Anthropic's US clientele are increasingly gravitating towards more affordable options, sidestepping the company's most advanced AI tools. This shift is raising questions about the sustainability of its high-cost business model, particularly as the market anticipates what could be the largest initial public offering (IPO) in history for the enterprise. Data from payments firm Ramp, which tracks spending by 70,000 businesses, reveals that over two months since the launch of its flagship and most expensive model, Fable5, it accounts for a mere 11% of the company's total spending on its suite of tools.

This trend breaks from the established pattern where corporate users would default to the most powerful model available. Analysts and investors attribute this change primarily to Fable's hefty price tag, noting that older versions are already sufficient for handling the vast majority of commercial applications. If this pattern persists, it could fundamentally reshape the business model of frontier AI laboratories, which have historically poured billions into research and development for increasingly larger and more complex models.

Where to begin

“Most users don't actually need to use the most cutting-edge model,” says Miles Clements, a partner at Accel, which has invested nearly $1 billion in Anthropic. He adds that the era of clients always prioritizing frontier models “won't last forever.” While technological breakthroughs in model intelligence remain crucial for fulfilling grand visions like curing diseases and attracting top research talent, Clements believes frontier models will increasingly become more of a showcase product.

Fable5's launch in early June was marred by intervention from the Trump administration, which forced Anthropic to pull the model on national security grounds. Concerns about further restrictions on Fable's usage have subsided since the government approved its relaunch on July 1st. According to analysts and investors, political uncertainty has now become a secondary factor in clients' model choices compared to price and performance.

The slower adoption rate of Fable5 compared to previous generations of cutting-edge models and weaker-than-expected demand add to the uncertainty surrounding Anthropic ahead of its IPO. Investors anticipate the company could be valued at $2 trillion or more and might go public as soon as next month. Compounding this, Anthropic's July revenue fell short of investors' most optimistic projections, which had forecasted annualized revenue exceeding $80 billion.

What are the key takeaways from this shift?

Last week, Anthropic informed shareholders that its annualized revenue reached $65 billion in July, up from $47 billion in May. Despite this, the startup, led by CEO Dario Amodei, continues to grow at a rapid clip, with revenue nearly septupling this year. Insiders reveal that Anthropic achieved its first adjusted operating profit in the second quarter and has guided investors to expect another profitable quarter in Q3. The company also reported having 6,000 customers who spend $100,000 or more annually. Anthropic declined to comment on these figures.

Businesses are actively trying to control their AI-related expenses by using models more efficiently rather than always opting for the top-tier option. In contrast, OpenAI, the developer of ChatGPT, has seen a resurgence this quarter, with annualized revenue jumping 35% to exceed $40 billion, largely thanks to the July launch of GPT-5.6 which reversed a sluggish start to the year. GPT-5.6 is priced significantly lower than Fable5.

Ramp's data indicates that Anthropic's smaller, yet powerful and more affordable model, Opus5, which launched at the end of July, has already captured a larger share of corporate spending than Fable. While Anthropic's revenue growth was hit in June by US government policies restricting Fable's rollout, it has since rebounded. Ramp's chief economist, Alla Khazian, notes that data retention regulations introduced by the Trump administration have also hampered Fable's widespread use.

Khazian suggests that predicting the company's trajectory for the next few months is nearly impossible. “If you were to extrapolate from past trends, you'd think Anthropic would dominate the market. But OpenAI's new model is very strong, and Fable has underperformed, completely flipping the market dynamics,” she added.