New Constructs is bearish on every tech IPO. Easy to reinforce your bias by selectively looking at instances where they were right, like WeWork, but they also predicted failed IPOs for Spotify (+219%), Uber (+60%), CrowdStrike (+3136%), Cloudflare (+2306%), Palantir (+1991%), Snowflake (+51%), DoorDash (+93%), Robinhood (+187%), ARM (+422%), Instacart (+59%), Reddit (+370%), CoreWeave (+105%), SpaceX (+20%) and lots more.
So whatever your stance on Anthropic this particular analysis is safe to ignore.
You can be right for the wrong reasons and you can be wrong for the right reasons. The economics of many of these businesses are disconnected from their market valuations, and there are examples of investors outright saying "none of this matters, let's meme together" (most notably, GameStop).
In general, the stock market is in a somewhat weird place because most people in the US who have some money just don't have anything else to do with it. It's not productive to keep it in savings or treasuries, we don't invest in friends' businesses because we don't have friends, real estate is too expensive, we don't collect art or antiques because that's for old people... so YOLO in the stock market it is.
So yeah, I don't think it's wrong to criticize the Anthropic IPO as nearly impossible to justify by anything other than vague hopes and dreams. But that doesn't mean it won't make you money.
Also known as a broken clock being right two times a day.
The fallacy is assuming ahead of time that they are actually right this time.
If you start assuming they’re right and also admit that their logic doesn’t support that conclusion, there isn’t even any argument left. You’re just implying that you believe one thing is true and anyone who agrees with you, regardless of the reason, is also correct.
You would think any investor would prefer to be informed that the numbers don't match expectations even if they then decide to go ahead anyway. People like to gamble sometimes even though the likelihood of losing money is very high.
It's not that the stock market isn't overvalued. It is that everything else is more overvalued. Especially real estate.
Friends businesses don't need our money, because banks are generous with giving out loans and friends prefer to keep ownership intact while being in debt instead of diluting it.
WeWork had a massive cost base to offer their service. They had to rent/buy a lot of real estate to serve their customers. None of all the examples you list here except CoreWeave has a comparably high cost base.
All the mayor AI players have to rent/buy a lot of computing power to serve their customers. We're talking costs of 2-5x (or 10x? does anyone actually know?) their revenue. The question is, will they ever be able to pay their cost of revenue and operating expenses? Many people doubt. And we know that they do all sorts of funny book keeping shenanigans like SPVs and delayed deprecation.
What comes on top is, LLMs have no economy of scale. More customers scale linear with higher costs. Will people or companies be willing to pay 5x what they're paying now? Will future frontier models become more cost efficient or less? We simply don't know yet. At this point, it's a gamble.
It fundamentally comes to investments/commitments divided by revenue over certain low number of years. Now add in any financing costs, overhead and actually operational costs.
Math ain't looking pretty. Just like it did not look pretty with WeWork. Might have worked, but still not great business to be in.
Being hyperscaler really does look very high capital and questionable margin bussiness at moment. With lot of competition.
>> Many people doubt. And we know that they do all sorts of funny book keeping shenanigans like SPVs and delayed deprecation.
Every time I see Anthropic and other AI companies getting ready to go public, I cannot stop thinking about the entire Enron debacle and all of their "unique" book keeping shenanigans that has far reaching impact, even to this day.
People keep telling me, "Nah this is totally different man, you can't compare the two!" But is it really??
You're discussing something entirely different, which is fine, but you're not refuting anything that the parent poster said.
All they were saying is that they're terrible at predicting risk. Examples were given. It doesn't matter why they're bad at predicting risk, they simply are.
True. All I say is that I agree on their take on Anthropic, although I wouldn't word it as strongly as they do. They may be bad at predicting IPOs, but every once in a while they may be right. ;)
> None of all the examples you list here except CoreWeave has a comparably high cost base.
Wut? I'm pretty sure SpaceX spends a lot of money shooting rockets into space, and Cloudflare has pretty high infrastructure costs given that a very large portion of all Internet traffic goes through their networks.
True. Cloudflare has a high cost base, but they had and still have a valid business model.
SpaceX is an entirely unique thing, I don't really know what to think of it. I don't see a viable business model there, but I might be wrong. Maybe there is trillions to make in space. Their targets are long shots, but meanwhile they are bleeding money on all their ventures and they ride on the AI wave. The IPO was fairly recent and it might still just implode one day.
Are you using lifetime change since IPO and not accounting for years? SpaceX hasn't beat the S&P for example. Uber hasn't. I didn't check them all but some of these seem to contradict your point?
I don't feel like going through the list but Uber definitively botched their IPO. If they are up 60% only since the IPO they are just matching inflation and pretty much below the index.
You dont need to criticize good research, you can just recognize the market can stay gullible, for longer than you stay solvent.
I like to think you can enjoy the ride wave as you are propped above the heads of an hysterical crowd, as they rush to the abyss...Just find some solid tree branch you can latch on, when they realize where the road ends.
It’s not “good research” when they are wrong >50% of the time. If you invested money in every IPO they told their subscribers to avoid you’d be very rich today.
I define good or bad research, based on my time horizon and the time-value-of-money. For example its irrelevant for me how much money Tesla makes, since I judge there only two possible outcomes for the company: bankruptcy or assimilation.
the peak of tulip mania was in 1637, people who invested in 1636 and got out in early 1637 would probably have made good money.
I believe the analogy here is that investing in the Tesla IPO would have made a lot of money, yes, but at some point in a future implied to be not so far off, staying in Tesla should lead to losing all that money.
I sort of feel like that will probably prove to be true. Was it a bad idea to invest in the IPO, no, but it wasn't a bad idea to invest in tulips either, until it became a very bad idea.
you don't have a time machine, trust me on this. Therefore you will not be going back to invest in Tesla in the past, you will only be investing in Tesla from now onward. You may have already invested in Tesla in the past, and if you keep your money in Tesla that you invested in the past that is like deciding to invest in them today.
Every company in existence is likely going to 0 at some point in the future, but some companies seem like to go to 0 in a few years and some companies we can not as yet conceive of what might possibly cause them to go to O.
So the question when you invest is, am I investing in something I expect to crash and burn in a year, or I have no idea even what could cause them to crash and burn because they look so strong.
There seems to be some people in this conversation that believe Tesla is a crash and burn in a year (or two) company. And whenever you get confronted with this belief you talk about how if you invested in them 16 years ago you'd feel pretty good about it now! Which is totally true, but also if you had invested in Tesla 16 years ago and you had cashed in last year you'd have felt better about them than you would now. Also you are only able to invest now, not 16 years ago, because, as noted above, you do not have a time machine.
Do I believe Tesla is going to crash and burn, uhm maybe, I don't care that much but I do think there are signs of it.
Survivorship bias: many IPOs since then have underperformed. If you cherry-pick all the ones that did, then IPOs look like an outrageously fantastic bet.
You have to bet on the IPO knowing only the information at the time, not knowing what the future growth of the stock was.
I feel like the market staying irrational/gullible longer than you can stay solvent argument doesn't really make sense when all you're doing is NOT investing in something. It seems an aphorism more suited to puts and calls, puts especially, than it is to deciding not to invest at all.
> the market can stay gullible, for longer than you stay solvent.
This is essentially just what people say when current reality is different from what they want it to be. Sort of an unfalsifiable escape hatch response to “well observable reality contradicts your claim”
It's usually wise advice when someone thinks they can make money by shorting an overvalued asset. Sure you might eventually be right, but in the meantime you'll go broke.
In the long term, in theory, prices should be tied to value, most most of the time the stock market plays more like a casino.
I agree it makes sense in the context of warning people not to short something. But what I am replying to is a person using it generally, not in the context of shorting, to just say “it only looks like I’m wrong because everyone else is crazy and irrational right now, but they’ll come around eventually”. Not exactly a rigorous argument.
> Track record is extremely relevant when the "argument" is mostly about judgement and subjective opinions.
Ironic given this article is from CNBC, employer of Cramer, host of "Mad Money", who has been so inconsistently wrong that his picks have literally sparked an ETF. Just search using your engine of choice "Inverse Cramer ETF".
I work in finance. Past performance is not a guarantee of future returns, but is a damn good indicator, which is why everyone always wants to see your past performance anyways.
SJIM lost 15% in a period when the S&P gained 25% (betting against Cramer). LJIM over its lifetime gained 3.7%.
Of course both had too short a lifetime to draw a conclusion due to lack of interest and this was pre-AI so maintaining the positions was difficult. But it’s important to remember that Jim Cramer fails to beat the market, not that he’s an inverse oracle.
> Past performance is not a guarantee of future returns, but is a damn good indicator,
Unless it's about stock picking, when the winners in one year of doing good stock picking are no better in the next than any other random stock picker.
Wise to critique both holistically, which makes it funny when people want to ignore an individual's or group's track record (especially regarding specific mental models or types of analyses) when evaluating a specific argument
If a weather reporter on TV says it's raining every day, and it's not always raining, I can still criticize them on days when it rains without it meaning I don't think it's raining.
I think it's probably a negative for the stock price when the CEO thinks his company shouldn't be developing its main product and believes wiggy and false things about what continuing development means. Investors can put up with a lot of things, but an erratic willingness to undermine core business activities is usually not one of them.
I don't see how Anthropic can become profitable enough to justify its investments unless they can either stop training models ("Pace the Frontier!!1"), or magically eliminate open source competition so that their volume x margin on inference is high enough to dwarf the training costs.
For the IPO, I assume they're going to try to get everyone to focus on inference - which is profitable in isolation. But I don't know how they'll distract the market from the other half of the equation.
Their inference margins are already high, the thing bringing their net down isn't training per se, it's the fact that they have to train the next iteration right away due to competition, otherwise an extended inference cycle would've eventually recouped training costs.
The bet is that cost per intelligence will keep going down and demand for intelligence will grow at the same time, if this bet holds, a user could get the same or more done with a cheaper model (running-cost wise) while paying the same subscription and the lab gets improved margins.
Open source is a challenge but their current moat is the fact that they're ahead, and as long as they stay ahead they'll be able to charge a premium.
The rush towards open weight models defeats this thesis. There’s no prize for being “ahead.” That’s academically interesting but a terrible business plan. 99% of AI use cases don’t need the latest and greatest model, and businesses increasingly understand this.
That's like saying "forklifts are a terrible idea, because a forklift is excessive for lifting 99% of the items that I can lift". See the problem?
"AI use cases" is a moving target! If you try to define "use cases" by "what AIs today can be used to do", you miss things AIs would do in the future. The more capable and price-performant AIs get, the more there are places where AI has a role.
This is a big part of what the frontier buys you.
The other big part is that going from a local AI to a frontier model often makes the difference between "this use case works 60% of the time, good tech demo" and "this use case works 99% of the time, good business decision". The difference between "clunky and needs human in the loop" and "just works" is worth paying the API price.
The forklift market seems to be in the $90-$95 billion / year while the global passenger car market is $2.9 trillion.
This is the problem.
While the frontier labs will always have a market for AI that can do things the other models can't, if the sliver of work that can be done only by the frontier models is narrow enough, then what they spend to train those frontier models may not let them capture all that much extra revenue.
I absolutely think there will be a market for frontier models pushing further and further.
But it's not yet a given whether or not being ahead on capabilities is going to buy them all that much more higher earnings relative to lower tier providers.
If it stays the case that going from local AI to a frontier model makes the difference between 60% and 99%, then they probably will, but there's nothing to suggest local or open model, or second-tier closed models won't keep moving ahead as well, and eat away at the use cases where only a frontier model will do.
Do you think that human civilization has a finite demand for intelligence? That there is a point that we can hit, and stop there, and say "we've thought of all there is to think about, no more thinking is required?"
Do you think that we are anywhere near that point?
We've already seeing things - like what's happening with AI reverse engineering now. I'm a reverse engineer - and I know that the reason why RE was used as "last resort option" was that expert reverse engineers are rare, expensive, and work slow.
But now that a lot of RE workloads can be tackled by AI instead of a human? The demand for reverse engineering is at a never before seen high. AI made reverse engineering much more viable - and thus, a lot more reverse engineering is happening now.
There are myriads of fields like this - things that go overlooked not because no one wants them, but because the economics of human expertise make them nonviable in most cases. As AI gets better, it can begin to enter those fields.
Except you, of course, need to push the frontier to do it.
> Do you think that human civilization has a finite demand for intelligence?
No, I don't. But for any given task there is a ceiling above which for that task there is no value in additional intelligence. E.g. it takes very little intelligence (none, in fact) to sort a list. More intelligence does not result in a more sorted list.
And so for a huge proportion of what we do there is a ceiling of value that can be extracted by selling AI tools to do any given task.
Combine that with there being at any given time a ceiling of available capital to be apportioned to buy intelligence to carry out the remaining tasks, and the floor of tasks that non-frontier models can do well enough rising, and there will at any given time be a finite amount of capital that will be accessible to frontier models.
It is by no means given that that slice of capital will grow rapidly enough for frontier providers to be able to create an attractive financial return. That depends on frontier labs being able to continue to deliver sufficiently more value than cheaper models at any given time that enough people won't simply wait.
I'm extremely bullish on AI in terms of its ability to transform society over time, but that does not automatically translate into assuming that the current frontier labs are a safe investment bet.
"Sort a list" doesn't exist by itself. It isn't a terminal goal - it's a step towards something else.
If "sort a list" becomes a trivial task, everything that was bottlenecked on "sort a list" is unbottlenecked, and other parts of the process become bottlenecks instead. Thus, the demand for non-sorting tasks grows. The saturation of low end feeds the value into the high end.
> "Sort a list" doesn't exist by itself. It isn't a terminal goal - it's a step towards something else.
Sometimes it is. But that is also irrelevant. Replace "sort a list" with any given goal and the argument remains the same.
> The saturation of low end feeds the value into the high end.
But that process is not immediate. There's a reason I was careful to include "at any given time" in my comment.
For the purpose of whether or not a frontier lab is a good investment, it doesn't necessarily help them if there is an ever rising demand for intelligence if their market is eaten from below just as fast by cheaper models from competitors catching up.
It could be they manage to out-pace their competitors sufficiently that they will produce returns high enough to justify their valuations.
But irrespective of whether the demand for more and more intelligence continues to rise perpetually if 2nd tier labs hollows out the bottom of their market fast enough, it could equally be that most of the market ends up being low-margin, highly-competitive inference that won't justify their valuations.
Given the size of their valuations, even if they turn out to be tremendously profitable businesses, it's still not a given they'll give a good return on investment for investors getting in now.
I'm not saying they won't. I'm saying we can't easily judge that based on just assuming growth at the high end will continue without understanding what their moat is likely to look like.
