Everything comes back to whether the demand is really there.
Anthropic thinks it is. The got the demand / datacenter match right in Q2, got great margins, and committed hard.
They've got:
- $114b committed to Google
- $110b committed to AWS
- $161b committed to Broadcom
- $120b committed to SpaceX
If the party continues, they'll go from $50b in revenue to $500b and be fine.
But if they don't, it's going to hurt. And that's their only choice, because otherwise, they end up with a frontier model and 50% of the capacity and get eviscerated on either availability or last-minute datacenter leases.
It's a big business, but it's not an easy business.
These commitments aren't annual though, most of them amount to 10 billion a year commitments for 10 years. Put another way Anthropic has committed 52 billion dollar a year to these companies and their S-1 indicates they earn 67.2B a year in revenue.
I'm not going to predict whether Anthropic succeeds or fails, just that it's very misleading to claim that Anthropic needs to grow to $500b in revenue without making it clear that it's $500B in revenue per decade rather than $500B in revenue per year which is what most people reading such a number would assume.
That is wild. What if there is a huge break-through in LLM models where they can reduce compute by 90%? All of those data centers would suddenly crater (many customers cancel) and go bankrupt. I feel it could go either way.
That's already happened. It's one reason prices have dropped so much lately (n.b. in the quarter that's not in their S-1, I think!) They've been able to improve model efficiency a lot through better algorithms and training models to be less verbose.
The question is, how're those datacenters build outs coming along? two reasons for Anthropic to cancel those contracts. A) They don't need the capacity because they have capacity elsewhere, or b) they don't need the capacity because no one is using Claude. (I guess c) they don't need the capacity because theyre running Claude more efficiently is also technically possible.) For B to happen, they've got the demand in the form of contracts, and models don't really seem like they're shrinking, though there's a lot of non-public info, Astra > insize than sol, and Opus > insize than a Sonnet. So then we're looking at situation A), and the think to look at is SpaceX has the vertical integration to be able to plonk down datacenters and get them powered with literal jet/rocket engines/turbines that they make from scratch because they're a space rocket company when no on else can. So, personally, I don't think it's that big a risk to SpaceX's revenue. Or rather, is cancelable in 90 days, but smart money is going to see those cancelations coming from a lot longer away, if you're tracking datacenter construction. (Disclaimer, I picked up some SPCX; not financial advice, etc)
Not the whole turbine, but they are manufacturing turbine blades in bastrop texas. The turbines are available right away, but the blades are 12-18 month lead time, so Elon built a foundry. From what i heard they've only gotten a couple proto's out of the foundry/ no idea the grain quality. But they are doing it.
> "SpaceX has the vertical integration to be able to plonk down datacenters and get them powered with literal jet/rocket engines/turbines that they make from scratch"
At this point, you can get the chips you just can't get the power. So in typical elon fashion, he just "solves" the bottleneck. Long term, no, that is not the strat. Thus the pivot to space.
We'll be forgiven for expecting the new overlords will take over in the bang of boiling oceans, as we miss the significant whimper of a cold Texan winter.
I'd imagine all of the vendors have an incentive to keep their main customer a float, while there might be penalties etc. for missed targets - it doesn't make sense for any of these vendors to ride the contract into chapter 11.
This is so important in analyzing these commitments. Anthropic's commitments will make them a Top 10 customer at many of their vendors. (Even at Google/Amazon, how many other customers do they have with $100B+ committed?)
Those vendors would very much like to retain as much of that business as possible. If the space goes sideways, I would very much expect some kind of renegotiation/work out.
On a side note, these are pretty hefty portions of the total revenue of these companies. 161B with Broadcom over 5 years is about 32B/year; that's fully half of their 2025 revenue. 120B with SpaceX over 3y is 40B a year, more than double their 2025 revenue and almost triple 2024. 114B with Google over 7 years is about 3% of their total revenue and about 1/4 of all Cloud revenue. 110B with Amazon is about 9% of their AWS revenue.
If Anthropic's revenue story doesn't materialize and the AI bubble bursts, these companies are in a world of hurt. It's probably not fatal for Google or Amazon but would be a major drag on the stock price (perhaps why Google has dropped from 400 to 315 over the last couple months as the AI story soured), and it could be company-ending for Broadcom or SpaceX if they end up building out infrastructure to service these commitments.
I remember before I left Google, one of the TGIF questions (which are now AI syntheses of many peoples' individual opinions) was "What happens if AI is a bubble and it bursts?" His response was "If that happens, the whole industry is in trouble." I see now what he meant.
SpaceX will just use the compute directly if they don't have buyers. They are already talking about the data center shortage as well because they can't get capacity elsewhere either. It's a weird problem to not be able to use your own data centers because you rented them out.
Between SpaceX, Starlink, Tesla, Neuralink, X, Grok, Grok Bot & Cursor there's not a demand shortage.
Grok Bot's the fastest growing product in the history of the company and the moment you use it, it's clear why. Took me about 1-2 days to realize I'd have a very hard time going back to not having it available.
No the biggest problem will be investors will demand much higher dividends aka cash return..... how will alphabet continue to fund its projects with ever decreasing internal cash flows available after dividends? If the founders decide not to come good on this - the stock price will crash. If much of your employees compensation is stock based...? i have bad news for you
Their current stock price is pricing in these contracts, which have already been announced but have not been fulfilled (or booked as revenue) yet. So Broadcom's 2025 revenue was 63B; note that this is already up almost double from its 2023 revenue of 35B, largely on AI contracts. If Anthropic spends another $32B in 2026, that's in addition to their declared revenue; investors expect they'll be making $100B+ in 2026. Broadcom's operating margins are pretty good, so a lot of this flows through to the shareholders as earnings, and so investors are valuing it on the assumption that these contracts result in tangible cash flow.
If the AI companies go tits-up, that introduces counterparty risk, the revenue doesn't materialize as cash, and suddenly their earnings take a nose-dive. If they've staffed up significantly to design and sell these AI accelerators and suddenly there's no market, they could be in a lot of hurt.
BRCM and Marvell are both the actual designers of many of the “we designed our own ai chip” chips that so many companies have been announcing.
Broadcom is also a major supplier of the networking chips that the hyperscalers use. Clusters are moving away from infiniband and nobody is particularly impressed by Spectrum.
I'm sure there are others here that are experts on this topic, but my 2 cents on this is that Broadcom specialise in custom / specialised AI chips, and their collaboration with Google to manufacture the TPUs is a pretty solid revenue moat over the next several years.
That's helpful, but 2026 isn't cancelable, nor is at least half of 2027. Also, I think some of these numbers are off. Only SpaceX is cancelable but the above shows declines for years outside of the SpaceX commitment (assuming it does get cancelled, and in full).
