Anthropic's S1, Gemini Carbon, Earnings Kerfuffle, & More

TLDR;

Welcome back! This week we cover Anthropic’s S1, OpenAI's latest AI-enabled discoveries, new models like Gemini Carbon, and earnings data that reveals the industry's financial state.

Enjoy!

THEWHITEBOX

Anthropic’s S1 has a lot of surprises

I’ve provided a detailed rundown of everything you need to know about this IPO and more in a recent Medium article you can read for free here.

We finally have access to Anthropic's financials as it prepares for an imminent IPO. And, well, as expected, it’s a lot.

Anthropic reported $16.3 billion in revenue for the first half of 2026, up from $1.2 billion a year earlier and more than three times its revenue for all of 2025, according to its IPO registration filing. Second-quarter revenue reached $11.6 billion, compared with $4.7 billion in the first quarter. Add the leaked $16.8 billion from the third quarter, and Anthropic’s revenues are on an unprecedented growth trajectory.

However, the company recorded a net loss of $80.7 billion in the first half. This sounds outrageous, but it’s kind of a red herring because $72.4 billion of that charge comes from changes in the fair value of convertible notes and other financing instruments. In simple terms, Anthropic issued convertible notes, loans that may or may not carry interest, that include a right to a certain number of shares at a very discounted rate, and the associated shares have increased in value by a lot.

Thus, the $72.4 billion “loss” refers to the growth in value of those shares since the agreement was made (the principal amount is $6-ish billion), which actually speaks more to Anthropic’s incredible valuation growth and less to something investors should be panicking about, especially considering this loss had no impact on cash (it’s a paper loss).

Anthropic posted an operating loss of $693 million for the six-month period, but reported $974 million in operating income in the second quarter, an 8% operating margin, the first time in its history to achieve operating profitability. It also generated $3.9 billion in cash from operations in the first half, compared with $1.5 billion used in the same period of 2025.

Despite the alleged unprofitability of the AI trade, this looks pretty profitable and cash-flow generating, right?

Well, hold your horses for one second. But before things turn south, which they do, let’s cover the other positives.

As of September 30, Anthropic had more than 11,900 customers generating at least $100,000 each in revenue over the preceding 12 months, including more than 1,900 generating at least $1 million, and 250 spending $10 million a year or more.

And most important of all, the revenue/compute ratio, the most important metric in AI that measures how efficiently a business converts compute spend into revenue, showed a 2.08x increase in Q2 (although that number has since dropped to 1.7x in Q3).

This means Anthropic generated $2 for every $1 of compute spend. Naturally, one must include other spending to see if a company actually makes money (e.g., salaries, marketing, non-operational expenses,…

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