> everything that was bottlenecked on "sort a list" is unbottlenecked, and other parts of the process become bottlenecks instead. Thus, the demand for non-sorting tasks grows.
Your assumption here is that the other parts of the process are intelligence. In the real world they usually are not e.g. raw materials, politics, zoning, manual labor, clinical trials, traffic, energy ... And usually those things are such huge bottlenecks that Amdahl's Law renders the speed of delivery of the intelligence part irrelavant.
This kind of all depends on being able to continuously make better models indefinitely. I'm not convinced that's possible. If there is a limit, then everybody will get there, and anthropic has no moat at all.
It's always disappointing to see comments by arrogant elitists claiming that most people are essentially NPCs. But even if your claim was correct, the demand for inference compute capacity by businesses, governments, and universities is effectively infinite. If there is a limit then there are no signs that we're getting anywhere close to it.
If his claim is correct, and 99% of people are NPCs incapable of any meaningful thinking, that makes the 1% that actually does all the thinking of human civilization very valuable.
And that, in turn, makes AI even more valuable if it can produce thinking on demand.
> If his claim is correct, and 99% of people are NPCs incapable of any meaningful thinking, that makes the 1% that actually does all the thinking of human civilization very valuable.
That's like saying if 99% of birds don't have huge colorful tails that makes peacocks very valuable. In each case it may or may not be true but you are just correlating. (i.e. It's possible that intelligence just isn't as valuable as 'intelligent' people think it is)
There is no business model for competing companies to build forklifts that can lift an infinite amount.
That is not to say attempting to do so would not find new use cases for such powerful forklifts. The problem is the cost of building ever increasingly powerful forklifts while the TAM for that power shrinks.
You don't even have to bring in the enormous difference between forklift rusting theta vs gpu theta.
Except that’s simply not how it works. Companies just have one forklift. Yes it’s too much for most use cases but you don’t have a garage full of different sized forklifts. There’s a big cost to keeping all these extra forklifts on standby.
Models, however, are completely interchangeable on demand. That’s why companies are building these realtime internal marketplaces to route tokens to different models. Anthropic may win the occasional “bleeding edge” use case but the money is in the day to day use cases that get routed to the cheap-but-works options. There’s zero cost to having all the forklift sizes at your disposal and only using the size needed when it’s truly needed.
Anthropic is trying to sell the biggest baddest forklift in a world where companies can swap out cheaper ones easily and on demand. Hence why Anthropic doesn’t appear to have a viable business model in its current form.
The biggest, baddest forklift in the world is a crane.
And crane, despite being bigger, more powerful and more awesome (they lift skyscrapers and do things nothing else can do), the Forklift is actually more useful to more people.
I think the argument carries solid weight. Making bigger and better things doesn't necessarily lead to bigger and better businesses.
Their competition has the same problem. They're engaged in a giant game of chicken (or giant game of "who runs out of ability to raise more cheap capital first") with respect to overspending on training relative to inference revenue.
So, yes, it's high risk - you're basically betting on who will be in the strongest position when one or more of the competitors are forced to slow spending and the rest are able to ease off on theirs as well as a consequence.
If you think either that Anthropic is in a strong enough position to come out on top or that we'll end up with a detente like with the big cloud providers where they big providers feel they have a strong enough position to beat off upstarts and collectively basically stop competing other than on the margins because they all know they'll earn more by protecting their margins than by internal competition, then the IPO might be worth putting money on.
I think the latter scenario is slightly lower risk, but still risky given how small the moat appears to be vs. the Chinese labs (I say this as I just had Kimi re-design a website in 10 minutes by just giving it the URL to the current one and tell it to replicate everything; they might not be as smart as the frontier models yet, but they're capable enough that they're taking over an increasing proportion of my token budget)
> Their competition has the same problem. They're engaged in a giant game of chicken (or giant game of "who runs out of ability to raise more cheap capital first") with respect to overspending on training relative to inference revenue.
It's a sort of weird chicken game in that there's a meta-chicken game going on too — they are both, sort of separately, betting that the outcome of their chicken game will be too devastating for the US economy for it to be allowed to happen.
(I say "sort of separately". But the one guy used to work for the other guy. You know how people who split up from partners spend the next few years trying to shake their ex-partner's framing of the world? They know each other's thinking; they are aligned where this meta-chicken game is concerned)
They don't need it to actually be devastating. They just need sufficient fear of it.
Especially if it is finely calibrated enough that they get to continue at a slower pace, but end up with enough expensive red tape to slow down upstart competition more because of high compliance costs.
If they can't beat OpenAI etc., the second best is to near-freeze market shares in place at a lower rate of investment - hence my comparison to cloud providers where none of the big providers makes too large reductions in prices etc. because they all know they'll all lose on a price war.
> their current moat is the fact that they're ahead
the problem is that they are not ahead. they are ahead on producing one-shot demos, which are useless party tricks, but when it comes to shipping real products these large models are just a big expensive waste of time and what you need is deterministic systems that integrate small efficient purpose built models in the places where they are actually the best solution for the problem.
the anthropic game plan was to wrap the entire software industry up in a magic box called "AI" and then rule the world but these people are delusional and their house of cards is rapidly collapsing. the technology is real, but they didn't invent it and they don't own it. it is kind of amazing to think of a $2T company with zero IP ... they didn't invent a single thing that they are selling, and for the most part they are implementing it worse, and serving it less efficiently than at least a half-dozen other competitors.
Limiting usage on heavily subsidized subscription plans is not the same as cutting access to their models. Switch to API billing and you can have as many tokens as you want. In fact their salespeople will aggressively try to sell you more.
> Open source is a challenge but their current moat is the fact that they're ahead, and as long as they stay ahead they'll be able to charge a premium.
Being ahead isn't much of a moat in a game where playing catch-up is significantly easier than being ahead. Also, how much ahead of Chinese labs are they at best? A year? Two? That's a moat for ants!
Unlike the dot-com era, this is a bubble that everyone saw coming.
Like dot-com, there are many long-term winners, but cash hungry frontier labs are not among them.
Prediction:
OpenAI, Anthropic, Oracle, and SpaceX[1] go down and assets be sold or companies acquired for a fraction of their valuation. The same goes for most neoclouds. Profitable "old" tech companies like MS, Google, Meta, and Amazon are fine and scoop up the valuable parts for pennies.
Nvidia will be in Cisco's position (Cisco was the world's most valuable company in the dot-com era). Both are good companies that are not going anywhere, but stock prices get decimated when markets collapse (Nvidia liabilities are not high enough to take company down, they are mostly tied to there not being a bubble and data centers are getting built)
[1] Everyone already knows that, according to SpaceX, > 80% of SpaceX's valuation is in AI, not in space stuff, right?
> Unlike the dot-com era, this is a bubble that everyone saw coming.
As far as I recall, the dot-com bubble was widely seen as such prior to it bursting. E.g. Greenspan and Buffet were both quite vocal about the irrationality of the values being assigned to companies.
Given https://www.abc.net.au/news/2026-10-10/how-firmus-the-bigges... and the above, I'd say we're already primed for a fall. Given 5 years is a pretty long time (that's 3 US elections cycles where politics can increase uncertainty about AI), and the length it took for the subprime market to create the GFC (see e.g. https://en.wikipedia.org/wiki/File:Subprime_mortgage_origina...) looks to be about 3-5 years, I'd be 99% sure the crash would happen by then (with the 1% covering both the uncertainty in the cycle and something odd happening).
Nvidia probably doesn't really have really serious liabilities as long as it has actually produced all the GPUs it has sold on a buy-and-hold basis.
It's fabless, right? So they haven't even built out wasted manufacturing capacity.
As long as the GPUs they have sold are really sitting in a warehouse in Taiwan or somewhere in the USA, they are making properly concrete money.
The fact that nobody else is making real money, that will eventually come back to bite them, but Nvidia will just see its business shrink; it will have to scale back if the bubble bursts, but it will get out with much of that money intact.
The other parties swimming in money are memory chip makers. And I think list pretty much ends there. They might or might not over commit for future and eat the cost. But they too might be good with these profits even if future fabs lose some money.
Memory demand over time naturally goes up, so even an overcommitment wouldn't last longer than a few years until demand catches up again. SK and Samsung memory margins are utterly ridiculous currently (> 80%).
For September:
> In IT, semiconductor exports rose 262.8 percent to $60.30 billion, exceeding $60.0 billion for the first time as memory demand continued to grow, with export volumes continuing to expand and contract prices maintaining their upward trend.
> So they haven't even built out wasted manufacturing capacity.
According to SEC filings Nvidia has $100 Billion in total commitments. They are mostly purchase obligations, advance supply agreements, and multi-billion-dollar prepayments for fab capacity (wafers, HBM, packaging, substrates and interconnects).
But aren't these for manufacturing things that they have actually sold?
A general rule in the AI bubble appears to be this: Nvidia aren't waiting to get paid for the things they make. Rather, they are being paid very up front for things that cannot be installed.
My prediction is the same. I think MS, Google, and Amazon will be the winners here. They might take a hit when OpenAI and Anthropic blow up, bu they can absorb it, and are well positioned to provide those services in a reasonably sustainable fashion. I suspect the costs of using AI will be considerably higher at that point (subscriptions will be extremely limited or just non-existent). Meta does not benefit in this case since it doesn't provide compute, but they have money to waste (as they did with Metaverse, VR, etc).
The vc’s have to be allowed to cash out - so that money remains a strategic weapon for US venture funds over any other nation re. Funding startups in future - esp capital intensive.
The valuation is a joke but they will be allowed to go on and cash out - just like the investors of spacex.
If they are a year from AGI, then the private investors can hang on and use their new super intelligence on their own tasks to make themselves considerably more wealthy now and into the future, so why would they want to sell that power to anyone else?
> These companies believe they're a year from AGI, and that's how they'll be profitable.
What I don't get is that if Company A is a year from AGI (I don't think that's true, but then again, I don't think anyone even has a good definition of AGI), then surely Companies B–ZZ are only a few years (at most!) from AGI as well. There is no moat. Or if there is a moat, the moat is hardware scarcity – but that's systemically outside of the control of these companies.
It's also weird that most seems to think that if inference is good, it's all good. You still have massive costs in data centers, replacing hardware, upgrading hardware, paying salaries, etc.
You can have 99% margins on what you sell and still go bankrupt.
In intrinsic valuation, the value of the operating assets is determined by ebit(1-t) - reinvestment.
Gross profit doesn’t mean a whole lot if a) your operating income is negative b) your reinvestment needs are mega. You have to make some interesting assumptions Re. Anthropic to get a 2T valuation.
I almost have to hold my nose reading finance posts on here.
People keep talking about the risk of open source models, but if you're outside the HN/SV bubble, no one is using them. Anthropic's revenue is ~$60B supposedly, OpenRouter's revenue is $140M. I know they're not the only place to get open source models from, but they're the most popular and Anthropic is bringing in 400x more revenue than them.
"The company’s growing operating losses" - yeah, if you are a "research firm" basing your research on the leaked 2025 Anthropic financials and not what happened in 2026 you are on the verge of malpractice.
(I think 2 trillion dollars is an absurd valuation for a product with such hot competition and low switching cost, but if you make the case that Anthropic is losing money based on the 2025 numbers from that Reuters report you're being farcical.)
"The company grew revenue twelvefold in 2025 to ~$4.6 billion. According to the New York Times, Anthropic is on pace to generate $100 billion in annualized revenue by the end of 2026."
It does lean into those 2025 figures when talking about Anthropic's losses though, which is weird when Anthropic have supposedly claimed two profitable quarters in 2026.
UPDATE 2: The CNBC article actually does cover this:
"Anthropic claimed at the end of July that its annualized revenue run rate was up sevenfold year-over-year to $65 billion."
I withdraw my comment. I shouldn't have let my pet peeve (that Reuters article being misreported all over the place) get ahead of me here.
> which is weird when Anthropic have supposedly claimed two profitable quarters in 2026
Anthropic claimed to be profitable if you dont count some of their largest expenses (like model training). Not the sort of profitable where revenue actually exceeds total expenses
"Anthropic still hasn’t made its prospectus public, so New Constructs hasn’t seen the actual filing. However, the firm cited figures that have been reported, including from the New York Times, which reported in September that the company was on pace to generate $100 billion in annualized revenue by the end of 2026."
Anthropic's annualized revenue run rate reached $65 billion at the end of July 2026, up from just over $5 billion in August 2025 (Anthropic, CNBC)
Anthropic made nearly $4.6 billion in revenue in 2025, 12x more than in 2024 (IPO prospectus, via Reuters, September 2026)
Anthropic's preliminary Q2 2026 revenue was more than $11.5 billion, ahead of OpenAI's $6.7 billion (Bloomberg and The Wall Street Journal, August 2026)
So, the Q2 revenue was $11.5 billion. The claimed $65 billions are "annualized revenue run rate". Please show me where that term is defined reliably. It's a BS marketing term to obfuscate real revenue after the tokenmaxxing hype has ended.
"Anthropic defines “run-rate revenue” in two parts. Use the last 28 days of sales from customers charged on a consumption basis and multiply it by 13. Then, multiply the monthly subscription take by 12, and add the two together."
$2 trillion is a lot of money and certainly doesn’t seem a safe bet at that price. But also, their revenue went from <$0 in 2024 to $4b in 2025 to what will likely be >15x that in 2026. Has anything ever grown that fast before?
If you carry that forward even one year, and I’m not saying you certainly can, they’re outselling NVIDIA.
I get it, there are risks, scalability issues, low cost competitors, etc. $2 trillion is a big number, but it’s tiny compared to all human payroll.
I’m not buying it either but I dont think anyone who does failed an IQ test.
Is it true growth, or circular dealing plus hype? I have little doubt the IPO is nothing but a wealth transfer from retail investors who'll be left holding an empty bag.
I take no position on the correct valuation of Anthropic, but I think if you've used coding agents, it's pretty clear that it's not just hype; they really are a useful technology that can massively increase software engineering productivity.
As far as I know the circular deal fears are more around the chip purchasing agreements, because there is a speculative component to building out datacenters for training which may not produce models that are worth the training cost, but the revenue from inference is real and it has truly grown a lot over the past two years.
> ...it's pretty clear that it's not just hype; they really are a useful technology that can massively increase software engineering productivity
Problem: Anthropic isn't the only provider. You can argue whether they are the "best" provider, but both GLM and DeepSeek exist and are really, really good. I was using Qwen offline on a trans-Atlantic flight on a 128GB MBP and output was totally acceptable.
Yea I am certainly not saying that Anthropic in particular is worth the valuation they are seeking or that they will end up a winner in the AI race; only that AI is not just hype, and that their inference revenue growth is real.