I also left out AMD at $20B for 2027, so that would need to jump up.
Finally, the above is only counting the commitments they've already made. It's not very likely they'll only spend $10B in 2035.
If we assume none of it is front-loaded (which seems, uhhhh unlikely) we're looking at ~$100 billion a year for the first 4 years of commitment. That's significant.
> Its largest commitment is with Broadcom, which co-develops the TPU AI processors with Google and leases them to Anthropic in deals worth $161bn over five years. From 2028, Anthropic expects to spend up to $150bn more on TPUs.
Thanks for clarifying, that’s a huge difference. Obviously they will have other revenue sources, but will likely make a small portion of their revenue. If we approximate their growth rate by these numbers, it is quite a slowdown.
You're right that my numbers are imprecise, but I did mean $500b in revenue annually.
This is just the compute, which primarily covers training + inference. They still have to run the rest of the business. If you think AI should look like SaaS and spend 10% of their revenue on compute, that's $1T in revenue. If you think it's a hardware business, that's 30% margins and perhaps $200b in revenue. I went with something in the middle at $500b.
They won't disappear as a company at $200b in revenue, but I don't think that's their aspiration. These commitments imply to me that they're confident they can do much better.
> If you think AI should look like SaaS and spend 10% of their revenue on compute, that's $1T in revenue. If you think it's a hardware business, that's 30% margins and perhaps $200b in revenue. I went with something in the middle at $500b.
I'd think it's more sound to just look at what percent of their current spend is on compute? Seems to be 50-60%
> Put another way Anthropic has committed 52 billion dollar a year
Idk where you got this figure from, but the actual figure are very different from that:
It's 120B over four years for SpaceX alone and 120B for Broadcom over 6 years. These two players, representing less than half of the total commitment, already give you an annual commitment above 50B.
Good point. Although they also need to make a profit. To justify an eventual PE ratio of 25 and a current valuation of $1 trillion they need to make an annual profit $40 billion. And then lets assume $40 billion in other expenses. So they need revenue of $50 + $40 + $40 = $130 billion revenue annually.
But if you buy them today at a $1 trillion valuation, and they only make $40 billion in annual profit, your investment will go nowhere. They need to be growing profits at 20% per annum to justify a PE OF 25.
And then you have the competition problem. The cheap open weight models are good enough for many (most?) tasks.
And then you have the problem that LLMs may not be that useful outside of programming, customer support and law (and doing homework).
We have examples today of companies that don't need to justify an eventual PE ratio of 25 so why would this be a thing all the sudden? I think you all are misunderstanding vague notions of market fundamentals as some kind of rules by which the market works.
Yeah, it's a crazy number, but they got the AI business right, just like Google got internet marketing right 25 years ago, as long as they keep the momentum (and prices).
> google launched at i dunno a 1bn market cap and grew as the internet grew
Google closed its first trading day "worth more than $25 billion" [1] with $1.5bn revenues, up 234% from 2002's $440mm [2]. That's a 16x revenue multiple, 0.07 growth adjusted [3].
On a similar revenue multiple, Anthropic's $16.3bn half-year earnings are worth $543 billion. Adjust for Anthropic's 1,400% YoY growth and you're well over $3 trillion.
Obviously, it's a lot harder to grow at a thousand percent from a $16bn baseline versus a few billion. But purely on a multiple basis, Anthropic is in a similar ballpark as Google.
As another check, SpaceX is trading at ~62x sales with a growth rate in the 30% range. Assigning the same sales multiple puts Anthropic at ~$2T market cap. Add in a factor for much faster growth (and non-GAAP profitability) and $3T is a really easy place to end up.
Sure, you can throw any numbers around, if you wish to get any valuation you want.
In reality, a valuation based on revenue (sales) is bonkers to begin with, but even worse when you consider that Anthropic has so much debt that it doesn't have positive equity value, it's in a deficit ("When liabilities attached to an asset exceed its value, the difference is called a deficit and the asset is informally said to be "underwater" or "upside-down""). At least SpaceX has more assets than liabilities.
There are a set of mistakes in what you wrote, but
> SpaceX has more assets than liabilities.
is definitely a choice thing to write on the day SpaceX announced a $40B debt deal to purchase compute to run other companies' models. Based on available information, this will put SpaceX into a place where it has more liabilities than assets.
Larger point stands. SpaceX is commanding a 62x sales multiple, whether or not you personally believe price:sales should be relevant. SpaceX's AI operation is smaller and growing slower than Anthropic's. It's reasonable to expect investors to benchmark Anthropic against SpaceX, it would be silly not to do so. A normal thing one would expect investors to do is assign a higher multiple to a company that grows faster.
But the question is not so much if they can IPO at those prices but rather if the valuations are sustainable over a couple of years. If they are priced to perfection there isn't much left for public investors besides huge risk that something might not work out 100% as expected.
> Some people will benchmark Anthropic vs. SpaceX, that doesn't make it a smart approach.
Yeah, I would not pay 62x sales for SpaceX. And I don't buy IPOs. I'm not endorsing these values, I am saying benchmarking against peers is what investors commonly do.
> A normal thing is to consider risk, liabilities, cashflow, how diversified revenue streams are etc., and other things which you seem to be missing.
I'm not missing those things, I am not including them here because being "right" is rarely how markets value companies. (Also because the rest of that stuff is in the S-1.)
It's possible to build a "correct" model of a high-growth high-tech company that looks primarily at risk, liabilities, cashflow, and diversity of revenue streams. That model might put Anthropic at (say) a $100B valuation. That "correct" model is going to be less predictive than a model that starts from what similar firms are trading at in public markets. I personally am more interested in predictive power than correctness when evaluating stocks.
> I am saying benchmarking against peers is what investors commonly do.
You are benchmarking against an outlier stock with a cult following (Elon Musk) and diversified sources of revenue. Anthropic does not have either.
If it was as easy as comparing the hottest new IPO with Elon's companies and applying the same multiples, people wouldn't have lost so much money on electric car IPOs that pretended to be Tesla (see PSNY -99.5%; NKLA -99.99%; FSRNQ -99.99%; etc.).
> being "right" is rarely how markets value companies.
Conventional metrics are how most stocks are valued most of the time. What you want to say is that market can be exuberant sometimes. That's fair. When the exuberance goes away, valuations come back to earth (see PSNY -99.5%; NKLA -99.99%; FSRNQ -99.99%; etc.).
> That "correct" model is going to be less predictive than a model that starts from what similar firms are trading at in public markets.
