Anthropic’s moat is Claude

Anthropic’s moat is Claude

The bull case for Anthropic’s IPO.

Noah Smith

Nov 02, 2026

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Anthropic

recently filed for IPO

. At an estimated $1.5 to $2 trillion, it will be one of the biggest IPOs of all time, rivaling SpaceX, and possibly the biggest. For reference, Facebook’s valuation when it had its blockbuster IPO in 2012 was $104 billion, and Google’s valuation in 2004 was $23 billion. Anthropic will instantly become one of the world’s most valuable companies — Google itself is now worth $3.4 trillion, and Nvidia and Apple are both worth around $5 trillion.

This naturally has a lot of people asking: What’s the upside to buying Anthropic? Even if it grew to be as valuable as Apple or Nvidia — in other words, if it became one of the most valuable companies on planet Earth — that would only be a multiple of 2 to 2.5. But if Anthropic stumbles, that lofty valuation could come tumbling down.

There are certainly

lots

of reasons Anthropic could stumble. Demand for AI could

take longer to materialize

than people think, perhaps because companies have trouble integrating AI into their existing business models. The U.S. government could decide that Claude’s hacking capabilities represent a national security threat — especially after the recent

wave of AI-assisted cyberattacks

— and decide to regulate, appropriate, or otherwise restrain the company (the

spat with the Department of War

might represent the beginnings of that conflict). One company (SpaceX?) might end up monopolizing all of the compute, squeezing Anthropic’s profits. Competition from OpenAI and Google, or Chinese models, might result in a competitive race to the bottom that

forces down Anthropic’s margins

. And so on.

In order to balance all that uncertainty and risk on the downside, Anthropic needs to have huge upside. It needs a way that it could be worth a lot

more

than $2 trillion in the years to come. For comparison, if you bought Google when it IPO’d, your investment would have gone up by over 130 times by today. To equal that performance, Anthropic would have to be worth $200 to $260 trillion by the late 2040s. That’s almost half of the total wealth that exists in the entire world today. For Facebook, the number is around 16x, meaning Anthropic would have to be worth $32 trillion by the early 2040s — still an impressive performance, considering that that’s more than six times the value of the most valuable company in 2026.

How could Anthropic manage that kind of growth? One possibility is that the world economy

itself

will grow at a very rapid pace, thanks to AI. Some AI researchers think that growth could soon accelerate to fantastically high levels. But

most economists bet against that

, and even most AI industry insiders expect the growth speedup to be

much more modest

. Even 7% nominal growth — 4% real growth plus 3% inflation — would only make the economy about 2.75x larger by 2041, and 4.43x larger by 2048.

So in order to have the upside of a Facebook-like outcome — let alone a Google-like outcome — Anthropic probably can’t just ride a wave of economic growth.

1

It’ll need to

capture a greater fraction of the value

that our economy produces.

So far, the company has been doing exactly that — and at an

extremely

rapid rate. Its

revenue has grown faster

than any company of similar size in all of history. And despite this explosive growth, the company is now making an operating profit:

Source:

Quartr

Businesses usually have to spend more money to make more money at the outset, but Anthropic’s Claude Code is a product that sells itself — relative to just one year ago, the company is making more than 3 times as many dollars of revenue for each dollar that it spends on compute:

Source:

Wall St. Engine

As

SemiAnalysis writes

, this is “the most efficient scaling of a business in the history of capitalism”.

Jeffrey Bussgang has a good breakdown

of Anthropic’s recent IPO filing, and it’s full of amazing details — incredible user retention, a broadening base of customers, and so on.

And Anthropic is selling a product whose adoption rate is still very low. As Aaron Levie points out, most big companies are still spending only a pittance on AI, and could afford to spend a lot more:

Aaron Levie

@

levie

This is the key stat. The average Fortune 500 customer of Anthropic spends less than .1% of their expenses on Anthropic.