That's a beefy MBP! I imagine it was quite hot by the end of that flight if you were running Qwen the whole time
That’s a good question that I assume will be cleared up in the prospectus, but I have to assume that enough of it is just cash coming in that they and OpenAI are likely the fastest growing companies of all time, or at least very high up the list.
The benefits of replacing all human payroll will go to AI companies as a whole. AI companies as a whole != Anthropic.
As the article points out, the greatest threat to closed models like Anthropic's comes from cheap open source models. Not from the possibility that AI won't be successful at replacing payroll.
I think it's a little early to make that statement. Could be. But at this point I think things like printing press, agriculture, writing ... they're all many times more significant.
I know it’s a hot take, but I disagree. I think the invention of AI (or more specifically, ASI with RSI) will dwarf the printing press, agriculture, writing, etc. in terms of significance.
Now, obviously all these things built on each other, so comparing them like this is a little silly, but in my view, inventing AI is essentially inventing an inventor of fantastical things on par (and beyond) the greatest inventions of humanity, including the ability to self-improve.
To be clear, I don’t think today’s LLMs are there yet, and I take no position on whether they’re a dead end, but in my view ASI has no fundamental barriers that cannot be overcome in time.
"The invention of a magical wish-granting technogenie that has not yet been invented, and may never be invented, and we have no idea how we could get from what we have to inventing it, would be the best thing of all time!"
> I’m buying, this is the greatest invention of all time and Anthropic has garnered a pretty solid lead right now.
Depends on your perspective, but that's definitely true if you're selfish and have been paying people for intellectual labor. Lots of layoffs to fantasize about (even though that represents vast amounts of pain and destruction for many people).
Cancer. Burkitt Lymphoma takes a couple of days to double in size.
It’s important to understand that infinite growth inside a finite system is impossible. At some point growth has to stop, either by eliminating the growing organism or it killing the host.
Well, unlike the economy I can’t grow in size rapidly. (And if I did I’d just have another major problem.)
Induced demand and limitless cheap human-quality labor can possibly grow the pie very fast, though even then, you start running into the earth’s finite resources eventually. But it is possible that they are worth much more than $2 trillion long before that.
But that is why I said you can’t just safely assume 15x multiples to continue.
I thought this was the reason to force an investor account on every american child, so that they can be "forced" to buy into these IPOs, and left holding the worthless stock while a massive amount of wealth is transferred from the system to a select few investors.
> The New Constructs report also notes that Anthropic’s assertion that AI could pose “a catastrophic or existential risk to humanity” is another reason why investors should avoid the IPO.
So, we go from an existential threat to basically unprofitable business. I can only see Amodei and Altman just as the next Holmes.
I don't understand how people are so certain on how this will play out. We have people basically saying companies like Anthropic offer no value because open source models are free. Then we have others saying once frontier AI labs go RSI FOOM takeoff they'll essentially _become_ the tech industry.
Most "news" is just a dramatized press release these days. The conditioning of the public to viewing media as authority creates a mental trap where you're told something is important/credible, despite having zero hallmarks of credibility. And we perpetuate this because it's familiar, not correct or accurate.
This is exactly why humanity continues to stumble, despite centuries of evidence as to what doesn't work. We just can't accept that most of what we tell ourselves is reality is just a for-profit (or for-influence) product that masquerades as knowledge or important information.
Anthropic raises money from IPO -> How long will that sustain them given the immense cash burn? Forget about gross profit - that's the number they want you to focus on and can be played with. Keep the focus on the cashflows -> if a firm runs out of money its over, who cares what your revenues and gross margins are. We are not talking Amazon level loss's which were paltry AND they were able to raise more than enough to keep going for awhile.
Management of firms who pay rent to LLM models need to reign in costs -> they will use a bundle of chinese +american models (this is already happening look at the data) -> affecting revenues, earnings and cash flows of frontier labs. Given the losses in absolute terms, any stunting of the growth rate would be catastrophic for the story re. valuation.
The frontier model story rests on one giant assumption: lay-offs must happen en masse at some point. It's not happening and in my view won't happen - there simply isn't enough trust. Moreover, do you think firms are going to trust these model providers, given its in their interest to steal IP? lol
I agree it’s not rocket science, but I think there’s more to consider here.
First, a lot of usage can switch to open models (like is happening, I agree), and yet frontier model usage can still grow (like is happening). As long as the market for frontier level intelligence keeps growing, the cost of frontier intelligence is marginally profitable to the user, and the open weight models don’t catch up, I don’t see any reason for frontier level usage to fall. Indeed, we haven’t seen any of that so far, despite the rise in open weight usage. My own product has started using open weight models, but my usage of frontier models also continues to grow, because they keep unlocking new capabilities. Maybe that’ll end, but I’m skeptical. I think the problem space that can benefit from the best intelligence money can buy is unbounded.
Plus the labs can still offer cheap non-frontier models to compete with the open weight models (like Luna and Haiku), and they have a massive advantage in terms of available compute.
Secondly, I don’t think that the big labs need mass layoffs to justify their valuation. That’s perhaps one path, but in my view a more likely one is that we get greater increases in productivity and economic growth, and they capture a large share of that. If global GDP grows 2% faster than it otherwise would over the next decade, that’s an extra $175 trillion in economic value created over the next decade. If it grows 5% above baseline growth, it’s half a quadrillion. GDP in 2036 would be more than $100T higher per year than if GDP grows at historical rates. AI companies don’t have to capture very much of that to justify a $2T valuation.
Now, will any of that happen? Who knows, it’s definitely unrealistic and unprecedented, but then again, so is much of what I see happening in the world today. Time will tell.
I was hoping you were able to make the numbers work.
I have just not read or listened to much of anything that the numbers work besides some science fiction fantasy on Dwarkesh podcast.
The gpu theta + the frontier model theta + token deflation creates this rolling window that I just don't see how it works given even the most bullish assumptions.
Maybe if the rolling window was expanding a rational argument could be made for the valuation. No one can say with a straight face the rolling window is expanding.
It is like competing biotech firms without patents working on the same drug but with these time decay parameters too.
10 months back 1T made sense, today even that looks expensive and they are eyeing 2T. How much do they expect to grow from here as a 10x growth from 2T is 20T and even a few years later 20T for a company is a lot. Amazon and Google ipoed with lots of room to grow.
New Constructs takes a similar position on all mega IPOs. Sometimes they're right, but sometimes they're wrong. For example, they insisted Uber's IPO valuation was too high due to unsustainable losses, hidden liabilities, etc. Initially they were proved right when the post-IPO stock price plummeted, but in the long term Uber has performed well, become very profitable, and now trades well above its IPO valuation.
I'm expecting a similar story to play out with Anthropic: The stock price will come down significantly after the IPO, resulting in lots of headlines about the AI bubble bursting. But in the long term it'll climb up again and investors who stick around will do very well.
“Now trades well above the IPO valuation” does not mean something would have been a good investment at the IPO price given opportunity cost and the time value of money. Additionally, the current price could equally not represent good value.
I suspect SpaceX is going to be the opposite of what will happen with Anthropic. With SpaceX I think the overwhelming majority of people didn't initially understand what Starship is, how far along it is, or what it even means in terms of its impact on the pathway of getting humans to be a multiplanetary species. So it was greatly undervalued and zoomed upward.
With Anthropic I think a lot of people haven't really realized the trend line of cost of "AI" (both in literal $ terms, and compute costs for local operation) or what open weight systems will do to the market in the "long run", where long run in this case means the next year or two. I don't think any LLM company is going to come out a winner in the longrun, because the price for LLM output is going to approach $0 with no chance for a moat whatsoever.
> the overwhelming majority of people didn't initially understand what Starship is, how far along it is, or what it even means ... So it was greatly undervalued
I don't think anyone was undervaluing the "space" segment of SpaceX. It's the clear leader in launch frequency and cost-to-orbit among the new wave of space firms, and shows no sign of losing that position.
Where the IPO raised a bunch of red flags was SpaceX suddenly acquiring Elon's AI firm, which had a significantly more nebulous basis for its valuation...
Think about what you're speaking of at the most fundamental level. Humanity starting to set foot permanently into the cosmos means you're opening the door practically infinite resources, land, and potential for expansion. And the first nation to start claiming territory and expanding outside of Earth will see its overall influence on the future of this species begin to grow exponentially, which will likely turn such into a race. You can already see the outlines of this forming today, but of course we're all still just lining up at the starting line. And this time the finish line will almost certainly be rather more remarkable than flags and footprints.
There are plenty of resources, land, and potential for expansion right here in earth. The reason it's not done is because it isn't economically viable. If it's not economically viable here, how could it possibly be so on another planet?
On a board where many people still think AI is a gimmick and a bubble that will pop, explaining where the economic value of expanding humanity's reach beyond low Earth orbit is, is going to be impossible.
It's possible to believe that AI will revolutionize humanity and that AI is a bubble that will pop. I suspect that this is the more typical view than believing that AI is a gimmick.
Trillions of dollars are being dumped into companies when frontier level open weight alternatives that are able to be run on ever more reasonable hardware already exist. It feels reminiscent of how everybody certainly knew that tulips could just be planted, but people operate under their own assumptions about the world and its future, and sometimes it can lead to quite odd outcomes.
Right. But then frankly, who ever cares about those trillion dollar valuations? That's just rich people doing rich people's silly things with numbers. Meanwhile, the technology is there, useful on the ground, and will not disappear even if the bubble pops.
I tend to frame this as beneficiary vs. investor perspective. I'm a beneficiary of AI, not an investor. I couldn't care less about whose name is on the model, it doesn't affect the way the technology transforms my life, or the world around me.
I always wonder: How is it that wanting to deport billionaires to cleanse society of their power is “left”, wanting to deport jews to cleanse society of theirs is “right”, and that those are to be considered not the same (say, scapegoating), but opposites?
> the pathway of getting humans to be a multiplanetary species
I am afraid that you're suffering from Flavor-Aid poisoning here. We need a reality check about "multiplanetary colonization".
I've been following human spaceflight since I was born. I've actually participated in robotic spaceflight. And I'm here to say that it is robots who are destined to be a multiplanetary species. The robots have already successfully escaped our solar system and extensively explored the Moon, Mars, and elsewhere.
Many unscientific people believe that it's harder to colonize the Moon or Mars because they are farther than Africa or Rio de Janeiro is from Rome. But mere distance is not really your biggest obstacle.
I've also been following the ISS since its inception, and they have empirically disproven the feasibility of colonizing planets. If we succeed in establishing a crewed Moon base, it will be an ultra-Herculean effort, and it's on the edge of feasibility.
But Mars? Venus? Asteroids? Europa? You really think humans are going to live there?
The reasons that ISS has disproven this are manifold, but I'll point out two key points:
Their supply-chain is only about 8-48 hours, and they can stash large amounts of provisions up there. Their escape route is also only 8 hours and they're back on Earth in a jiffy. None of this is true for any body outside of Earth orbit. The Apollo missions arrived on the Moon and returned safely, by burning, jettisoning, consuming, and abandoning nearly everything they started with!!
A 15th-century expedition to Africa or Brazil means that you can fish in the ocean, breathe the air, drink rainwater along the way. An expedition to the Moon puts you in an airtight bubble with no stops, no rescue, no resupply, and most importantly, no breathing on the way, nor once you get there.
The ISS has also demonstrated the severe toll on the human physique in microgravity conditions. Watch astronauts who land or splash down. They are carted off in gurneys. They are literally unable to walk unassisted. NASA restricts returnees from driving or even jogging. The astronauts describe having to "relearn gravity" activities like brushing your teeth and showering. Any astronaut arriving on Mars would be as helpless as a toddler! Do you want to colonize Mars with toddlers? Because all the treadmills and workouts along the way won't make them fit for purpose on arrival.
So between here and Mars it's minimum six months, no escape, no rescues, no takey-backsies. We could send humans to Mars if we didn't want them to survive or return. I mean, no problem. There's no air to breathe on Mars; no water to drink; no fuel to burn; no fish to fish nor deer to hunt; no steel to build a shelter. You pack it all into the spacecraft, newbie?
But NASA and the rest of the world has amply demonstrated just how capable robots are where humans fail. Robots are going to inherit the solar system. Robots are in 2026, the de facto interplanetary species, sine qua non. My heart is warmed by these human achievements. I, for one, am happy to live and die on Earth. I think that every American should be grateful for Earth, and not permit our oligarchs to cheat and lie to us with fairytales of escaping our Earth.
See, there is that "simple solution" always proposed in HN comments that solves everything and sweeps away every possible objection. Just send robots.
Look, the GP went beyond "colonizing" into "a multiplanetary species". We have already landed and walked on the Moon, we've established an extremely safe and stable outpost in LEO, but we haven't even colonized Antarctica!
Think about that for a few. We can't colonize Antarctica. It is not far away; it has plenty of breathable air; it's... replete with water, if you will. But still, there are only a few scientific outposts that are unsustainable without constant resupply and staff changes. That's not a colony.
I don't believe we could colonize the Moon. I mean, the astronauts could walk around after landing, and the supply chain isn't absurdly long, but to sustain a Moon outpost you'd need a perpetual supply chain, sending up needed provisions.
I don't know about your definition of "colonize" but, generally on Earth, that means putting down roots and establishing a rather self-sufficient presence that happens to consist of foreigners. How does a colony of ants get established? They find food and resources nearby; they begin mating and reproducing; they build with what they find. The ants are not smuggling in breathable air, food and water over 10 miles away.
The supply-chain to Mars is ~6 months. I mean, you can fly humans there in about 6 months, every 26 months. Now imagine that you have a "colony" or "outpost" on Mars that needs perpetual resupply. Can you launch 26 months' worth of provisions in the short window every 26 months? Can you launch the provisions during the worst-case window, when it will take much longer to arrive? Are you going to send a bunch of provisions up with the robots in advance?
Those resupply logistics are just nightmarish, and they are daunting to envision, even if everything goes right with every single launch and voyage. The margin for error is nil. The opportunity for rescue or emergency escape, is nil. Again, send humans to Mars, but don't expect to get them back in one piece!
So, I contend that even with spinning capsules, and advance-team robots, and even with some magical method of extracting resources for fuel, a Mars colony or self-sufficient outpost is infeasible with current technology, as well as any foreseeable future technology. Sure, set up a "Moon base" but it will always be more difficult than Antarctica, and never self-sufficient. Rescue and escape from the Moon are likewise unlikely.
The thought leaders who are promising "multiplanetary species" are leading you down a primrose path. They're encouraging fantasy scenarios so that young kids will enter STEM programs and pursue science career paths. They solicit donations and support for tech programs that are, ultimately, just part of the military-industrial complex.
