Anthropic Is Growing 50%, Microsoft Isn’t

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Yesterday, Anthropic announced that its revenue grew 50% quarter over quarter to $16.8 billion. On the back of an envelope, its 2027 revenue could exceed $100 billion. That is about Morgan Stanley’s annual revenue. However, Anthropic’s top line could still be rising in the high double digits, just as Nvidia’s (NASDAQ: NVDA) is today.

With that growth and its position at the center of the AI sector, Anthropic’s IPO valuation could reach a staggering $2 trillion.

Anthropic’s revenue, revenue growth, and valuation are a real challenge to the stock prices and market caps of publicly traded companies whose shares are largely based on their AI businesses. Microsoft (NASDAQ: MSFT) is a prime example. Its market cap is $3.9 trillion. But its shares have lagged the market badly over the last year. They are up only 4%, while the S&P 500 is higher by 16%.

Microsoft has a huge drag. That is its legacy business, which will be bigger than its AI-based operations for the next several quarters, or much longer. This is a boat anchor for valuation.

Microsoft’s financials are nothing special compared to most other huge public tech companies. In its most recent quarter, revenue was $90 billion, but that was up (only) 18%. Diluted EPS was up 32% to $4.81. The first full paragraph of the earnings release mentioned Xbox.

AI was mentioned when Microsoft released its most recent quarterly figures. However, this was primarily tied to Microsoft Cloud and the Azure segment. AI revenue was not called out separately in a way that would excite investors.

Microsoft is not the only large tech company with this challenge. Alphabet (NASDAQ: GOOG), Meta (NASDAQ: META), and Amazon (NASDAQ: AMZN) share the challenge. Their legacy revenues are huge, and the growth of these is not spectacular.

Without mid-double-digit growth, these huge tech companies and their investors have a problem.

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