While that number likely will eventually asymptote somewhere (token prices coming down, and other large enterprise spend areas not going away), there’s no…

Ben Bajarin

@

BenBajarin

More than half of the Fortune 500 already qualifies as a significant customer, but Anthropic’s revenue from those companies averages less than 0.1% of their expenses. Its ten largest Fortune 500 customers spend more than eight times the broader cohort average while still spending

4:51 PM · Oct 26, 2026

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And yet for this growth to continue, Anthropic must do more than simply make great products. It will need to stave off the competition for decades on end. It will, in Wall Street jargon, need a “moat”.

Why Anthropic needs a moat

When I was teaching business economics to MBAs at Stony Brook, I spent lots of time on the question of why companies make profit. This might sound like a stupid question, especially if you’ve been conditioned to think that there’s some kind of magic force called “capitalism” that companies can use to extract money from people and hand it to their shareholders. But in a world of perfect competition, companies should keep trying to undersell each other until

their profit goes to zero

— or at least, until it goes to a level where companies are just able to pay for their investments. Even if one company has a huge share of the market, the simple threat that new companies might be able to enter the market and compete with them should force them to keep their prices low in order to maintain their market share.

And in fact, lots of industries

do

work like this. Agriculture, in the absence of farm subsidies or other significant government support, is the most famous example. Solar power is another — energy provides huge value to the world, but solar is so undifferentiated a product that solar producers never end up making big margins.

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Airlines are a third example. Consumers (and workers) benefit from these industries, but shareholders don’t end up making huge returns.

In order to make profits (or “excess profits” above and beyond the cost of investment), companies generally need

some sort of a “moat”

— a

barrier to entry

that reduces the threat of competition. This could be a

government-sponsored monopoly

— cronyism, or intellectual property. It could be a

network effect

— the natural tendency of everyone to be on the same social network or use the same electric power grid. It could be something as simple as

brand loyalty

— maybe everyone thinks Louis Vuitton bags are worth paying money for because of the name, or maybe everyone is just very used to using Microsoft Excel and doesn’t want to switch.

These are all reasons why some companies make high profit margins. There are probably more. Investors will tell you that if you want to assess how valuable you think a company is going to be, you should try to evaluate the strength of its moat — in fact, the term “moat” as slang for barriers to entry was coined by Warren Buffett.

Ever since AI companies like Anthropic and OpenAI burst on the scene, I’ve been

hearing smart people argue

that they have no moat. After all, unlike famously profitable software companies like Facebook or Google, it’s not clear that AI has a network effect — whether I should use Claude Code or Codex doesn’t really depend on whether you use Claude Code or Codex. And brand loyalty to AI is probably pretty low, since coding with Claude Code and coding with Codex is probably a pretty similar experience, and since AI isn’t a prestige good like an iPhone or a Rolex. And logistically speaking, it’s

very easy to switch

from one company’s AI products to another’s.

What’s more, catch-up in AI models is typically very fast — OpenAI and Google are typically only a little bit behind Anthropic in terms of model capability. In fact, by some measures, Google’s new

Gemini 4 Carbon model just took the lead

over Anthropic. Obviously this will reverse when Anthropic releases the next blockbuster model it currently has under wraps, but it shows that the other major players are still very much in the race. In terms of market share, OpenAI has been nipping at Anthropic’s heels:

Source: OpenRouter via

Peter Walker

I’ve written previously about the possibility that AI will end up like solar power, or airlines — a cheap utility that lots of companies use to create enormous economic value, but whose producers don’t manage to capture much of that value:

The AI bust scenario that no one is talking about

Noah Smith

·

December 9, 2025

Read full story

But I think we need to talk more about the opposite scenario — the possibility that AI intrinsically

does

have a huge moat. I see a distinct possibility that

intelligence itself

— the ability to outsmart competitors in the arena of business — is a tremendous source of competitive advantage for a company. And in fact, I suspect that this is exactly what Anthropic itself is (quietly) betting on.

How intelligence itself can be a moat

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