Even if we take your statement at face value, you're still not doing it right. A valuation based on comparisons has to have more than 1 peer to compare against. Check out the multiples of other model providers listed on the stock market. You'll probably be shocked that it's not a double digit multiple of revenue.
And then, if you really want to have a proper model, isolate the AI revenues of SpaceX and other hyperscalers, then we can argue that you have a model worth something.
> You are benchmarking against an outlier stock with a cult following (Elon Musk) and diversified sources of revenue
So in this case, diversified revenue is a drag on SpaceX because all the non-AI revenue is growing considerably slower.
But your point about Musk is taken. Cerebras went out in May, and despite being a hardware company is trading at 37x sales. Palantir trades at 78x, CrowdStrike at 50x, Cloudflare at 47x, etc. Anthropic is growing significantly faster than any of those companies. I'm not making the case that Anthropic will/should trade at any of those, just that Anthropic trading in the range of the P/S of SpaceX would not be crazy, and it would not require Musk to be involved.
> A valuation based on comparisons has to have more than 1 peer to compare against
Yes, the best peers are "public pure play frontier model providers trading in the US." There are none. SpaceX is closest, despite not really being a frontier provider and definitely not a pure play. But you are correct that investors will use a basket of stocks. It is silly to suggest SpaceX will not be in that basket.
You absolutely can make an AI doomer basket to model Anthropic. Use "real infrastructure companies" as the connective tissue since AI wants to be infra. In your basket put Caterpillar, Kroger, The Southern Company, AT&T, Comcast, and ExxonMobil. You can absolutely make the argument that Anthropic should trade more like them than like CrowdStrike or Cloudflare, that is a coherent position. Then based on that infra peer group, calculate a valuation. I think this model will be much less accurate in the near term than a model that uses other high-growth tech companies.
Price discovery is part of the fun of IPOs! The doomer model could be right, the stock value could collapse toward irrelevance as fast as the exchange's circuit breakers will allow!
> So in this case, diversified revenue is a drag on SpaceX because all the non-AI revenue is growing considerably slower.
Your argument is like saying that having gearbox in a car is a drag on speed, why not remove it? Just take out the transmission and the windshield while you're at it too.
> Cerebras went out in May, and despite being a hardware company is trading at 37x sales. Palantir trades at 78x, CrowdStrike at 50x, Cloudflare at 47x
None of those companies are AI labs, you're just cherry picking random expensive stocks and doing the whole price/sales nonsense again. All of them have positive shareholder equity (Anthropic has shareholder deficit).
> But you are correct that investors will use a basket of stocks.
That's your approach, I was just quoting it.
> You absolutely can make an AI doomer basket to model Anthropic. Use "real infrastructure companies" as the connective tissue since AI wants to be infra. In your basket put Caterpillar, Kroger, The Southern Company, AT&T, Comcast, and ExxonMobil.
At this point you're either being silly or arguing in bad faith. Your best case scenario is for Anthropic to trade like a stock with cult-like following and your worst case scenario is for it to trade like a ketchup stock. Completely ignoring the most obvious tech companies that are traded publicly and also provide models of their own. This conversation became so absurd that it's not worth answering anymore.
The mental gymnastics you're doing here are appalling.
Did they get it right? I'm geniunly curious because from my point of view the only company to get AI right so far is Microsoft. This is from the point of view of an EU energy company married to Microsoft services mind you, but Microsoft is the only AI company which actually sells AI to us in a manner that can be considered useful. 7 months ago I thought Copilot (the m365 one, not the github one) was useless. Now I think the chat part is as good as what you'll get on the smaller subscriptions to ChatGPT or Claude, and it's Cowork is very good.
Obviously it's not like having Claude Code or similar, but those would be very hard to run legally and safely in EU regulated industries like us in energy production. You could run Codex but it would require your IT department to have yet another place to manage security and software integrations. Which is a fairly big issue when you have around 1 IT staff member per 300 employees, and an organisation which will buy five different sharepoint solutions for the same problem.
Microsoft sells something that seamlessly integrates into everything else you buy from them. It's easy to manage credit spending and when I say that I don't mean that it's easy to set it up. It's easy to track and budget so the right departments pay for it. It can read your emails, your onedrive, your loop, your sharepoint, your powerbi/fabric and anything else you have access to. Sure it's annoying to be confronted with a point you've made 7 months ago (like how you think Copilot is utter trash) and since changed opinions on it's frightingly good at finding relevant stuff, even in some obscoure legal document on your intranet.
I assume that Anthropic and OpenAI makes money of this somehow, but for the most parts our users wouldn't care if it was the GPT and Claude models or Mistral or Deepseek. Which is why I asked if they had really gotten it right.
> Put another way Anthropic has committed 52 billion dollar a year to these companies and their S-1 indicates they earn 67.2B a year in revenue.
A very large part of that revenue is paying for inference. There’s not enough leftover for the committed outlays. So it has to come from smucks I mean investors.
Meanwhile the Chinese are going to undercut them every chance they get.
Today's prices are the ceiling. But AI capability is getting less of a scarce resource with every passing day and it would be a big mistake to plan that your current margins are going to be your future margins as well. Long terms AI will converge on energy costs + capex write-off + margin and the latter will be a race to the bottom.
The problem for me is that it's really hard to project what this industry is going to look like 6 months from now, let alone 6 years.
What's the endgame once the dust settles? Is it going to be a utility like water or electricity and the cheapest offer will prevail, in which case margins will be crushed? Or is Anthropic (or some other big AI lab) going to swallow everything and become the Google Search of LLMs, with everybody else fighting for scraps?
Or is it local compute, models becoming more efficient and hardware becoming cheaper (again) and companies hosting their own AI clusters like they would run SAP?
I think there is a plausible path where this valuation actually works out, but it's a narrow one IMO. I also want to acknowledge that I personally would prefer if it wasn't the case and a more distributed, open model prevailed.
I just look at technology over the last 50 years and see: decreasing prices, increasing capabilities. Barring temporary hiccups. Altman & co did a very smart thing by locking up the GPUs and the RAM, they effectively created a temporary near monopoly. At the same time: that incentivized the rest of the world to look more closely at efficiency negating some of the gains of that expense.
It's just like a utility with the slight difference that it can be sold at a distance without significant cost for transportation, in many ways it is the ultimate digital good. Unlike Spotify copyright is not an issue, unlike your electricity, gas, internet or water company there is no last mile problem. Unlike Google there are a ton of qualified contenders already (Google had to be better than Altavista, which wasn't hard, but they were so much better they managed to lock up search for long enough to cement their position).
Anthropic has none of the advantages and all of the disadvantages. On top of that all AI companies seem to be run by megalomaniacs.
