech In Asia reported.

OpenAI plans to rent an additional 4.5 gigawatts of compute capacity from Oracle in the U.S. as part of its Stargate data center plan, according to Bloomberg, a sign that the effort, which was announced in January, is progressing.

Tesla has halted purchasing components for its Optimus humanoid robot, as the company is making changes to the robot’s hardware and software designs, Chinese tech media LatePost reported.

The FTC has launched an in-depth investigation of SoftBank’s acquisition of Ampere, Bloomberg Law reported.

Perplexity launched a $200 per month subscription plan, which gives users unlimited access to Perplexity’s spreadsheet features and the most advanced AI models.

Google is rolling out its Veo 3 video AI model to users around the world.

A U.S. district court decided that it would not dismiss a lawsuit alleging that Huawei committed racketeering and fraud, and stole trade secrets. Huawei has denied the allegations.

Thank you for reading the AI Agenda Newsletter! I’d love your feedback, ideas and tips: [email protected].

If you think someone else might enjoy this newsletter, please pass it forward or they can sign up here.