Will the AI bubble burst?
That’s the question on investors’ minds when an AI company announces anything from a rogue agent to an earnings report.
Sure, AI companies continue to increase their revenue, but one lesser discussed metric has investors scared: a slowing growth rate.
“A handful of AI-linked companies have driven much of the stock market’s gains recently, so any wobble here can ripple through retirement accounts and index funds broadly, not just tech investors,” says Sameer Samana, an adviser and head of global equities and real assets at the Wells Fargo Investment Institute.
Take Anthropic , which shared its third-quarter results with current and prospective investors on Wednesday, October 14. The company announced that its revenue rose 45% to $16.8 billion, up from $11.6 billion in the previous quarter, CNBC reported .
In theory, it sounds like a successful result, but looking at the bigger picture, it signals a potential slowdown. Anthropic’s revenue had previously risen nearly 60%—from $4.7 billion to $11.6 billion—between quarters one and two.
Yet, the first quarter still beat the entirety of 2025. Anthropic reported $4.6 billion in revenue for the year and $386 million in revenue for 2024, according to Morningstar .
The declining growth rate marks a change for AI companies. “Investor expectations had been getting increasingly optimistic and hoping for ‘fast growth and getting faster.’ Now it’s just ‘fast,’” Samana says. “AI companies are still growing quickly, but not at the eye-popping pace investors had come to expect—and stocks were priced for that pace to continue.”
OpenAI’s revenue forecast drops
OpenAI is among the companies causing concern. At the end of September, sources told Axios that OpenAI’s annualized recurring revenue was close to $70 billion. Then, on October 8, reports emerged that the company had revised that number, cutting it by $20 billion. In reporting the shift, the publication said the initial figure was due to the fact that AI companies have distinctive ways of counting sales. OpenAI wanted to directly compare itself with Anthropic.
“It seems counterintuitive to worry about companies generating billions in revenue, but in financial markets, valuations are driven by the rate of change, not just absolute revenue,” says Adam Coons, chief investment officer and portfolio manager at Winthrop Capital Management. “Investors aren’t paying for today’s sales; they’re paying for years of hypergrowth to come. When that growth rate slows, even from extraordinary levels, it changes the math behind both the valuations and the debt-financed build-out that depends on them.”
In addition to the discrepancy, annualized recurring revenue is nothing more than a prediction, one that is commonly used by Silicon Valley but can be inaccurate. Investors can’t rely on it alone for growth indicators.
Competition can slow revenue growth
Samana and Coons both point to competition as a potential reason for slower growth. “Competition is driving prices down,” Samana says. “More AI companies are competing for customers, so even as more people use AI, the money each company makes per customer is shrinking.”
OpenAI might have started the current AI era with the launch of ChatGPT, but it now has to contend with a number of competitors. “With open-source models such as Meta’s Llama and a wave of Chinese models closing the capability gap, and OpenAI, Anthropic, and Google competing aggressively on price, the cost of digital intelligence is falling fast,” Coons adds. “When models converge in capability, pricing power evaporates, and revenue growth and margins can shrink at the same time.”
Anthropic’s IPO valuation sinks
These declining growth rates can scare away investors. Some investors in attendance at last week’s meeting are now leaning toward an initial public offering (IPO) valuation of $1.5 trillion for Anthropic, down from $2 trillion, Reuters reports .
Anthropic submitted its initial filing to the Securities and Exchange Commission (SEC) in June. The company has since pushed its IPO plans from October to November, a move that left time to share its latest results.
Reuters also viewed Anthropic’s IPO prospectus in which the company planned to warn investors that AI could have “catastrophic or existential risks to humanity.”
But slower revenue growth isn’t the only notable part of Anthropic’s finances. The prospectus revealed that Anthropic’s operating loss rose from $2.98 billion in 2024 to $8.06 billion in 2025. The company had $12.65 billion in total operating expenses for 2025, $7.33 billion of which was spent on computing and infrastructure—three times the amount it spent the year before.
Overall, Anthropic had a net loss of $42 billion in 2025, up from just over $8 billion in 2024. According to the prospectus, $34 billion of its net loss was due to an accounting charge.
A week after that news broke, New Constructs called Anthropic’s IPO “an unprecedented test of investor gullibility.” The independent research technology firm warned investors to avoid the IPO, citing “gargantuan risks” such as Anthropic’s rising net losses.
As Samana puts it: “These companies bet big—with borrowed money. Many committed to massive spending on chips and data centers, assuming growth would stay sky-high. Slower growth makes those bets riskier.”