> On top of that all AI companies seem to be run by megalomaniacs.
Not all of them. Only those who outspend all the others and then you never really hear of any others. It's like the most basic requirement for the job.
> On top of that all AI companies seem to be run by megalomaniacs.
I think this might genuinely going to become a problem for them in the long run.
People just absolutely hate their guts. That's a very strong motivator to do everything possible to get rid of them.
We'll of course see in 5-10 years if the doom PR will work out, but that always was a rather high-risk gamble, and it already looks like it might not.
There is a significant amount of businesses and people that are very willing to switch to literally anyone else just out of spite alone.
It's not necessarily spite as well, it goes without saying that international relations between the US and its allies have deteriorated to the point yet another critical dependency Washington can turn off for geopolitical reasons isn't a very attractive idea for many. While I dislike a lot of Anthropic's behaviour, it was not their actions but the fact their models were subject to export controls which really motivated me to not be dependent on US providers alone.
My country has no frontier models; since I've no national grounds to support one provider over another, a strong degree of provider diversity is an obvious benefit to me. I also think a highly competitive global market is a good thing for mankind in general, any hegemonic power having a monopolistic or oligopolistic position in AI provision is probably the 'bad ending' for most of us since it represents an enormous concentration of democratically unaccountable power regardless of the power which 'wins'. I'd argue it's rational, not spiteful to favour provider diversity on those grounds.
Even inside the US, many businesses are looking at local LLMs because they don't want to get caught by USGOV restricting access to "frontier" AI models.
I really don't see any situation where local AI doesn't absolutely eat the big labs' lunch. They can't compete and the only way it makes any sense for them to exist is if the government somehow tries to ban local AI, which likely wouldn't work in the first place.
As a French person myself, I think this antipathy is less strong in non-English speaking countries, where the population (even if they understand English) is less exposed to the antisocial rants of these megalomaniac idiots.
Someone like me who spends a lot of time in the anglosphere puts faces on companies like OpenAI or Anthropic. I doubt that's true for most people, especially outside of the USA. They're just big companies, like 3M, DHL or Toyota. Who knows what the management of these companies think of the future of humankind?
I would expect than personality-driven rejection of American tech from abroad nowadays is driven mainly by Trump and, to a much lesser extent, Musk. Everybody else is just "some guy" to 99% of the population.
I'm not so sure if that assessment is true, but regardless of that, it also doesn't matter.
Decisions in tooling are not made by the 99% of the population, but a subset that is likely a lot more tuned-in to all this.
After all, that is kinda their job so that they can make good decisions
> As a French person myself, I think this antipathy is less strong in non-English speaking countries, where the population (even if they understand English) is less exposed to the antisocial rants of these megalomaniac idiots.
German here, every stupid utterance of at least the orange clown makes national headlines here. Frankly I wish our populations were more exposed to the utter buffoonery of the rest of the American wannabe elites, maybe people would then not go and type their deepest fears into ChatGPT.
I know I'm just one person, but I absolutely detest all of the rhetoric coming from these companies and what it means for software freedom - the FSF kind. I ABHOR the idea that free software developers have to either use the hosted (controlled) service, or go way slower than proprietary software devs.
So I'm doing what I can - I only use local models for 100% of my personal coding. (And their capability is amazing! Qwen 3.8 Flash Next leaves me wanting for nothing at this point.)
And I know open weights aren't enough. I'm ready to support open training if/when we get around to that. I hope once hardware prices ease, we can see homelabbers building small AI hosts (small by homelab standards yknow. So let's say 512GB host ram and 1-2 32GB cards, though i hope we also start to see AI cards with lots of vram but less compute cores). Then maybe we can do folding@home style distributed training.
In a time when software freedom is perhaps more threatened than ever, I'm happy to see that information still WANTS to be free, perhaps even more than ever. Look at how easy it is to distill claude! Despite, presumably, anthropic working very hard to prevent it.
It's interesting, because licensing is based on copyright, and copyright doesn't apply to AI code.
In theory, things will become even more free, because you can copy whatever code you like, it's all in the public domain because it was all written by an AI (or enough of it was that a court will decide that copying the whole code base is fair).
And the ability of AI's to reverse-engineer binaries means that even hiding the code won't be enough.
Companies may write T&Cs that try to cover some of this, but they'll still have lost the biggest protection they have.
So, in theory, we move to what the FOSS movement have always wanted: all the code available, all the time, with anyone able to change whatever they like about the software they run.
Somehow I don't think anyone is going to be happy about this, though.
Heh, good for you. It's insane. A friend of mine just got ripped off here (I posted about it the other day but it never got traction), he is a student and bought what he thought was a GPU but it was actually an empty shell with the GPU and the RAM removed from the board.
Unsloth studio, on a server that I built in 2024 that was, at the time, ludicrously oversized, but is now just ok-sized to run the q4 quant of qwen flash next. (128GB ram, 16GB vram).
I really want to build something less scuffed, but, yknow. So I'm making do atm.
There were a bunch of high performance computing efforts from the 1990s and on where, if you could work out that you'd need 5 years of "today's" compute, you should obviously hang on to the money for 4 years, then spend it on the correspondingly improved hardware and finish the job in a under a year. I've been considering building a box to run OLMO (one of the only models with training data "that you wouldn't have to defend in court" as far as I can tell?) and even with Sam Altman's supply chain attack, stalling for bigger hardware still seems like the right path...
That's a very interesting take. Unfortunately I can't wait with anything so I'll just use what's available today. But still you had me wondering for a bit.
I don't hate them. They're doing amazing work, and I'd like to believe they're genuinely trying to do good for humanity. I just think it's dangerous for any group of people to think they can impose their morality on everyone (only Dario knows what's right and wrong in military actions, only one company in the world, welfare to the current models, humanity has 10% of chance of getting destroyed by AI, and etc). For that, I'd rather see open-weighted and hopefully even open-sourced models win
The only thing protecting America's AI industry is the cartel of hardware and embargoes against sharing resources. Once those are cracked, they have zero moat. We're talking 1's and 0's at the end of the day, not nuclear engineering or nuclear fusion or some other revolutionary way to increase the value of real property.
>not nuclear engineering or nuclear fusion or some other revolutionary way to increase the value of real property.
Is engineering the factories that make the hardware not nuclear engineering? Even if not, considering there exists only 1 supply chain in the world capable of making them, it seems pretty revolutionary. And that moat seems pretty big, given that it hasn't been crossed for many years.
The long-term is considerably easier because in the short-term there are limits on supply so prices aren't really able to move in a way where balance will be found.