But it's all borne on the wings of sci-fi imaginations and not gritty reality. I was just chatting with my parents about how the ISS smells, and how chaotic it is. It's worse than a submarine. It's sending our best & brightest to camp in a hoarder house. They've got a chance of survival if things go wrong up there. On the Moon or Mars, they wouldn't. They won't be smiling, and they won't be growing potatoes.
The whole caring oh so much about humanity simply doesn't pass the smell test for me. I don't want to go into details and individuals, but I just don't buy it; what I do buy is wanting to get a foot into space to get even more leverage over the humans on Earth, and not for our benefit. That actually fits their actions and their aura, so to speak. But "preserving the light of human consciousness" and such? Now I know it's a scam and an agenda. And the more flowery the language, the more sinister I expect the actual designs to be.
Do look up CG Jung and the concept of the shadow and its projection.
There are many people who believe the opposite, btw. Earth has a disease. And the disease is called man. The world would be better off without humans, etc. Say that in a pub - you’ll get nods. But say you want humanity to populate the universe, and people will think there’s something wrong with you. Says less about the speaker and more about those who listens, if you ask me…
This has nothing to do with the idea of "going to other planets" and the motivations and issues of certain people pushing for it. The idea that we need to go to Mars or whatnot to "survive", considering the treatment of humans and resources on Earth by these people is just spam from Nigeria to me, at best.
I love going to the beach, but I wouldn't hop into a car with no wheels and blood trickling from the trunk, just because the guy wears a hat saying "I love the beach! That's where I'm driving! No detours, no tricks." and makes grunt noises at me because he never had the patience to even learn to properly mask and come up with a coherent ruse. To make that about "beach haters" is as expected as it is off the mark.
There is one core reason that Machiavellianism is naive. It's because the grand long-term ends people seek to create with all of their sinister deeds in the short-run rarely ever comes to pass. Yet all those sinister deeds absolutely do come to pass and are what we all get to live through.
So the most well intentioned person doing awful things? In my mind he's an awful person. But this also goes the other way as well. Imagine you're right, and the idea of getting humans into space is some elaborate scheme to somehow get more leverage over humanity. Awesome! Because it's highly unlikely such schemes will come to pass in any sort of remotely realistic way, but we'll be left with the means of humans actually meaningfully expanding into space.
I'd love to see as sharp increase in the number of evil people plotting to do good things to further their evil ends. All the 'good' people doing evil deeds in the name of some grand end that never happens is quite tiresome.
We're not escaping Earth nor seeking to replace it. The entire idea of becoming a multiplanetary species is exactly that. Ostensibly we all started in Africa, and plenty of us are still in Africa. The same will be true on a planetary level, and eventually on a star system level. You said a lot and I don't want this to turn into a wall of zig-zagging tit for tat nonsense, so I just want to speak briefly and holistically. The first missions to Mars will be fully dependent upon supplies we're bringing. The goal of self sustainability is aspirational and long-term. At best it will take decades. In reality, it may never happen much in the same way that no country in the world today is fully self sustainable in practice, even if many could be in theory.
The whole point of the extended stays in LEO are precisely to simulate worse case scenarios for travel to Mars. So for instance the record for the longest time in space is held by Valeri Polyakov. [1] He spent 437 days on Mir in LEO, and then opted to immediately walk upon landing back on Earth. It was all to prove that humans would be physically capable of working on Mars (which has 1/3rd the gravity of Earth) even after absurdly long periods of time in space. In fact his first words upon return from his first (240 day) stay in space were "We can fly to Mars."
Robotics don't really work well for space exploration, because moving parts break. For instance the Curiosity/Perseverance drills are cutting edge yet have a max depth of ~2.7 inches. And traveling is even harder. On average Curiosity ended up traveling about 1 mile per year. It's all because if anything breaks, that's game over. So everything has to be done with the utmost of caution, and even then stuff constantly breaks. Curiosity's drill broke after about a dozen activations and required a team of scientists and months of full-time work to create a passable work-around when it could have viably been fixed on the ground by a human in a few moments.
This is part of the reason that we only learned in 2013 that the soil/regolith on Mars is actually extremely moist, 2-5% water by volume. A cubic foot of soil heated up gets you about 2 pints, a liter, of water. The whole plot-line in "The Martian" about having to jump through hoops to get water was correct based on the latest knowledge when the book was written in 2011. We'll probably learn more in a couple of weeks with people on Mars than we have with 60 years of probes and rovers.
I'm certain every human of sound mind is grateful for Earth. That's not a reason to not seek to expand out as far and as wide as we can.
I fully agree with your points: the hard, unyielding reality which most Trekkie fanatics refuse to acknowledge, except for one: "severe toll on the human physique in microgravity conditions."
That's easily fixed!
Spinning a space station for gravity is straightforward, it's just that the ISS wasn't designed for it, and NASA didn't have the budget to build a second, bigger space station with "extra engineering challenges" on top.
It's definitely practical though, it's just a matter of launching enough mass to orbit.
Like you said, Starship is going to change a lot of things, starting with space station design.
Yeah, I mean, I get that the spinning has long been a viable proposition. Perhaps if we send a spinning expedition to Mars, the astronauts won't be toddlers when they arrive on a barren, hostile, resource-free world. Yet, that is a lot of extra mass; that is non-zero extra fuel; that is a lot of extra "stuff goes wrong" risk inherent in that design.
But it's unprecedented, untried, and not currently in any pipeline, AFAIK. I believe there were a few experimental spinning crewed flights, during the original Space Race. But does Starship spin and simulate gravity? Is there any crewed spinning spacecraft extant, in production, or even being designed?
They don't need to spin their way to the Moon, so it would be unlikely that any Artemis or future crewed Moon mission spins at all. But if spinning our way to Mars will solve an otherwise intractable set of problems, I suppose we'd better get started on proving it.
“So, what you're telling me is that the music is about to stop and we're going to be left holding the biggest bag of odorous excrement ever assembled in the history of capitalism.”
A brilliant line from the movie Margin Call (a fictional portrait of the actual events of the 2008 crisis) that appears likely to get reused in upcoming AI bubble burst movies.
I think people saying that open source is a threat underestimates how scared large corps are for lagging behind when it comes to AI. There are other risks that are bigger I think like the political risk.
Anthropic's small models are almost certainly distilled from their larger ones. And their biggest training expense are going to be experimental models that aren't even intended for release, just to test out some idea.
The model is engine, the harness is the car Anthropic are selling.
They are a service company, selling home-grown, mass-produced, conveniently packaged intelligence at a well established price for consumer. Their API pricing might just be for value proposition and tax deduction purposes.
Every tech company, tech department, startup that I know is using claude code to deliver. The boutique deepseeks, qwens, glms and kimis are nice, but ain't production ready in 98% of cases. All the pi's, opencodes, etc are nice, but much less enterprise friendly. And google just outright sucks in comparison. There's a use case for each, but not at the scale Anthropic is doing.
Only real competition - OpenAI - is close, but they're burning money to stay there, which imo is unsustainable long term.
Is Anthropic worth $2T? Can't say. But boy they have a good opportunity to test this, and they may not have a similar chance in the future.
All the smaller players İ know of have moved production to DeepSeek or Qwen, while they still play with idea/prototyping on Claude or GPT, that's the Western focused players. There are many foreign firms who won't touch either company at all even for that.
Simple reasons being no nonsense nanny refusals & it's cheap/good enough to get the everyday production parts done fast and reliably for next to nothing.
Your experience is not what I see at all, but İ don't work with megacorps or in the Valley anymore, so it's possible those powers will carry the weight to some extent, until they won't or can't.
I've tried a bunch of LLMs, and I agree that Claude is currently the best at coding, but the gap isn't huge. Gemini 3.8 Flash is surprisingly good and I'm looking forward to trying Gemini 4. The open weights models like Kimi, GLM, etc. are a little behind in quality I think but not massively.
With harnesses I see little difference between what Zed or Pi gives me and what Claude Code gives me. Enterprise features? The AI can help code those in a week.
AI itself is a great breaker of moats.
The question isn't whether they lead today. It's whether there's any kind of moat. Without a moat, frontier model development is an industry like chip fabrication or large volume manufacturing. Those industries are a red queen's race where if you stop innovating for even a short while you sink. Ask Intel what happened when they decided to coast for a few years.
Chip fabs and bulk manufacturers make a lot of money, sure, but they don't command such a multiple. Anthropic is priced like they're going to be to AI what Google was to web search or Apple is to (US at least) mobile and higher-end PCs.
I don't see it. I think they'll be a big player but that big?
Of course... maybe if they suddenly have that much cash they'll be able to carpet bomb the entire world with AI doom Rationalist ideology and buy their regulatory capture and outlaw their competition.
They made it convenient to get value for the specialist masses and I don't think anyone else managed to achieve it yet. That's their moat.
I've seen firsthand attempts at integrating open source in place of it and they all failed. Time is money and it costs premium. Touching the ground running is a huge advantage. That's why cloud services stuck.
time is money so when the subsidies stop or they magically make inference price an afterthought like cloud did to traffic then it's going to be much more economically better to spend a one-time price setting up a local or a self hosted open model than paying $2000 for a subscription
Yes, they have the same problem WeWork had on the multiple front. Coworking was a thing long before WeWork was a thing. It’s an important but boring business that trades at low multiples. WeWork tried to IPO on the basis that somehow it was worth vastly more, but the market woke up and realized it’s just subleasing office space.
The same is unfolding with Anthropic. It’s doing important work but everyone is realizing it’s not got a serious edge over anyone else. It’s important but ultimately a boring business. It’s still likely worth a few hundred billion, which is massively impressive for any startup, but trillions is pipe dream.
The thing that makes the frontier labs frontier is mostly access to huge amounts of training data and compute. In the earlier days of AI access to top AI talent was a moat, but that moat is rapidly eroding as more and more people familiarize themselves with the "black magic" of LLMs and training. The success of the Chinese models is evidence of this diffusion of knowledge.
Give me a team of, say, 20 good engineers with a deep knowledge of AI/LLMs and training and give me a billion dollars worth of GPU compute and a huge amount of training data and I'll give you a frontier model.
New Constructs is bearish on every tech IPO. Easy to reinforce your bias by selectively looking at instances where they were right, like WeWork, but they also predicted failed IPOs for Spotify (+219%), Uber (+60%), CrowdStrike (+3136%), Cloudflare (+2306%), Palantir (+1991%), Snowflake (+51%), DoorDash (+93%), Robinhood (+187%), ARM (+422%), Instacart (+59%), Reddit (+370%), CoreWeave (+105%), SpaceX (+20%) and lots more.
So whatever your stance on Anthropic this particular analysis is safe to ignore.
You can be right for the wrong reasons and you can be wrong for the right reasons. The economics of many of these businesses are disconnected from their market valuations, and there are examples of investors outright saying "none of this matters, let's meme together" (most notably, GameStop).
In general, the stock market is in a somewhat weird place because most people in the US who have some money just don't have anything else to do with it. It's not productive to keep it in savings or treasuries, we don't invest in friends' businesses because we don't have friends, real estate is too expensive, we don't collect art or antiques because that's for old people... so YOLO in the stock market it is.
So yeah, I don't think it's wrong to criticize the Anthropic IPO as nearly impossible to justify by anything other than vague hopes and dreams. But that doesn't mean it won't make you money.
> You can be right for the wrong reasons
Also known as a broken clock being right two times a day.
The fallacy is assuming ahead of time that they are actually right this time.
If you start assuming they’re right and also admit that their logic doesn’t support that conclusion, there isn’t even any argument left. You’re just implying that you believe one thing is true and anyone who agrees with you, regardless of the reason, is also correct.
I don’t find that persuasive in any way.
You would think any investor would prefer to be informed that the numbers don't match expectations even if they then decide to go ahead anyway. People like to gamble sometimes even though the likelihood of losing money is very high.
It's not that the stock market isn't overvalued. It is that everything else is more overvalued. Especially real estate.
Friends businesses don't need our money, because banks are generous with giving out loans and friends prefer to keep ownership intact while being in debt instead of diluting it.
WeWork had a massive cost base to offer their service. They had to rent/buy a lot of real estate to serve their customers. None of all the examples you list here except CoreWeave has a comparably high cost base.
All the mayor AI players have to rent/buy a lot of computing power to serve their customers. We're talking costs of 2-5x (or 10x? does anyone actually know?) their revenue. The question is, will they ever be able to pay their cost of revenue and operating expenses? Many people doubt. And we know that they do all sorts of funny book keeping shenanigans like SPVs and delayed deprecation.
What comes on top is, LLMs have no economy of scale. More customers scale linear with higher costs. Will people or companies be willing to pay 5x what they're paying now? Will future frontier models become more cost efficient or less? We simply don't know yet. At this point, it's a gamble.
It fundamentally comes to investments/commitments divided by revenue over certain low number of years. Now add in any financing costs, overhead and actually operational costs.
Math ain't looking pretty. Just like it did not look pretty with WeWork. Might have worked, but still not great business to be in.
Being hyperscaler really does look very high capital and questionable margin bussiness at moment. With lot of competition.
>> Many people doubt. And we know that they do all sorts of funny book keeping shenanigans like SPVs and delayed deprecation.
Every time I see Anthropic and other AI companies getting ready to go public, I cannot stop thinking about the entire Enron debacle and all of their "unique" book keeping shenanigans that has far reaching impact, even to this day.
People keep telling me, "Nah this is totally different man, you can't compare the two!" But is it really??
but they also predicted failed IPOs
You're discussing something entirely different, which is fine, but you're not refuting anything that the parent poster said.
All they were saying is that they're terrible at predicting risk. Examples were given. It doesn't matter why they're bad at predicting risk, they simply are.
True. All I say is that I agree on their take on Anthropic, although I wouldn't word it as strongly as they do. They may be bad at predicting IPOs, but every once in a while they may be right. ;)
> None of all the examples you list here except CoreWeave has a comparably high cost base.
Wut? I'm pretty sure SpaceX spends a lot of money shooting rockets into space, and Cloudflare has pretty high infrastructure costs given that a very large portion of all Internet traffic goes through their networks.
True. Cloudflare has a high cost base, but they had and still have a valid business model.
SpaceX is an entirely unique thing, I don't really know what to think of it. I don't see a viable business model there, but I might be wrong. Maybe there is trillions to make in space. Their targets are long shots, but meanwhile they are bleeding money on all their ventures and they ride on the AI wave. The IPO was fairly recent and it might still just implode one day.
Are you using lifetime change since IPO and not accounting for years? SpaceX hasn't beat the S&P for example. Uber hasn't. I didn't check them all but some of these seem to contradict your point?
I don't feel like going through the list but Uber definitively botched their IPO. If they are up 60% only since the IPO they are just matching inflation and pretty much below the index.
