This week · post, October 26

Ball derives 85% serving gross margin; S-1 lists none

Jamin Ball, who writes the software-stock newsletter Clouded Judgment, worked out from Anthropic's IPO filing that the gross margin on serving customers rose from 12% in the first half of 2025 to 85% in the first half of 2026. Ball, an investor at Altimeter Capital, posted Anthropic's gross-margin series on X on October 26: 37% in 2023, negative 95% in 2024, 40% in 2025, 12% in the first half of 2025 and 85% in the first half of 2026 (Jamin Ball, 2026-10-26). The S-1 itself lists no gross margin. Recomputing cost of revenue against revenue from the S-1 notes reproduces all five values (our calculation). First-half 2026 cost of revenue was US$2.38 billion against revenue of US$16.286 billion. The negative 95% in 2024 arises because that year's US$752 million cost of revenue exceeded US$386 million in revenue. The S-1 says cost of revenue is essentially all compute and infrastructure for serving customer workloads and excludes compute used for model development and research. So 85% is the margin on the serving layer, and research compute is counted separately under R&D.

Concept illustration on a mustard-yellow background: at the top, a white framed sign lettered ANTHROPIC with a black angular mark, next to large black quotation marks; below, two matching tables joined by a black arrow pointing right, each holding a server tower labelled SERVING COMPUTE, a laptop showing a speech bubble, a person seated behind it, and a round disc split into a cream part and a red part, with the red part small on the left table and much larger on the right. In the left foreground, a dark silhouette of a person holding a notepad and pencil points toward the tables.

In another post Ball wrote "$134b of cash today." That figure is the June-end total of cash, short-term investments and restricted cash; the US$131.7 billion in main-line item 1 excludes restricted cash. How we checked →

Source and checks

This item ran in the brief of Oct 27, 2026, alongside 12 other items. How we checked it, the quote checks and what was still missing that day are on that issue's How we checked page.

Cite this item

SecondSource (2026). "Ball derives 85% serving gross margin; S-1 lists none." https://secondsource.io/en/expert/2026-10-27-1/. Accessed access date.