In the long-term, the marginal cost of a request is zero so prices will plunge and a lot of the fixed investment will get stuck. The difference between the cost of training a model/infra and serving a request from that model is a clear problem for economics.
What happens with Anthropic specifically is less clear because they, as every company in the same position in the last 150 years has done, are going to push for regulation. A lot of the risk has also been shifted onto neoclouds. The value of the customer relationship is, however, effectively zero. A core part of their strategy has been to build stuff out like CC to differentiate that but, ultimately, that won't work.
The other strategy they have employed is trying to get other companies to stop training new models. Again, seems unlikely to work.
There is no scenario in which they become Google search outside of government intervention. Obviously this is a key part of their strategy now but at best, this will only work in the US and Europe (I would actually say they are much further along in Europe where there is a strong tendency towards corporatism and centralisation of power, they could be "Europe's AI").
The only thing regulatory capture in the USA will do is to improve the situation for the rest of the world to compete. I wonder how long it will take them to figure that one out, for all their smarts they seem to be incapable of reading a history book.
> improve the situation for the rest of the world to compete
The risk is that USA and China will come together on a joint "AI non-proliferation" agreement in the same way that nuclear technology became restricted by the countries that already had the capability. This will lead to a de facto techno-colonization of the rest of the world just between themselves.
This was a topic of discussion at Trump and Xi's AI summit just last month.
Nobody cares about hobby models running on a 5 year old GPU cluster in the basement. This is about industrial-scale AI which, to date, only USA and China have accomplished.
If you think that these are hobby models you are simply saying you haven't used them.
One of the largest legal services partnerships here in NL just launched their local DC so they can maintain confidentiality. Do you think they are 'running hobby models on 5 year old GPU clusters in the basement'? Or does a couple of racks of GB300's sound like maybe they know what they're doing after all?
That is microscopic scale compared to what we are talking about. From an investor and "market" perspective, the only AI that matters is the one that's built into every iPhone and Google Android phone, every car, every TV, every smart appliance. The AI models that power ships, planes, and all kinds of robotics. The frontier AI that services the energy grid, and even the smart homes and very structures that we dwell in.
This is all on the horizon. We are only barely scratching the surface and right now it is largely hobbyist having fun with it, but we already see the potential of the AI revolution and where it is going.
It matters from the perspective of tech dependency.
If a medium/small country deemed it a threat to rely on US/China for AI capabilities, they can get 95% of the utility by banning all American and Chinese models and just using local ones.
This contrasts to something like oil or nukes, where if you're not one of the countries blessed with them, you have a serious power imbalance.
Seems to me that from an investor perspective, the AI models built into the cars and TVs and other things are likely to be open source. I think long term, due to the high cost of training these models, there is going to be a "Linux of AI". I.e. some model that lots of companies collaborate on and then use for free.
The economic logic is the same as that of operating systems. AI models are very expensive for one company to make, but lots of companies need them. So companies are better off collaborating on that side of things and competing on something else.
Economically, the AI models that require big servers with lots of GPUs in data centers should likely be more interesting to investors than the AI models that can run on local hardware.
It just doesn't really make much sense. It's way harder to stop a company in a country which hasn't signed it (not that the congress ever would sign a random document Trump and Xi come up with regardless...) from developing a model than from building nukes. Also if American and Chinese labs stop development it would make it cheaper and easier for others to catch up.
Although I agree inference will become cheap (probably not zero), it's quite possible that there is a moat they can build around understanding customer context.
With each query OpenAI and Anthropic get more context about their users. When I compare answers between AIs the ChatGPT answer often includes useful things it inferred from earlier conversations. Losing that context could be a meaningful barrier for a customer to switch to a cheaper service.
> With each query OpenAI and Anthropic get more context about their users.
Not unless they break their own TOS. The temptation must be very large to do so and is probably why those settings keep mysteriously shifting back to 'yes, I give all my data to you to do with as you please'.
I don't think that's what GP meant. I think the point is maybe they could build a moat by "knowing you" in a way that makes you care about using Claude rather than, say, Gemini.
The evidence we have so far points to LLMs becoming commodities. I can’t think of a technology in the last 30 years where so many companies are within ankle biting distance of the leader. There seems to be no data aggregation moat like with Google.
Distilling just works too well. It costs much more to aggregate the data in the first place and train the first model, but once that exists and you are selling access, the second guy can train their model by using the first model to generate the training data.
The only ways to fight this is trying to either:
1. Block it by cutting off access, which is pretty tough because it basically means you cannot offer unmonitored access which is a no-no to a lot of customers, and even then the workload looks very similar to actual real workloads and if the company doing the distilling is a bit sneaky and using intermediaries etc it's almost impossible to stop, or:
2. Try to use IP law to block the practice, which is pretty gross given how they got the data in the first place, and so far no court has supported them on this. And even if they can make it illegal, it won't actually help because there are countries that see having top-tier AI as a national priority and will actually support their companies breaking laws to get there.
People misunderstand why Anthropic is being so stingy about granting access to their top models. It's not some kind of marketing ploy, they know that if they release them fully openly then there will be a Chinese open-weights model in 3 months that is just as good. Also the reason why they try to hide chain-of-thought and the probability distributions.
I don't think the evidence supports this claim. All the important capability gains now come from RL rollouts in real environments. You can't fake that by generating text from a teacher model. Anthropic makes a lot of noise about how China is distilling their models, but all Chinese labs can access is text outputs. They can't even get the logits. Now, compare all of the recent US open-weights models that are far behind the Chinese frontier. Why haven't they simply "distilled" all of those powerful open weight models that are available to them?
> the second guy can train their model by using the first model to generate the training data
Isn't this somewhat akin to a model learning from its own inputs? Doesn't that behavior lead to model collapse? Either the model is trained on pristine data, in which case it stagnates, or it's distilled from another model, which leads to model collapse.
I think the better analogy is kick-starting. Yes, you'd get model collapse eventually, but you can kick-start a new model by cloning an old one and then you start training it like a normal model from then on out.
Given Anthropic is basically just “distilling” the IP of others they’re in no position to cry foul when others run the same playbook on Anthropic IP. They can pound sand on that front.
Indeed, the hypocrisy is cringe worthy but the lack of proof makes it a transparent play to stop giving their users the ability to audit the token counts. "Here is your bill. You spent 20% more than last month, but we're not going to show you what you spent it on."
Independent verification from non-aligned entities would be a minimum for something like this. Note how in spite of all of the claims not a single lawsuit has been filed.
These are more claims of the same kind from an aligned institution. There is no evidence offered.
You cannot believe intelligence agencies when they do not offer proof. Their job is to provide (reputationally but not factually) authoritative story lines that protect big business interests from competition overseas. Sometimes they protect US business by bombing their competitors.