You dont need to criticize good research, you can just recognize the market can stay gullible, for longer than you stay solvent.
I like to think you can enjoy the ride wave as you are propped above the heads of an hysterical crowd, as they rush to the abyss...Just find some solid tree branch you can latch on, when they realize where the road ends.
It’s not “good research” when they are wrong >50% of the time. If you invested money in every IPO they told their subscribers to avoid you’d be very rich today.
I define good or bad research, based on my time horizon and the time-value-of-money. For example its irrelevant for me how much money Tesla makes, since I judge there only two possible outcomes for the company: bankruptcy or assimilation.
So would you consider putting money into the Tesla IPO a bad investment?
Would you consider putting money into Tulips in Amsterdam on Feb 1636 ?
No, because people who did so lost money. Now answer my question.
the peak of tulip mania was in 1637, people who invested in 1636 and got out in early 1637 would probably have made good money.
I believe the analogy here is that investing in the Tesla IPO would have made a lot of money, yes, but at some point in a future implied to be not so far off, staying in Tesla should lead to losing all that money.
I sort of feel like that will probably prove to be true. Was it a bad idea to invest in the IPO, no, but it wasn't a bad idea to invest in tulips either, until it became a very bad idea.
Every company in existence is likely going to 0 at some point in its life. So then what is a good investment?
you don't have a time machine, trust me on this. Therefore you will not be going back to invest in Tesla in the past, you will only be investing in Tesla from now onward. You may have already invested in Tesla in the past, and if you keep your money in Tesla that you invested in the past that is like deciding to invest in them today.
Every company in existence is likely going to 0 at some point in the future, but some companies seem like to go to 0 in a few years and some companies we can not as yet conceive of what might possibly cause them to go to O.
So the question when you invest is, am I investing in something I expect to crash and burn in a year, or I have no idea even what could cause them to crash and burn because they look so strong.
There seems to be some people in this conversation that believe Tesla is a crash and burn in a year (or two) company. And whenever you get confronted with this belief you talk about how if you invested in them 16 years ago you'd feel pretty good about it now! Which is totally true, but also if you had invested in Tesla 16 years ago and you had cashed in last year you'd have felt better about them than you would now. Also you are only able to invest now, not 16 years ago, because, as noted above, you do not have a time machine.
Do I believe Tesla is going to crash and burn, uhm maybe, I don't care that much but I do think there are signs of it.
One which produces an income. Otherwise it's speculating, not investing.
Depends on what your time horizon is. As an investor, if it doesn't go to zero before I die, what do I care that it might later?
Tesla is up 29,644% since IPO 16 years ago. Where is the argument exactly?
You can't today invest in their IPO 16 years ago.
16 years is a long time to be wrong. That's a tremendous amount of money to have given up for fear of insolvency.
Survivorship bias: many IPOs since then have underperformed. If you cherry-pick all the ones that did, then IPOs look like an outrageously fantastic bet.
You have to bet on the IPO knowing only the information at the time, not knowing what the future growth of the stock was.
I just did
How can you eat any food to stay alive? Don't you know that in time it rots?
I feel like the market staying irrational/gullible longer than you can stay solvent argument doesn't really make sense when all you're doing is NOT investing in something. It seems an aphorism more suited to puts and calls, puts especially, than it is to deciding not to invest at all.
> the market can stay gullible, for longer than you stay solvent.
This is essentially just what people say when current reality is different from what they want it to be. Sort of an unfalsifiable escape hatch response to “well observable reality contradicts your claim”
It's usually wise advice when someone thinks they can make money by shorting an overvalued asset. Sure you might eventually be right, but in the meantime you'll go broke.
In the long term, in theory, prices should be tied to value, most most of the time the stock market plays more like a casino.
I agree it makes sense in the context of warning people not to short something. But what I am replying to is a person using it generally, not in the context of shorting, to just say “it only looks like I’m wrong because everyone else is crazy and irrational right now, but they’ll come around eventually”. Not exactly a rigorous argument.
Criticize the argument, not the speaker.
Track record is extremely relevant when the "argument" is mostly about judgement and subjective opinions.
In fact track record is perhaps one of the most important things of all when deciding wherever to even engage with the argument in the first.
> Track record is extremely relevant when the "argument" is mostly about judgement and subjective opinions.
Ironic given this article is from CNBC, employer of Cramer, host of "Mad Money", who has been so inconsistently wrong that his picks have literally sparked an ETF. Just search using your engine of choice "Inverse Cramer ETF".
I work in finance. Past performance is not a guarantee of future returns, but is a damn good indicator, which is why everyone always wants to see your past performance anyways.
SJIM lost 15% in a period when the S&P gained 25% (betting against Cramer). LJIM over its lifetime gained 3.7%.
Of course both had too short a lifetime to draw a conclusion due to lack of interest and this was pre-AI so maintaining the positions was difficult. But it’s important to remember that Jim Cramer fails to beat the market, not that he’s an inverse oracle.
> Past performance is not a guarantee of future returns, but is a damn good indicator,
Unless it's about stock picking, when the winners in one year of doing good stock picking are no better in the next than any other random stock picker.
Part of their argument is, "Look how reliable the speaker is."
TFA does not contain an argument beyond reporting on the statement
Their track record is directly relevant.
Right, if you are in the business of predicting the future your track record of past predictions is extremely relevant.
Wise to critique both holistically, which makes it funny when people want to ignore an individual's or group's track record (especially regarding specific mental models or types of analyses) when evaluating a specific argument
So is Anthropic's. You'd have to be ludicrously gullible to buy 1/4 of the shit Dario says as true
If a weather reporter on TV says it's raining every day, and it's not always raining, I can still criticize them on days when it rains without it meaning I don't think it's raining.
Sure, but is that a negative for the stock price?
>Sure, but is that a negative for the stock price?
I feel like that statement is one of mans' biggest foot-guns in the modern world.
that single sentence has driven the biggest hucksters the world has known to commit the biggest frauds ever perpetrated against man for decades.
I think it's probably a negative for the stock price when the CEO thinks his company shouldn't be developing its main product and believes wiggy and false things about what continuing development means. Investors can put up with a lot of things, but an erratic willingness to undermine core business activities is usually not one of them.
Exactly. If everyone else is gullible, it’s a good buy!
just because you can see the mark in your poker game doesn't mean you're not also a mark :-)
No, but is it much of a stretch to say that the valuation and profit/loss are out of proportion?
…which, in a normal sane world, would affect the stock price?
2 trillion is a lot. I’m skeptical, for the same reasons listed in the report.
Its has nothing to do with Dario, and mostly to do with Chinese open weight models.
I don't see how Anthropic can become profitable enough to justify its investments unless they can either stop training models ("Pace the Frontier!!1"), or magically eliminate open source competition so that their volume x margin on inference is high enough to dwarf the training costs.
For the IPO, I assume they're going to try to get everyone to focus on inference - which is profitable in isolation. But I don't know how they'll distract the market from the other half of the equation.
Their inference margins are already high, the thing bringing their net down isn't training per se, it's the fact that they have to train the next iteration right away due to competition, otherwise an extended inference cycle would've eventually recouped training costs.
The bet is that cost per intelligence will keep going down and demand for intelligence will grow at the same time, if this bet holds, a user could get the same or more done with a cheaper model (running-cost wise) while paying the same subscription and the lab gets improved margins.
Open source is a challenge but their current moat is the fact that they're ahead, and as long as they stay ahead they'll be able to charge a premium.
The rush towards open weight models defeats this thesis. There’s no prize for being “ahead.” That’s academically interesting but a terrible business plan. 99% of AI use cases don’t need the latest and greatest model, and businesses increasingly understand this.
That's like saying "forklifts are a terrible idea, because a forklift is excessive for lifting 99% of the items that I can lift". See the problem?
"AI use cases" is a moving target! If you try to define "use cases" by "what AIs today can be used to do", you miss things AIs would do in the future. The more capable and price-performant AIs get, the more there are places where AI has a role.
This is a big part of what the frontier buys you.
The other big part is that going from a local AI to a frontier model often makes the difference between "this use case works 60% of the time, good tech demo" and "this use case works 99% of the time, good business decision". The difference between "clunky and needs human in the loop" and "just works" is worth paying the API price.
The forklift market seems to be in the $90-$95 billion / year while the global passenger car market is $2.9 trillion.
This is the problem.
While the frontier labs will always have a market for AI that can do things the other models can't, if the sliver of work that can be done only by the frontier models is narrow enough, then what they spend to train those frontier models may not let them capture all that much extra revenue.
I absolutely think there will be a market for frontier models pushing further and further.
But it's not yet a given whether or not being ahead on capabilities is going to buy them all that much more higher earnings relative to lower tier providers.
If it stays the case that going from local AI to a frontier model makes the difference between 60% and 99%, then they probably will, but there's nothing to suggest local or open model, or second-tier closed models won't keep moving ahead as well, and eat away at the use cases where only a frontier model will do.
Do you think that human civilization has a finite demand for intelligence? That there is a point that we can hit, and stop there, and say "we've thought of all there is to think about, no more thinking is required?"
Do you think that we are anywhere near that point?
We've already seeing things - like what's happening with AI reverse engineering now. I'm a reverse engineer - and I know that the reason why RE was used as "last resort option" was that expert reverse engineers are rare, expensive, and work slow.
But now that a lot of RE workloads can be tackled by AI instead of a human? The demand for reverse engineering is at a never before seen high. AI made reverse engineering much more viable - and thus, a lot more reverse engineering is happening now.
There are myriads of fields like this - things that go overlooked not because no one wants them, but because the economics of human expertise make them nonviable in most cases. As AI gets better, it can begin to enter those fields.
Except you, of course, need to push the frontier to do it.
> Do you think that human civilization has a finite demand for intelligence?
No, I don't. But for any given task there is a ceiling above which for that task there is no value in additional intelligence. E.g. it takes very little intelligence (none, in fact) to sort a list. More intelligence does not result in a more sorted list.
And so for a huge proportion of what we do there is a ceiling of value that can be extracted by selling AI tools to do any given task.
Combine that with there being at any given time a ceiling of available capital to be apportioned to buy intelligence to carry out the remaining tasks, and the floor of tasks that non-frontier models can do well enough rising, and there will at any given time be a finite amount of capital that will be accessible to frontier models.
It is by no means given that that slice of capital will grow rapidly enough for frontier providers to be able to create an attractive financial return. That depends on frontier labs being able to continue to deliver sufficiently more value than cheaper models at any given time that enough people won't simply wait.
I'm extremely bullish on AI in terms of its ability to transform society over time, but that does not automatically translate into assuming that the current frontier labs are a safe investment bet.
"Sort a list" doesn't exist by itself. It isn't a terminal goal - it's a step towards something else.
If "sort a list" becomes a trivial task, everything that was bottlenecked on "sort a list" is unbottlenecked, and other parts of the process become bottlenecks instead. Thus, the demand for non-sorting tasks grows. The saturation of low end feeds the value into the high end.
> "Sort a list" doesn't exist by itself. It isn't a terminal goal - it's a step towards something else.
Sometimes it is. But that is also irrelevant. Replace "sort a list" with any given goal and the argument remains the same.
> The saturation of low end feeds the value into the high end.
But that process is not immediate. There's a reason I was careful to include "at any given time" in my comment.
For the purpose of whether or not a frontier lab is a good investment, it doesn't necessarily help them if there is an ever rising demand for intelligence if their market is eaten from below just as fast by cheaper models from competitors catching up.
It could be they manage to out-pace their competitors sufficiently that they will produce returns high enough to justify their valuations.
But irrespective of whether the demand for more and more intelligence continues to rise perpetually if 2nd tier labs hollows out the bottom of their market fast enough, it could equally be that most of the market ends up being low-margin, highly-competitive inference that won't justify their valuations.
Given the size of their valuations, even if they turn out to be tremendously profitable businesses, it's still not a given they'll give a good return on investment for investors getting in now.
I'm not saying they won't. I'm saying we can't easily judge that based on just assuming growth at the high end will continue without understanding what their moat is likely to look like.
> everything that was bottlenecked on "sort a list" is unbottlenecked, and other parts of the process become bottlenecks instead. Thus, the demand for non-sorting tasks grows.
Your assumption here is that the other parts of the process are intelligence. In the real world they usually are not e.g. raw materials, politics, zoning, manual labor, clinical trials, traffic, energy ... And usually those things are such huge bottlenecks that Amdahl's Law renders the speed of delivery of the intelligence part irrelavant.
This kind of all depends on being able to continuously make better models indefinitely. I'm not convinced that's possible. If there is a limit, then everybody will get there, and anthropic has no moat at all.
I could be wrong, of course.
This is insanely delusional.
Much of humanity doesn’t think at all btw - that’s why they’ll never pay for these products and Google search had to be free.
Furthermore two things could be true a) market for frontier is large b) Anthropic still continues to generate net loss’s
It's always disappointing to see comments by arrogant elitists claiming that most people are essentially NPCs. But even if your claim was correct, the demand for inference compute capacity by businesses, governments, and universities is effectively infinite. If there is a limit then there are no signs that we're getting anywhere close to it.
If his claim is correct, and 99% of people are NPCs incapable of any meaningful thinking, that makes the 1% that actually does all the thinking of human civilization very valuable.
And that, in turn, makes AI even more valuable if it can produce thinking on demand.
> If his claim is correct, and 99% of people are NPCs incapable of any meaningful thinking, that makes the 1% that actually does all the thinking of human civilization very valuable.
That's like saying if 99% of birds don't have huge colorful tails that makes peacocks very valuable. In each case it may or may not be true but you are just correlating. (i.e. It's possible that intelligence just isn't as valuable as 'intelligent' people think it is)
So delusional you had to hide behind a throwaway
What’s your goal here
Oh so people who recently sign up = throwaway
Interesting. Are you an Anthropic investor?
The forklift analogy proves the opposite point.
There is no business model for competing companies to build forklifts that can lift an infinite amount.
That is not to say attempting to do so would not find new use cases for such powerful forklifts. The problem is the cost of building ever increasingly powerful forklifts while the TAM for that power shrinks.
You don't even have to bring in the enormous difference between forklift rusting theta vs gpu theta.
Except that’s simply not how it works. Companies just have one forklift. Yes it’s too much for most use cases but you don’t have a garage full of different sized forklifts. There’s a big cost to keeping all these extra forklifts on standby.
Models, however, are completely interchangeable on demand. That’s why companies are building these realtime internal marketplaces to route tokens to different models. Anthropic may win the occasional “bleeding edge” use case but the money is in the day to day use cases that get routed to the cheap-but-works options. There’s zero cost to having all the forklift sizes at your disposal and only using the size needed when it’s truly needed.