I think people often underestimate how far behind most of the competition is.
Isn't the first open model that likely surpasses original Mythos from February this week's Kimi K3.1 Pro?
Nothing compares to September's Opus 5.5 yet.
Now the question is whether Anthropic is preparing another phenomenal upgrade with Fable 5.5, or if the progress eventually slows down and competitors catch up.
Top models, capable of discovering and inventing stuff, held back from public, and available only as for-rent research service (or whatever the relevant bureaucratic term is) to big corporations and government agencies like NASA, DARPA, NSF, NIST, DOE, etc. only.
I have a feeling that we, the public, will stop getting access to more intelligent models starting next year.. i mean, not the incremental ones, but, major ones.. like the one you got going from opus 5 to opus 5.5.
The economics of that don't work out. Government is a small market and can't drive frontier innovation at the scale it's happening today, let alone in the future.
Look at the defense industry: The Big 5 contractors (Boeing, RTX, General Dynamics, Lockheed Martin, Northrop Grumman) capture most of the discretionary military budget, and the largest of them is in the $300B valuation range (Boeing, which has substantial non-government revenue). Fine businesses but nowhere near Anthropic's valuation.
Bottom line, the government doesn't have deep enough pockets.
I disagree. I think it does make sense the way it was described; top models for governments or industrial players with deep pockets, and "normal" models for the general public. None of the big 5 defense contractors sells directly to the wider public.
In fact, I'd assume this direction has been widely discussed and considered at Anthropic. I think Fable's release was an experiment to test this.
The biggest risks though are China and Moore's law. In the short term, if you don't offer a competitive model as the market grows, you fall behind in marketshare. Anthropic's edge is that it's offering is still better than Chinese offerings. If they offer anything less than that, something not better but just comparable for example, they lose on price. In the long term, as computing capacity continues to increase, local models potentially pose the same challenge.
So there's plenty of pressure for Anthropic to keep widely offering the best model they can.
Yeah, so long as China exists and wants to keep releasing open models, it's not feasible for Western labs to stop releasing frontier models to the people.
this suffers from the same prisoner's dilemma we already see at play. Any player can defect and in theory capture a "trillion dollar market". Once they IPO, then their service is to maximize (short term) shareholder value. Saying "we reject all the billions in recurring subscription revenue because we are hoping all AI providers will do the same, therefore creating a moat" isn't going to go over well.
The SOTA model dilemma is that you have to pay more and more to train models that focus on less and less of the AI task market, because 95% of tasks can be done by cheap small models.
Also frees up more compute for recursive improvement, and gives them leverage over USG (makes regulatory & legal & other issues disappear) due to the frontier being significantly more effective for military use. There's a lot of chatter around distilled models being "close" to the frontier, but realistically they are optimized only to look good on benchmarks - and are still 6 months behind Anth / OAI models at that.
There is a good chance of that. This will incentivize the rest of the world. Keep in mind that the world is much larger than the USA, that the USA has alienated a lot of parties that were its allies and friends not that long ago and that there are far more talented people outside of the USA than in it. Silicon Valley had the world by the short and curlies and then Trump came along and pretty much burned it all down. It will take another decade to know how big the damage is but it is probably in the trillions of $ of lost income and that's before we get into intangibles.
I don't want to make this discussion politicized.. but man... Trump truly burned everything down that the US built over decades of hard work and careful planning. And these things are extremely difficult to build back, especially in a world like today's.
Politics is intertwined with economics and finance. Unless by politicized you meant inviting opinions unrelated to facts. What you stated is a fact. The part that is hard to divine is if there's a larger end goal that justifies the loss of trust.
At this point, the best guess is he plans to deflate the currency to make the debt worthless.
>best guess is he plans to deflate the currency to make the debt worthless
That might be the best possible intended outcome, but it also seems unlikely that Donald Trump and his government are involved in anything so far-sighted. Just look at the man's public behavior over the last year; either he is an incredible actor, or this is not a government where anyone in power cares about anything beyond the Big Man's whims of the moment and their personal benefit.
Donald Trump is a puppet for those with bigger around him, but because of his mania and dementia, it's like having to roll a d6 whenever you try to steer him. I think that unpredictability is part of the issue making it hard to extract what the long term play is.
There's also the incompetence of the ones with the longer term plans making whatever is played out more inscrutable. Although they have actually implemented a significant portion of project 2025.
I personally think it's really funny how if you were to try to reverse engineer his motivations based on the actual outcome, then the most likely answer is that he's a joint Chinese-Russian spy based on how much they've benefited from his elections.
I've never seen an individual that was so damaging to the country that democratically elected him. There are others that were as damaging but they were not elected or it wasn't during my lifetime. Trump is unique in that respect, more so because he did it twice.
I agree with you but as they say "markets have short memories". After the Ukraine war is over let's see how fast Europe goes back to Russian gas. They're making noises about it now (and parts never stopped).
The world is going to be very different in another two years.
yes, you are no longer trusted. Europe is lucky that the UK and France essentially told the US to fuck off when they tried to stop them developing their own nuclear deterrent. If they had, then right now the alliance between Russia and the US would put the whole of europe at risk of Putins Russia. As it is the French and UK capability is more than enough to counter the russian nuclear threat. As in we all fucking die if russia launches nukes, but it at leats lets russia know that too.
fuck trump and republicans. and yes whatever goodwill you had built up over the last 60 years was up and away like a fart in the wind when you elected a corrupt pedophile for the second time. And it cant be built back, ever. No one trusts you no to pull the rug if we became reliant on you again. What we will have though is a relationship with allies built on equality rather than one main player calling the shots.
the trust could in theory be built back if they would manage to dethrone him and his cronies, hold a Nuremberg-style trial leaving out no accomplice and reform their system and constitution in order to setup real guardrails that would reliably avoid this from happening ever again. This would require, among other things, to severely limit presidential powers, or better yet, switch to a parliamentary system with a "first minister", and abandon the two-party system in favor of a more democratic proportional multi-party one. Sadly I don't think these changes will ever happen.
This is pretty much it. I don't think anybody believes these changes will ever happen unless it gets much worse than it is today. I would not rule that out though and 'ever' is a long time.
I haven't been back since Trump I. Missed a funeral of a friend. I still have more friends on the other side of the Atlantic than I have in Europe, even so I don't think I will ever go there again. Enough is enough.
How is it not clear that LLMs are being increasingly commoditized and that the foundation model producers are in a bad race to the bottom with each other AND cheap open-weight competition?
Not even just from Chinese models, but from companies/labs like Mercury
I wouldn't bet on local compute.
Even if it may end up cheaper in the long run, the convenience of just another SaaS subscription sure beats the high upfront const and continuous maintenance required with local deployments.
We've seen businesses moving everything to the cloud before AI, we'll see more of that as regulatory requirements are increasing.
The difference is you can get the same model from different providers so they compete on price and features (ZDR, security, fast inference). It's less like Netflix and more like Apple Music.
It's very possible given the current environment that LLMs go the way of airlines. Low margin businesses that are essential to world economics with heavy price competition.
and airlines are still finding ways to enshittify. flights included meals, now you're (un)lucky if they include biscoff. and that'll be $50 to check a bag. I can't imagine how frustrating an enshittified LLM would be. hey - I noticed this is a finance-related query. those cost 100% more.
And this is why I think companies will wise up and stop sending their information to the likes of Anthropic and OpenAI: they will not be able to maintain their edge if either one of them decides to defect and start using all of their uploaded user data to improve the model. So they have a massive incentive to break their own TOS.
That's the push factor. The pull is, say there's a giant repo like windows or Adobe. LLMs produce spaghetti code because the repo doesnt fit in the context and it wasn't in the training set. If Adobe fine tuned it the LLM would be much more useful.
This will be the future model for businesses. Buy a generalized frontier model and finetune it and make it available internally. This model offers a lot more business benefits than the current risk.
It wasn't a theoretical thing, it was a practical thing. Just like when we talk about 'infinite tape' when looking at Turing machines. As opposed to 'clear boundaries to how much context you can have because that is baked into the model'.
The idea that noisy usage data is worth that much for training as to balance the fatal risk of the crime you describe, imo borders on a conspiracy theory.
I am under the impression that curated training pipelines are driving the gains, not utilizing random usage data in nefarious ways.
>The problem for me is that it's really hard to project what this industry is going to look like 6 months from now, let alone 6 years.
i keep thinking how crazy it is we went from ChatGPT releasing in 2022 to multi-trillion IPOs 4 years later. the industry still hasn't agreed on how to generally use anything. crazy times ahead.
It's going to be "all of the above" because AI has a whole lot of use cases.
For certain AI use cases, AI will be like a utility. For other user cases you need to pay a premium for the frontier. For other use cases AI will be local.
Even in the industries you mention (water and electricity) you have all sorts of businesses. Like people selling water in fancy cans for a large markup or batteries vs wall power.
When google became the king of search the incumbents were so far behind that catching up wasnt possible and they thought their position was entrenched anyway. With LLMs openAI's competitors are at or close to their capability already and everyone knows they need to keep spending to remain relevant. So unless the cash pipeline dries up for competitors that is unlikely to happen. The reason for that is anyone who has invested knows that either they give up and hand everything to their competitors or someone else does. Which means you need to keep spending to outlast your competitors. These companies are too rich and there is too much VC money around and enough billionaires with more money than they and their descendants could spent in many lifetimes, and a huge amount of greed. If the money runs out that is because some very bad shit has occurred and LLMs will be the leats of our worries.
In the short term perhaps, but I like to think that unlike ISPs, this kind service isn't bound by network effects. You can't just "generate your own internet"; like it or not you have to connect to something. With time though I think it'll increasingly be possible and cost-effective to generate inference locally.
So like electricity, where most people will probably just use the network, but a few will opt to invest upfront and generate their own.
Given the trillion-dollar spend, the theory is that every many woman and child in the western world will devote a substantial portion of their income (like 5-10%) towards some sort of AI subscription.
or...
That doesn't happen. All the AI investments go south and every man woman and child in the western world will devote a substantial portion of their income (like 5-10%) to bailing out an economic system that went all-in on AI. Either way, the money has already been spent.
The already shaky economic system (and associated political systems) can't take the strain of every man woman and child in the western world devoting a substantial portion of their income (like 5-10%) to LLM fallout, and we end up with a collapse scenario of some sort. (Which, to be clear, is near-certain to be worse than either of the above.)
I don't see a path forward for valuations like Anthropic, either the hardware requirements fall off a cliff (and why would people pay Anthropic so much if it runs on a cheap laptop?) or either they don't and they will never have the capabilities to serve all their customers (and why would they be valued so much then?).
It's a lose/lose situation here for Anthropic (and OpenAI) whatever happens.
> Or is Anthropic (or some other big AI lab) going to swallow everything and become the Google Search of LLMs, with everybody else fighting for scraps?
Of all scenarios, based on the data we have now, this seems to be the least likely one.
The Chinese labs are not providing their open-weight models for free because they think it is good for humanity. They are doing it because they are severely chip constrained due to the Nvidia and ASML embargos and all available GPUs have to go toward training with very little left for inference [1]. So they are giving their models away for US and EU hosts to serve inference in order to still have a presence in the market.
It's not a great position to be in and it will still take a long time for the compute gap to close. In the meantime, Anthropic, OpenAI, and Google are essentially unchallenged.
You should. Maybe they have it open now just to destroy competition and then they close it. Now you have a closed system, with no alternatives.
Besides...
"If passed, the rules would require Chinese companies to obtain licenses to export the core technology behind their leading models.
They would also ban the export of A.I. that can be used to launch cyberattacks, as well as models trained on what China calls “core data.” The government broadly defines that as data that concerns national security, the welfare of Chinese citizens and the public interest. Experts say the scope includes data on the military or critical infrastructure, state secrets and other sensitive information. "
> You should. Maybe they have it open now just to destroy competition and then they close it. Now you have a closed system, with no alternatives.
What makes you think there would be no alternatives, though?
Put it like this: Kimi K3.1 is downloadable and can be run locally. (If you have a datacenter.) This is a very capable, ~2.8T parameter model.
Now let's say that every Chinese firm goes closed in six months or a year and jacks up pricing... What's stopping a bunch of enterprising upstarts from updating all 2.8 trillion parameters, extending them, distilling the model into very competent flash models, or applying targeted RL?
Once the principles are understood and there are models that can be pulled off the open internet, it doesn't seem that hard to spin up your own LLM. You just need some financial resources and a reason for doing it. And that would come into play if the Chinese kill every closed American provider and then go closed themselves.
Training is really really expensive and open models are not getting funded by VCs. Distillation also doesn’t improve performance. Until training gets exponentially cheaper so that you can do it for a few hundred grand to train a competitive model, open models are labs trying to flood the market to get market share / undercut more successful labs, not a sustainable strategy that will extend indefinitely necessarily. It’s like claiming Uber and DoorDash are fantastic because their prices are so low - once they eat the market the prices become higher than ever.