Anthropic is trying to sell the biggest baddest forklift in a world where companies can swap out cheaper ones easily and on demand. Hence why Anthropic doesn’t appear to have a viable business model in its current form.
The biggest, baddest forklift in the world is a crane.
And crane, despite being bigger, more powerful and more awesome (they lift skyscrapers and do things nothing else can do), the Forklift is actually more useful to more people.
I think the argument carries solid weight. Making bigger and better things doesn't necessarily lead to bigger and better businesses.
If you can have something that is the best in the world for a cheap price, that's a deal many people would take, even if they don't need it.
> it's the fact that they have to train the next iteration right away due to competition
That it would be profitable if only there were no competition is not a really strong starting point for an IPO, though, is it?
(It is, however, the winner-takes-all world view Anthropic still seems to operate with)
Their competition has the same problem. They're engaged in a giant game of chicken (or giant game of "who runs out of ability to raise more cheap capital first") with respect to overspending on training relative to inference revenue.
So, yes, it's high risk - you're basically betting on who will be in the strongest position when one or more of the competitors are forced to slow spending and the rest are able to ease off on theirs as well as a consequence.
If you think either that Anthropic is in a strong enough position to come out on top or that we'll end up with a detente like with the big cloud providers where they big providers feel they have a strong enough position to beat off upstarts and collectively basically stop competing other than on the margins because they all know they'll earn more by protecting their margins than by internal competition, then the IPO might be worth putting money on.
I think the latter scenario is slightly lower risk, but still risky given how small the moat appears to be vs. the Chinese labs (I say this as I just had Kimi re-design a website in 10 minutes by just giving it the URL to the current one and tell it to replicate everything; they might not be as smart as the frontier models yet, but they're capable enough that they're taking over an increasing proportion of my token budget)
> Their competition has the same problem. They're engaged in a giant game of chicken (or giant game of "who runs out of ability to raise more cheap capital first") with respect to overspending on training relative to inference revenue.
It's a sort of weird chicken game in that there's a meta-chicken game going on too — they are both, sort of separately, betting that the outcome of their chicken game will be too devastating for the US economy for it to be allowed to happen.
(I say "sort of separately". But the one guy used to work for the other guy. You know how people who split up from partners spend the next few years trying to shake their ex-partner's framing of the world? They know each other's thinking; they are aligned where this meta-chicken game is concerned)
They don't need it to actually be devastating. They just need sufficient fear of it.
Especially if it is finely calibrated enough that they get to continue at a slower pace, but end up with enough expensive red tape to slow down upstart competition more because of high compliance costs.
If they can't beat OpenAI etc., the second best is to near-freeze market shares in place at a lower rate of investment - hence my comparison to cloud providers where none of the big providers makes too large reductions in prices etc. because they all know they'll all lose on a price war.
> if this bet holds, a user could get the same or more done with a cheaper model (running-cost wise) while paying the same subscription
I think there will be a few forces driving prices lower if anything.
Everyone is currently looking at their spend on AI and the revenue growth for their own companies that this spend is not yielding.
I also think that if there is any competition, they won’t be able to lock in prices where they stand. Especially with open source models.
No doubt that if they wanted to they could be profitable.
But profitable enough to justify the ludicrous valuation?
> their current moat is the fact that they're ahead
the problem is that they are not ahead. they are ahead on producing one-shot demos, which are useless party tricks, but when it comes to shipping real products these large models are just a big expensive waste of time and what you need is deterministic systems that integrate small efficient purpose built models in the places where they are actually the best solution for the problem.
the anthropic game plan was to wrap the entire software industry up in a magic box called "AI" and then rule the world but these people are delusional and their house of cards is rapidly collapsing. the technology is real, but they didn't invent it and they don't own it. it is kind of amazing to think of a $2T company with zero IP ... they didn't invent a single thing that they are selling, and for the most part they are implementing it worse, and serving it less efficiently than at least a half-dozen other competitors.
>> Their inference margins are already high
So they make a profit on each burger they sell you, but however they keep limiting how many they are willing to sell you?
Only in this analogy it also takes years and lots of money to train the people flipping them, and they would like their investors not to notice that.
How are they limiting it?
https://www.bleepingcomputer.com/news/artificial-intelligenc...
https://explainx.ai/blog/anthropic-claude-code-limits-17-per...
Limiting usage on heavily subsidized subscription plans is not the same as cutting access to their models. Switch to API billing and you can have as many tokens as you want. In fact their salespeople will aggressively try to sell you more.
Sounds like the trick of restaurants with cheap food, and expensive wine ;-) I dont drink alcohol and dont date anymore...
> Open source is a challenge but their current moat is the fact that they're ahead, and as long as they stay ahead they'll be able to charge a premium.
Being ahead isn't much of a moat in a game where playing catch-up is significantly easier than being ahead. Also, how much ahead of Chinese labs are they at best? A year? Two? That's a moat for ants!
Unlike the dot-com era, this is a bubble that everyone saw coming.
Like dot-com, there are many long-term winners, but cash hungry frontier labs are not among them.
Prediction:
OpenAI, Anthropic, Oracle, and SpaceX[1] go down and assets be sold or companies acquired for a fraction of their valuation. The same goes for most neoclouds. Profitable "old" tech companies like MS, Google, Meta, and Amazon are fine and scoop up the valuable parts for pennies.
Nvidia will be in Cisco's position (Cisco was the world's most valuable company in the dot-com era). Both are good companies that are not going anywhere, but stock prices get decimated when markets collapse (Nvidia liabilities are not high enough to take company down, they are mostly tied to there not being a bubble and data centers are getting built)
[1] Everyone already knows that, according to SpaceX, > 80% of SpaceX's valuation is in AI, not in space stuff, right?
Agree with you overall, but:
> Unlike the dot-com era, this is a bubble that everyone saw coming.
As far as I recall, the dot-com bubble was widely seen as such prior to it bursting. E.g. Greenspan and Buffet were both quite vocal about the irrationality of the values being assigned to companies.
Interesting take. How high is that probability within the next five years, do you think?
Given https://www.abc.net.au/news/2026-10-10/how-firmus-the-bigges... and the above, I'd say we're already primed for a fall. Given 5 years is a pretty long time (that's 3 US elections cycles where politics can increase uncertainty about AI), and the length it took for the subprime market to create the GFC (see e.g. https://en.wikipedia.org/wiki/File:Subprime_mortgage_origina...) looks to be about 3-5 years, I'd be 99% sure the crash would happen by then (with the 1% covering both the uncertainty in the cycle and something odd happening).
Nvidia probably doesn't really have really serious liabilities as long as it has actually produced all the GPUs it has sold on a buy-and-hold basis.
It's fabless, right? So they haven't even built out wasted manufacturing capacity.
As long as the GPUs they have sold are really sitting in a warehouse in Taiwan or somewhere in the USA, they are making properly concrete money.
The fact that nobody else is making real money, that will eventually come back to bite them, but Nvidia will just see its business shrink; it will have to scale back if the bubble bursts, but it will get out with much of that money intact.
The other parties swimming in money are memory chip makers. And I think list pretty much ends there. They might or might not over commit for future and eat the cost. But they too might be good with these profits even if future fabs lose some money.
Memory demand over time naturally goes up, so even an overcommitment wouldn't last longer than a few years until demand catches up again. SK and Samsung memory margins are utterly ridiculous currently (> 80%).
For September:
> In IT, semiconductor exports rose 262.8 percent to $60.30 billion, exceeding $60.0 billion for the first time as memory demand continued to grow, with export volumes continuing to expand and contract prices maintaining their upward trend.
https://english.motir.go.kr/eng/article/EATCLdfa319ada/2743/...
Not too shabby for a rainy day fund.
> So they haven't even built out wasted manufacturing capacity.
According to SEC filings Nvidia has $100 Billion in total commitments. They are mostly purchase obligations, advance supply agreements, and multi-billion-dollar prepayments for fab capacity (wafers, HBM, packaging, substrates and interconnects).
But aren't these for manufacturing things that they have actually sold?
A general rule in the AI bubble appears to be this: Nvidia aren't waiting to get paid for the things they make. Rather, they are being paid very up front for things that cannot be installed.
My prediction is the same. I think MS, Google, and Amazon will be the winners here. They might take a hit when OpenAI and Anthropic blow up, bu they can absorb it, and are well positioned to provide those services in a reasonably sustainable fashion. I suspect the costs of using AI will be considerably higher at that point (subscriptions will be extremely limited or just non-existent). Meta does not benefit in this case since it doesn't provide compute, but they have money to waste (as they did with Metaverse, VR, etc).
They don’t care if they get to sell more equity.
This. The product is the stock, the tech is the fomo theater to sell the product.
It’s even more sinister.
The vc’s have to be allowed to cash out - so that money remains a strategic weapon for US venture funds over any other nation re. Funding startups in future - esp capital intensive.
The valuation is a joke but they will be allowed to go on and cash out - just like the investors of spacex.
If the models get good enough, the demand for them will soar.
These companies believe they're a year from AGI, and that's how they'll be profitable.
If they are a year from AGI, then the private investors can hang on and use their new super intelligence on their own tasks to make themselves considerably more wealthy now and into the future, so why would they want to sell that power to anyone else?
> These companies believe they're a year from AGI, and that's how they'll be profitable.
What I don't get is that if Company A is a year from AGI (I don't think that's true, but then again, I don't think anyone even has a good definition of AGI), then surely Companies B–ZZ are only a few years (at most!) from AGI as well. There is no moat. Or if there is a moat, the moat is hardware scarcity – but that's systemically outside of the control of these companies.
It's also weird that most seems to think that if inference is good, it's all good. You still have massive costs in data centers, replacing hardware, upgrading hardware, paying salaries, etc. You can have 99% margins on what you sell and still go bankrupt.
Most here need a finance lesson.
In intrinsic valuation, the value of the operating assets is determined by ebit(1-t) - reinvestment.
Gross profit doesn’t mean a whole lot if a) your operating income is negative b) your reinvestment needs are mega. You have to make some interesting assumptions Re. Anthropic to get a 2T valuation.
I almost have to hold my nose reading finance posts on here.
> inference - which is profitable in isolation
They have not actually demonstrated this, really.
Open source is what has given them all their coding ability.
Open source doesn't have the compute to meaningfully hurt them.
BullSHIT.
Question is really how many companies will stay due to inertia while competition catches up
You're of course speaking of a world that doesn't manipulate the cost of memory.
Hard to run local modals when sam altman continues to drive up the cost of compute.
People keep talking about the risk of open source models, but if you're outside the HN/SV bubble, no one is using them. Anthropic's revenue is ~$60B supposedly, OpenRouter's revenue is $140M. I know they're not the only place to get open source models from, but they're the most popular and Anthropic is bringing in 400x more revenue than them.
"The company’s growing operating losses" - yeah, if you are a "research firm" basing your research on the leaked 2025 Anthropic financials and not what happened in 2026 you are on the verge of malpractice.
(I think 2 trillion dollars is an absurd valuation for a product with such hot competition and low switching cost, but if you make the case that Anthropic is losing money based on the 2025 numbers from that Reuters report you're being farcical.)
UPDATE: I found the actual New Horizons report here - it does acknowledge the 2026 numbers, unlike the linked CNBC story about that report: https://www.newconstructs.com/anthropic-is-the-most-ridiculo...
"The company grew revenue twelvefold in 2025 to ~$4.6 billion. According to the New York Times, Anthropic is on pace to generate $100 billion in annualized revenue by the end of 2026."
It does lean into those 2025 figures when talking about Anthropic's losses though, which is weird when Anthropic have supposedly claimed two profitable quarters in 2026.
UPDATE 2: The CNBC article actually does cover this:
"Anthropic claimed at the end of July that its annualized revenue run rate was up sevenfold year-over-year to $65 billion."
I withdraw my comment. I shouldn't have let my pet peeve (that Reuters article being misreported all over the place) get ahead of me here.
> which is weird when Anthropic have supposedly claimed two profitable quarters in 2026
Anthropic claimed to be profitable if you dont count some of their largest expenses (like model training). Not the sort of profitable where revenue actually exceeds total expenses
You sure they're not including training costs in those probability claims? I've not seen confirmation one way or the other on that.
Remember, when you see “EBITA”’think “bullshit earnings”
This is acknowledged in the CNBC article:
"Anthropic still hasn’t made its prospectus public, so New Constructs hasn’t seen the actual filing. However, the firm cited figures that have been reported, including from the New York Times, which reported in September that the company was on pace to generate $100 billion in annualized revenue by the end of 2026."
Careful, there are word plays used here:
Anthropic's annualized revenue run rate reached $65 billion at the end of July 2026, up from just over $5 billion in August 2025 (Anthropic, CNBC) Anthropic made nearly $4.6 billion in revenue in 2025, 12x more than in 2024 (IPO prospectus, via Reuters, September 2026) Anthropic's preliminary Q2 2026 revenue was more than $11.5 billion, ahead of OpenAI's $6.7 billion (Bloomberg and The Wall Street Journal, August 2026)
https://explodingtopics.com/blog/anthropic-revenue
So, the Q2 revenue was $11.5 billion. The claimed $65 billions are "annualized revenue run rate". Please show me where that term is defined reliably. It's a BS marketing term to obfuscate real revenue after the tokenmaxxing hype has ended.
"Anthropic defines “run-rate revenue” in two parts. Use the last 28 days of sales from customers charged on a consumption basis and multiply it by 13. Then, multiply the monthly subscription take by 12, and add the two together."
That according to "a person familiar with the matter" aka an anonymous source. From https://www.reuters.com/commentary/breakingviews/anthropic-g...
Thanks, good catch. Updated my comment.
From the article: Anthropic didn’t respond to a request for comment.
They could have cleared it up, could they not? But silence is more expedient when attempting the most fraudulent IPO of all times.
$2 trillion is a lot of money and certainly doesn’t seem a safe bet at that price. But also, their revenue went from <$0 in 2024 to $4b in 2025 to what will likely be >15x that in 2026. Has anything ever grown that fast before?
If you carry that forward even one year, and I’m not saying you certainly can, they’re outselling NVIDIA.
I get it, there are risks, scalability issues, low cost competitors, etc. $2 trillion is a big number, but it’s tiny compared to all human payroll.
I’m not buying it either but I dont think anyone who does failed an IQ test.
> Has anything ever grown that fast before?
Is it true growth, or circular dealing plus hype? I have little doubt the IPO is nothing but a wealth transfer from retail investors who'll be left holding an empty bag.
I take no position on the correct valuation of Anthropic, but I think if you've used coding agents, it's pretty clear that it's not just hype; they really are a useful technology that can massively increase software engineering productivity.
As far as I know the circular deal fears are more around the chip purchasing agreements, because there is a speculative component to building out datacenters for training which may not produce models that are worth the training cost, but the revenue from inference is real and it has truly grown a lot over the past two years.
Yea I am certainly not saying that Anthropic in particular is worth the valuation they are seeking or that they will end up a winner in the AI race; only that AI is not just hype, and that their inference revenue growth is real.
That's a beefy MBP! I imagine it was quite hot by the end of that flight if you were running Qwen the whole time
It was a hot-plate; could probably make some flapjacks on it...
Problem: Anthropic is the only provider.
Is a hypothetical, but is one that's an even higher risk factor for investors.
That’s a good question that I assume will be cleared up in the prospectus, but I have to assume that enough of it is just cash coming in that they and OpenAI are likely the fastest growing companies of all time, or at least very high up the list.
With the NASDAQ rule change, even more so.
https://ir.nasdaq.com/news-releases/news-release-details/nas...
> it’s tiny compared to all human payroll
The benefits of replacing all human payroll will go to AI companies as a whole. AI companies as a whole != Anthropic.
As the article points out, the greatest threat to closed models like Anthropic's comes from cheap open source models. Not from the possibility that AI won't be successful at replacing payroll.
That’s a risk for sure.
If you don't need ROI then with this kind of money I can make revenue grow even faster.
I’m buying, this is the greatest invention of all time and Anthropic has garnered a pretty solid lead right now.
> this is the greatest invention of all time
I think it's a little early to make that statement. Could be. But at this point I think things like printing press, agriculture, writing ... they're all many times more significant.
I know it’s a hot take, but I disagree. I think the invention of AI (or more specifically, ASI with RSI) will dwarf the printing press, agriculture, writing, etc. in terms of significance.
Now, obviously all these things built on each other, so comparing them like this is a little silly, but in my view, inventing AI is essentially inventing an inventor of fantastical things on par (and beyond) the greatest inventions of humanity, including the ability to self-improve.
To be clear, I don’t think today’s LLMs are there yet, and I take no position on whether they’re a dead end, but in my view ASI has no fundamental barriers that cannot be overcome in time.
"The invention of a magical wish-granting technogenie that has not yet been invented, and may never be invented, and we have no idea how we could get from what we have to inventing it, would be the best thing of all time!"
I agree with you about the greatest invention of all time part, the rest is where my crystal ball gets hazy.
> I’m buying, this is the greatest invention of all time and Anthropic has garnered a pretty solid lead right now.
Depends on your perspective, but that's definitely true if you're selfish and have been paying people for intellectual labor. Lots of layoffs to fantasize about (even though that represents vast amounts of pain and destruction for many people).
> Has anything ever grown that fast before?
Cancer. Burkitt Lymphoma takes a couple of days to double in size.
It’s important to understand that infinite growth inside a finite system is impossible. At some point growth has to stop, either by eliminating the growing organism or it killing the host.
Well, unlike the economy I can’t grow in size rapidly. (And if I did I’d just have another major problem.)
Induced demand and limitless cheap human-quality labor can possibly grow the pie very fast, though even then, you start running into the earth’s finite resources eventually. But it is possible that they are worth much more than $2 trillion long before that.
But that is why I said you can’t just safely assume 15x multiples to continue.
I thought this was the reason to force an investor account on every american child, so that they can be "forced" to buy into these IPOs, and left holding the worthless stock while a massive amount of wealth is transferred from the system to a select few investors.
Yep, system working as intended.
> In an interview with CNBC in 2021, Trainer acknowledged that “crazy stuff happens” and New Constructs doesn’t always get it right.
> “I can’t let that bother me,” he said at the time. “I have to stay true to what I think is right.”
Monkey remains true to darts, dartboard.
Imagine Quoting anything from 2021 in a Thread about AI in 2026
> The New Constructs report also notes that Anthropic’s assertion that AI could pose “a catastrophic or existential risk to humanity” is another reason why investors should avoid the IPO.
So, we go from an existential threat to basically unprofitable business. I can only see Amodei and Altman just as the next Holmes.
Why not both?
I don't understand how people are so certain on how this will play out. We have people basically saying companies like Anthropic offer no value because open source models are free. Then we have others saying once frontier AI labs go RSI FOOM takeoff they'll essentially _become_ the tech industry.
None of this sounds credible.
Because it's all manufactured.
Most "news" is just a dramatized press release these days. The conditioning of the public to viewing media as authority creates a mental trap where you're told something is important/credible, despite having zero hallmarks of credibility. And we perpetuate this because it's familiar, not correct or accurate.
This is exactly why humanity continues to stumble, despite centuries of evidence as to what doesn't work. We just can't accept that most of what we tell ourselves is reality is just a for-profit (or for-influence) product that masquerades as knowledge or important information.
It's pretty clear actually.
Anthropic raises money from IPO -> How long will that sustain them given the immense cash burn? Forget about gross profit - that's the number they want you to focus on and can be played with. Keep the focus on the cashflows -> if a firm runs out of money its over, who cares what your revenues and gross margins are. We are not talking Amazon level loss's which were paltry AND they were able to raise more than enough to keep going for awhile.
Management of firms who pay rent to LLM models need to reign in costs -> they will use a bundle of chinese +american models (this is already happening look at the data) -> affecting revenues, earnings and cash flows of frontier labs. Given the losses in absolute terms, any stunting of the growth rate would be catastrophic for the story re. valuation.
The frontier model story rests on one giant assumption: lay-offs must happen en masse at some point. It's not happening and in my view won't happen - there simply isn't enough trust. Moreover, do you think firms are going to trust these model providers, given its in their interest to steal IP? lol
Not rocket science mate.
I agree it’s not rocket science, but I think there’s more to consider here.
First, a lot of usage can switch to open models (like is happening, I agree), and yet frontier model usage can still grow (like is happening). As long as the market for frontier level intelligence keeps growing, the cost of frontier intelligence is marginally profitable to the user, and the open weight models don’t catch up, I don’t see any reason for frontier level usage to fall. Indeed, we haven’t seen any of that so far, despite the rise in open weight usage. My own product has started using open weight models, but my usage of frontier models also continues to grow, because they keep unlocking new capabilities. Maybe that’ll end, but I’m skeptical. I think the problem space that can benefit from the best intelligence money can buy is unbounded.
Plus the labs can still offer cheap non-frontier models to compete with the open weight models (like Luna and Haiku), and they have a massive advantage in terms of available compute.
Secondly, I don’t think that the big labs need mass layoffs to justify their valuation. That’s perhaps one path, but in my view a more likely one is that we get greater increases in productivity and economic growth, and they capture a large share of that. If global GDP grows 2% faster than it otherwise would over the next decade, that’s an extra $175 trillion in economic value created over the next decade. If it grows 5% above baseline growth, it’s half a quadrillion. GDP in 2036 would be more than $100T higher per year than if GDP grows at historical rates. AI companies don’t have to capture very much of that to justify a $2T valuation.
Now, will any of that happen? Who knows, it’s definitely unrealistic and unprecedented, but then again, so is much of what I see happening in the world today. Time will tell.
I posted other (different) research into the IPO yesterday: https://news.ycombinator.com/item?id=50033644
I was hoping you were able to make the numbers work.
I have just not read or listened to much of anything that the numbers work besides some science fiction fantasy on Dwarkesh podcast.
The gpu theta + the frontier model theta + token deflation creates this rolling window that I just don't see how it works given even the most bullish assumptions.
Maybe if the rolling window was expanding a rational argument could be made for the valuation. No one can say with a straight face the rolling window is expanding.
It is like competing biotech firms without patents working on the same drug but with these time decay parameters too.
10 months back 1T made sense, today even that looks expensive and they are eyeing 2T. How much do they expect to grow from here as a 10x growth from 2T is 20T and even a few years later 20T for a company is a lot. Amazon and Google ipoed with lots of room to grow.
I will be waiting 1-2 weeks prior to opening a short position.
At least one person in this thread is putting their money where their mouth is
A short on what? The entire market? The companies we are saying would sink in value (well other than Oracle I guess) aren't public yet.
Anthropic, once it goes public.
Shouldn’t we wait until the S-1 is officially released before jumping to conclusions? Currently the financial data we have is based on leaks.
New Constructs takes a similar position on all mega IPOs. Sometimes they're right, but sometimes they're wrong. For example, they insisted Uber's IPO valuation was too high due to unsustainable losses, hidden liabilities, etc. Initially they were proved right when the post-IPO stock price plummeted, but in the long term Uber has performed well, become very profitable, and now trades well above its IPO valuation.
I'm expecting a similar story to play out with Anthropic: The stock price will come down significantly after the IPO, resulting in lots of headlines about the AI bubble bursting. But in the long term it'll climb up again and investors who stick around will do very well.
“Now trades well above the IPO valuation” does not mean something would have been a good investment at the IPO price given opportunity cost and the time value of money. Additionally, the current price could equally not represent good value.
Yeah. Look at SpaceX. Dropped to $108 from an Ipo price of $135, but it's currently at $162 which is... fine?
While I think SpaceX is still horribly over-valued they at least have a diverse line of businesses that are very hard to copy.
Anthropic is a one trick pony and the world is discovering lots of other cheap ponies that do the same trick.
I suspect SpaceX is going to be the opposite of what will happen with Anthropic. With SpaceX I think the overwhelming majority of people didn't initially understand what Starship is, how far along it is, or what it even means in terms of its impact on the pathway of getting humans to be a multiplanetary species. So it was greatly undervalued and zoomed upward.
With Anthropic I think a lot of people haven't really realized the trend line of cost of "AI" (both in literal $ terms, and compute costs for local operation) or what open weight systems will do to the market in the "long run", where long run in this case means the next year or two. I don't think any LLM company is going to come out a winner in the longrun, because the price for LLM output is going to approach $0 with no chance for a moat whatsoever.
> the overwhelming majority of people didn't initially understand what Starship is, how far along it is, or what it even means ... So it was greatly undervalued
I don't think anyone was undervaluing the "space" segment of SpaceX. It's the clear leader in launch frequency and cost-to-orbit among the new wave of space firms, and shows no sign of losing that position.
Where the IPO raised a bunch of red flags was SpaceX suddenly acquiring Elon's AI firm, which had a significantly more nebulous basis for its valuation...
Where is the profit in becoming a "multiplanetary species"? How does it make anybody money, besides the rocket man's company?
Think about what you're speaking of at the most fundamental level. Humanity starting to set foot permanently into the cosmos means you're opening the door practically infinite resources, land, and potential for expansion. And the first nation to start claiming territory and expanding outside of Earth will see its overall influence on the future of this species begin to grow exponentially, which will likely turn such into a race. You can already see the outlines of this forming today, but of course we're all still just lining up at the starting line. And this time the finish line will almost certainly be rather more remarkable than flags and footprints.
There are plenty of resources, land, and potential for expansion right here in earth. The reason it's not done is because it isn't economically viable. If it's not economically viable here, how could it possibly be so on another planet?
On a board where many people still think AI is a gimmick and a bubble that will pop, explaining where the economic value of expanding humanity's reach beyond low Earth orbit is, is going to be impossible.
It's possible to believe that AI will revolutionize humanity and that AI is a bubble that will pop. I suspect that this is the more typical view than believing that AI is a gimmick.
Trillions of dollars are being dumped into companies when frontier level open weight alternatives that are able to be run on ever more reasonable hardware already exist. It feels reminiscent of how everybody certainly knew that tulips could just be planted, but people operate under their own assumptions about the world and its future, and sometimes it can lead to quite odd outcomes.
Right. But then frankly, who ever cares about those trillion dollar valuations? That's just rich people doing rich people's silly things with numbers. Meanwhile, the technology is there, useful on the ground, and will not disappear even if the bubble pops.
I tend to frame this as beneficiary vs. investor perspective. I'm a beneficiary of AI, not an investor. I couldn't care less about whose name is on the model, it doesn't affect the way the technology transforms my life, or the world around me.
> pathway of getting humans to be a multiplanetary species.
We must send our best people to represent Earth. Lets send a trillionaire and the next 300 richest billionaires.
I always wonder: How is it that wanting to deport billionaires to cleanse society of their power is “left”, wanting to deport jews to cleanse society of theirs is “right”, and that those are to be considered not the same (say, scapegoating), but opposites?
> the pathway of getting humans to be a multiplanetary species
I am afraid that you're suffering from Flavor-Aid poisoning here. We need a reality check about "multiplanetary colonization".
I've been following human spaceflight since I was born. I've actually participated in robotic spaceflight. And I'm here to say that it is robots who are destined to be a multiplanetary species. The robots have already successfully escaped our solar system and extensively explored the Moon, Mars, and elsewhere.
Many unscientific people believe that it's harder to colonize the Moon or Mars because they are farther than Africa or Rio de Janeiro is from Rome. But mere distance is not really your biggest obstacle.
I've also been following the ISS since its inception, and they have empirically disproven the feasibility of colonizing planets. If we succeed in establishing a crewed Moon base, it will be an ultra-Herculean effort, and it's on the edge of feasibility.
But Mars? Venus? Asteroids? Europa? You really think humans are going to live there?
The reasons that ISS has disproven this are manifold, but I'll point out two key points:
Their supply-chain is only about 8-48 hours, and they can stash large amounts of provisions up there. Their escape route is also only 8 hours and they're back on Earth in a jiffy. None of this is true for any body outside of Earth orbit. The Apollo missions arrived on the Moon and returned safely, by burning, jettisoning, consuming, and abandoning nearly everything they started with!!
A 15th-century expedition to Africa or Brazil means that you can fish in the ocean, breathe the air, drink rainwater along the way. An expedition to the Moon puts you in an airtight bubble with no stops, no rescue, no resupply, and most importantly, no breathing on the way, nor once you get there.
The ISS has also demonstrated the severe toll on the human physique in microgravity conditions. Watch astronauts who land or splash down. They are carted off in gurneys. They are literally unable to walk unassisted. NASA restricts returnees from driving or even jogging. The astronauts describe having to "relearn gravity" activities like brushing your teeth and showering. Any astronaut arriving on Mars would be as helpless as a toddler! Do you want to colonize Mars with toddlers? Because all the treadmills and workouts along the way won't make them fit for purpose on arrival.
So between here and Mars it's minimum six months, no escape, no rescues, no takey-backsies. We could send humans to Mars if we didn't want them to survive or return. I mean, no problem. There's no air to breathe on Mars; no water to drink; no fuel to burn; no fish to fish nor deer to hunt; no steel to build a shelter. You pack it all into the spacecraft, newbie?
But NASA and the rest of the world has amply demonstrated just how capable robots are where humans fail. Robots are going to inherit the solar system. Robots are in 2026, the de facto interplanetary species, sine qua non. My heart is warmed by these human achievements. I, for one, am happy to live and die on Earth. I think that every American should be grateful for Earth, and not permit our oligarchs to cheat and lie to us with fairytales of escaping our Earth.
>empirically disproven the feasibility of colonizing planets
I'm not convinced by your proof. Just send the robots ahead to build the base before humans come.
If you don't specify how long it takes I think the odds of having human basses on the Moon and Mars at some point in the next centuries are high.
See, there is that "simple solution" always proposed in HN comments that solves everything and sweeps away every possible objection. Just send robots.
Look, the GP went beyond "colonizing" into "a multiplanetary species". We have already landed and walked on the Moon, we've established an extremely safe and stable outpost in LEO, but we haven't even colonized Antarctica!
Think about that for a few. We can't colonize Antarctica. It is not far away; it has plenty of breathable air; it's... replete with water, if you will. But still, there are only a few scientific outposts that are unsustainable without constant resupply and staff changes. That's not a colony.
I don't believe we could colonize the Moon. I mean, the astronauts could walk around after landing, and the supply chain isn't absurdly long, but to sustain a Moon outpost you'd need a perpetual supply chain, sending up needed provisions.
I don't know about your definition of "colonize" but, generally on Earth, that means putting down roots and establishing a rather self-sufficient presence that happens to consist of foreigners. How does a colony of ants get established? They find food and resources nearby; they begin mating and reproducing; they build with what they find. The ants are not smuggling in breathable air, food and water over 10 miles away.
The supply-chain to Mars is ~6 months. I mean, you can fly humans there in about 6 months, every 26 months. Now imagine that you have a "colony" or "outpost" on Mars that needs perpetual resupply. Can you launch 26 months' worth of provisions in the short window every 26 months? Can you launch the provisions during the worst-case window, when it will take much longer to arrive? Are you going to send a bunch of provisions up with the robots in advance?
Those resupply logistics are just nightmarish, and they are daunting to envision, even if everything goes right with every single launch and voyage. The margin for error is nil. The opportunity for rescue or emergency escape, is nil. Again, send humans to Mars, but don't expect to get them back in one piece!
So, I contend that even with spinning capsules, and advance-team robots, and even with some magical method of extracting resources for fuel, a Mars colony or self-sufficient outpost is infeasible with current technology, as well as any foreseeable future technology. Sure, set up a "Moon base" but it will always be more difficult than Antarctica, and never self-sufficient. Rescue and escape from the Moon are likewise unlikely.
The thought leaders who are promising "multiplanetary species" are leading you down a primrose path. They're encouraging fantasy scenarios so that young kids will enter STEM programs and pursue science career paths. They solicit donations and support for tech programs that are, ultimately, just part of the military-industrial complex.
But it's all borne on the wings of sci-fi imaginations and not gritty reality. I was just chatting with my parents about how the ISS smells, and how chaotic it is. It's worse than a submarine. It's sending our best & brightest to camp in a hoarder house. They've got a chance of survival if things go wrong up there. On the Moon or Mars, they wouldn't. They won't be smiling, and they won't be growing potatoes.
The whole caring oh so much about humanity simply doesn't pass the smell test for me. I don't want to go into details and individuals, but I just don't buy it; what I do buy is wanting to get a foot into space to get even more leverage over the humans on Earth, and not for our benefit. That actually fits their actions and their aura, so to speak. But "preserving the light of human consciousness" and such? Now I know it's a scam and an agenda. And the more flowery the language, the more sinister I expect the actual designs to be.
Do look up CG Jung and the concept of the shadow and its projection.
There are many people who believe the opposite, btw. Earth has a disease. And the disease is called man. The world would be better off without humans, etc. Say that in a pub - you’ll get nods. But say you want humanity to populate the universe, and people will think there’s something wrong with you. Says less about the speaker and more about those who listens, if you ask me…
This has nothing to do with the idea of "going to other planets" and the motivations and issues of certain people pushing for it. The idea that we need to go to Mars or whatnot to "survive", considering the treatment of humans and resources on Earth by these people is just spam from Nigeria to me, at best.
I love going to the beach, but I wouldn't hop into a car with no wheels and blood trickling from the trunk, just because the guy wears a hat saying "I love the beach! That's where I'm driving! No detours, no tricks." and makes grunt noises at me because he never had the patience to even learn to properly mask and come up with a coherent ruse. To make that about "beach haters" is as expected as it is off the mark.
There is one core reason that Machiavellianism is naive. It's because the grand long-term ends people seek to create with all of their sinister deeds in the short-run rarely ever comes to pass. Yet all those sinister deeds absolutely do come to pass and are what we all get to live through.
So the most well intentioned person doing awful things? In my mind he's an awful person. But this also goes the other way as well. Imagine you're right, and the idea of getting humans into space is some elaborate scheme to somehow get more leverage over humanity. Awesome! Because it's highly unlikely such schemes will come to pass in any sort of remotely realistic way, but we'll be left with the means of humans actually meaningfully expanding into space.
I'd love to see as sharp increase in the number of evil people plotting to do good things to further their evil ends. All the 'good' people doing evil deeds in the name of some grand end that never happens is quite tiresome.
We're not escaping Earth nor seeking to replace it. The entire idea of becoming a multiplanetary species is exactly that. Ostensibly we all started in Africa, and plenty of us are still in Africa. The same will be true on a planetary level, and eventually on a star system level. You said a lot and I don't want this to turn into a wall of zig-zagging tit for tat nonsense, so I just want to speak briefly and holistically. The first missions to Mars will be fully dependent upon supplies we're bringing. The goal of self sustainability is aspirational and long-term. At best it will take decades. In reality, it may never happen much in the same way that no country in the world today is fully self sustainable in practice, even if many could be in theory.
The whole point of the extended stays in LEO are precisely to simulate worse case scenarios for travel to Mars. So for instance the record for the longest time in space is held by Valeri Polyakov. [1] He spent 437 days on Mir in LEO, and then opted to immediately walk upon landing back on Earth. It was all to prove that humans would be physically capable of working on Mars (which has 1/3rd the gravity of Earth) even after absurdly long periods of time in space. In fact his first words upon return from his first (240 day) stay in space were "We can fly to Mars."
Robotics don't really work well for space exploration, because moving parts break. For instance the Curiosity/Perseverance drills are cutting edge yet have a max depth of ~2.7 inches. And traveling is even harder. On average Curiosity ended up traveling about 1 mile per year. It's all because if anything breaks, that's game over. So everything has to be done with the utmost of caution, and even then stuff constantly breaks. Curiosity's drill broke after about a dozen activations and required a team of scientists and months of full-time work to create a passable work-around when it could have viably been fixed on the ground by a human in a few moments.
This is part of the reason that we only learned in 2013 that the soil/regolith on Mars is actually extremely moist, 2-5% water by volume. A cubic foot of soil heated up gets you about 2 pints, a liter, of water. The whole plot-line in "The Martian" about having to jump through hoops to get water was correct based on the latest knowledge when the book was written in 2011. We'll probably learn more in a couple of weeks with people on Mars than we have with 60 years of probes and rovers.
I'm certain every human of sound mind is grateful for Earth. That's not a reason to not seek to expand out as far and as wide as we can.
[1] - https://en.wikipedia.org/wiki/Valeri_Polyakov
I fully agree with your points: the hard, unyielding reality which most Trekkie fanatics refuse to acknowledge, except for one: "severe toll on the human physique in microgravity conditions."
That's easily fixed!
Spinning a space station for gravity is straightforward, it's just that the ISS wasn't designed for it, and NASA didn't have the budget to build a second, bigger space station with "extra engineering challenges" on top.
It's definitely practical though, it's just a matter of launching enough mass to orbit.
Like you said, Starship is going to change a lot of things, starting with space station design.
> spinning ... for gravity
Yeah, I mean, I get that the spinning has long been a viable proposition. Perhaps if we send a spinning expedition to Mars, the astronauts won't be toddlers when they arrive on a barren, hostile, resource-free world. Yet, that is a lot of extra mass; that is non-zero extra fuel; that is a lot of extra "stuff goes wrong" risk inherent in that design.
But it's unprecedented, untried, and not currently in any pipeline, AFAIK. I believe there were a few experimental spinning crewed flights, during the original Space Race. But does Starship spin and simulate gravity? Is there any crewed spinning spacecraft extant, in production, or even being designed?
They don't need to spin their way to the Moon, so it would be unlikely that any Artemis or future crewed Moon mission spins at all. But if spinning our way to Mars will solve an otherwise intractable set of problems, I suppose we'd better get started on proving it.
Everything you’re saying is true but it’s nevertheless going to happen anyway.
“So, what you're telling me is that the music is about to stop and we're going to be left holding the biggest bag of odorous excrement ever assembled in the history of capitalism.”
A brilliant line from the movie Margin Call (a fictional portrait of the actual events of the 2008 crisis) that appears likely to get reused in upcoming AI bubble burst movies.
"In the history of… <pregnant pause> capitalism"
That whole scene is absolutely full of perfect observations; I refer to it often in different contexts.
It's the first film JC Chandor ever directed, from what I understand to be his first feature-length film script.
Another great quote: "I run risk management... it just doesn't seem like a natural place to start cutting."
> that appears likely to get reused in upcoming AI bubble burst movies.
Yes, it's indeed likely those movies will be made entirely by AI.
The REAL reason Anthropic must IPO now: https://www.youtube.com/shorts/E80oYhrGa8c
New findings reveal AI bubble worries are justified: https://www.youtube.com/shorts/xCzCyPoI-eA
As open models get better I wonder what advantage Anthropic would retain to justify this market valuation?
This is a legitimate question. The Chinese companies are releasing their open weights models for free. Here in America, Meta is doing that as well.
I think people saying that open source is a threat underestimates how scared large corps are for lagging behind when it comes to AI. There are other risks that are bigger I think like the political risk.
Not easy for humans to understand the power of AI transformation
..."a mere $150 billion"
I mean, compared to the desired IPO valuation in the trillions, it certainly deserves the "mere" description, but still...
Related:
Anthropic IPO prospectus shows AI vision, surging costs
https://news.ycombinator.com/item?id=49886005
Did Trump pay him to diss Anthropic?
You don't buy their stock to obtain money, you do it to placate the future overlords.
Maybe the portion of Anthropic that produces Opus/Sonnet can be spun out for us devs at a reasonable valuation?
Keep all the Mythos/Projects/etc. hype/feature-creep crap in some other entity and value that at $5 tn or something if you wish.
Just spin the golden-egg production part out of the goose, then we can cook and eat the rest.
Anthropic's small models are almost certainly distilled from their larger ones. And their biggest training expense are going to be experimental models that aren't even intended for release, just to test out some idea.
This reminds me of all the people asking for AWS to be spun out of Amazon.
The model is engine, the harness is the car Anthropic are selling.
They are a service company, selling home-grown, mass-produced, conveniently packaged intelligence at a well established price for consumer. Their API pricing might just be for value proposition and tax deduction purposes.
Every tech company, tech department, startup that I know is using claude code to deliver. The boutique deepseeks, qwens, glms and kimis are nice, but ain't production ready in 98% of cases. All the pi's, opencodes, etc are nice, but much less enterprise friendly. And google just outright sucks in comparison. There's a use case for each, but not at the scale Anthropic is doing.
Only real competition - OpenAI - is close, but they're burning money to stay there, which imo is unsustainable long term.
Is Anthropic worth $2T? Can't say. But boy they have a good opportunity to test this, and they may not have a similar chance in the future.
I think they have a fair chance at this.
All the smaller players İ know of have moved production to DeepSeek or Qwen, while they still play with idea/prototyping on Claude or GPT, that's the Western focused players. There are many foreign firms who won't touch either company at all even for that.
Simple reasons being no nonsense nanny refusals & it's cheap/good enough to get the everyday production parts done fast and reliably for next to nothing. Your experience is not what I see at all, but İ don't work with megacorps or in the Valley anymore, so it's possible those powers will carry the weight to some extent, until they won't or can't.
I've tried a bunch of LLMs, and I agree that Claude is currently the best at coding, but the gap isn't huge. Gemini 3.8 Flash is surprisingly good and I'm looking forward to trying Gemini 4. The open weights models like Kimi, GLM, etc. are a little behind in quality I think but not massively.
With harnesses I see little difference between what Zed or Pi gives me and what Claude Code gives me. Enterprise features? The AI can help code those in a week.
AI itself is a great breaker of moats.
The question isn't whether they lead today. It's whether there's any kind of moat. Without a moat, frontier model development is an industry like chip fabrication or large volume manufacturing. Those industries are a red queen's race where if you stop innovating for even a short while you sink. Ask Intel what happened when they decided to coast for a few years.
Chip fabs and bulk manufacturers make a lot of money, sure, but they don't command such a multiple. Anthropic is priced like they're going to be to AI what Google was to web search or Apple is to (US at least) mobile and higher-end PCs.
I don't see it. I think they'll be a big player but that big?
Of course... maybe if they suddenly have that much cash they'll be able to carpet bomb the entire world with AI doom Rationalist ideology and buy their regulatory capture and outlaw their competition.
They made it convenient to get value for the specialist masses and I don't think anyone else managed to achieve it yet. That's their moat.
I've seen firsthand attempts at integrating open source in place of it and they all failed. Time is money and it costs premium. Touching the ground running is a huge advantage. That's why cloud services stuck.
time is money so when the subsidies stop or they magically make inference price an afterthought like cloud did to traffic then it's going to be much more economically better to spend a one-time price setting up a local or a self hosted open model than paying $2000 for a subscription
The question isn’t whether Anthropic makes a good product. The question is whether it can rationally sustain multiples like this.
Yes, they have the same problem WeWork had on the multiple front. Coworking was a thing long before WeWork was a thing. It’s an important but boring business that trades at low multiples. WeWork tried to IPO on the basis that somehow it was worth vastly more, but the market woke up and realized it’s just subleasing office space.
The same is unfolding with Anthropic. It’s doing important work but everyone is realizing it’s not got a serious edge over anyone else. It’s important but ultimately a boring business. It’s still likely worth a few hundred billion, which is massively impressive for any startup, but trillions is pipe dream.
Great comparison.
The thing that makes the frontier labs frontier is mostly access to huge amounts of training data and compute. In the earlier days of AI access to top AI talent was a moat, but that moat is rapidly eroding as more and more people familiarize themselves with the "black magic" of LLMs and training. The success of the Chinese models is evidence of this diffusion of knowledge.
Give me a team of, say, 20 good engineers with a deep knowledge of AI/LLMs and training and give me a billion dollars worth of GPU compute and a huge amount of training data and I'll give you a frontier model.
No moat.