Sure, but once they release an open model, it's open forever. You can download it, share it with friends, make a torrent, whatever. So in this sense every open model is a gift to the commons.
It's not quite like Uber. It's more like... well... imagine there are two computer operating systems, Gray and Teal. Gray is always slightly better, but it costs $50/user/month for a license. Teal is free. Eventually, when both happen to be in version 9.0, Teal puts Gray out of business. Starting from version 10.0, Teal starts charging $100/user/month from a license. But nothing's stopping you from sticking with 9.0, which remains free forever.
Perhaps what's "sustainable" is not clear, given that Gray was eventually dominated by Teal? In any case, versions 1.0-9.0 were, effectively, gifted to the public. We can appreciate (and even disapprove of) that commercial strategy while benefitting from its fruits.
Short term benefit for long term harm. You’re handing the power and clout to a hostile nation that is literally underwriting the competition’s ability to employ this strategy. Its economic warfare and you’re rooting for the away team. Even if you’re not an American, I’m not sure I’m convinced the scenario of Chinese dominance around AI is good for other countries.
>You’re handing the power and clout to a hostile nation
>Its economic warfare
You started the "economic warfare". You tried to turn them into enemies because you can't compete under the same conditions.
And don't you say anything about china competing unfairly, e.g. distilling etc. You looted, and continuously looting, the whole internet with 0 care. You are having a net negative impact on the internet as a whole currently. You are aggressively extracting value from things people gave away out of a good will, or just outright stealing and laundering the stolen knowledge.
>Short term benefit for long term harm.
Long term harm to who? Investors who gave money expecting an eventual monopoly?
And since when are we on the same side? Big american labs sure don't behave like allies to the general population.
> What makes you think there would be no alternatives, though?
There could be, they can actually come from open American companies too. Ask yourself why we aren't seeing a thousand or more American AI startups spring into life overnight to build "open" models. Follow the economics.
> What's stopping a bunch of enterprising upstarts from updating all 2.8 trillion parameters, extending them, distilling the model into very competent flash models, or applying targeted RL?
> And that would come into play if the Chinese kill every closed American provider and then go closed themselves.
What's stopping American or European tech companies from doing this today? It's economic and technical capability. I'm very suspicious of any suggestion that it is in any way not incredibly difficult to build and scale up LLMs. Maybe in the future it can be much easier, but in that case you run into a sort of tautology where it becomes easier but the leading companies continue to lead and do so by a significant margin because they're the ones that have the most talent and access to capital.
The premise seemed to be "an open China" versus a "closed USA". I'm not sure that's a great premise. If China can create open-weight models so can the US. If the US can close their models (as clearly evidenced by the article) so can the Chinese.
> What's stopping American or European tech companies from doing this today? It's economic and technical capability. I'm very suspicious of any suggestion that it is in any way not incredibly difficult to build and scale up LLMs.
Seems more economic than technical. If the economics are covered, the technical aspects seem straightforward enough, and may perhaps be fully solved. I think there's proof of this in that there are a lot of different LLMs on the market. Even Xiaomi -- in-between making cars, e-scooters, backpacks, and home appliances -- spun-up an exceptionally capable LLM! (And one which is rather idiosyncratic. It's weirdly good at music composition and generation, which both Opus and Astra cannot do.)
The economic case doesn't exist for VC-funded US corporations, nor does it exist for cash-strapped nonprofits. In China, all such ventures are likely funded by a government development bureau. If Chinese ventures kill expensive closed providers and universally go closed themselves, there's nothing stopping the US or Europe from copying that same playbook -- unless, as may well be the case, they're ideologically opposed to subsidizing strategic industries.
They'll be just as useful as they are today. Which is plenty useful. Just like my 10 year old laptop is still useful. I could replace it, but why would I, it serves me well.
I mean how useful are GPT-3 weights today? That's the kind of useful they'll be relative to the frontier.
I feel like the so-called "Deepseek moment" broke too many people's brains and they've lost the ability to reason about why frontier advantages matter. I think we have to learn some new core concepts and rate of improvement over time is going to be a big one, and not understanding that causes people to exaggerate the significance of downstream distillation that's done in response to it. It's cheaper and open and that matters, but it's not the kind of mattering that replaces the relevance or advantage of the frontier, and I feel like I'm not seeing people demonstrate that they know how to really compare the relative merit of these two things so much as zoom in on one to talk past the other.
Even the original DeepSeek is old hat. The capabilities already released are game changers, whether you want to acknowledge that or not is not my affair.
I was using GPT-3 and the original Llama when they came out and realized that it is interesting, but not good enough - yet. But they are good enough now. And just like there are still people driving Renaults and Volkswagens the latest batch of open models will be useful for a long time to come.
So my whole previous comment was a plea to not do exactly this, namely, treat the example of open models like they somehow negate the value or strategic significance of having a model that leads at the frontier. I would submit that it's the core confusion behind the "Deepseek moment" and what it supposedly teaches about the relative strategic positions of different actors in the AI race.
> whether you want to acknowledge that or not is not my affair.
I felt I acknowledged it pretty explicitly. I said the likes of Deepseek are "cheaper and open and that matters", but it's the rest of that sentence that I think went without acknowledgment.
>And just like there are still people driving Renaults and Volkswagens the latest batch of open models will be useful for a long time to come.
Walking is great too! But you're not filling an economic need by selling walking to the masses, and those companies are marginalized and the economic destiny of the world is being set by those who own the infrastructure to build out the world's next generation of electric vehicles (at least in the automotive space).
I think you have to put up some facts to justify the assumption that uber-super-ultra-premium intelligence will continue to be significantly more economically valuable than boring old super-ultra-premium intelligence. Most things in reality have a point of saturation. The AI industry doesn't like to think about that; they prefer to make claims based on promises of infinite exponential growth.
I just disagree, I don't think your 10-year-old laptop is very useful either.
It's like sure yea you can access the Internet and tinker around or whatever, and with some old LLM model you can have it do fun things, but on a scale of absolute usefulness and if we include what people actually pay money for and what is highly adopted, your laptop and model are severely outdated and by and large irrelevant. That's why the iPhone sells like hotcakes all day every day and twice on Sunday and Apple is a $5 trillion company. Society disagrees with your measure of usefulness.
Sorry I'm rate limited since Dang thinks I'm arguing to much on political topics (he's probably right), but to answer a couple of questions regarding "my old technology does this one thing" you are conflating your personal and nostalgic uses for old hardware/software with what is useful for society or business. If the old hardware was still just as useful as the new hardware it would be used instead of the new hardware.
> I don't think your 10-year-old laptop is very useful either.
Technology never was about the tech an sich but about what you do with the tech. For one person that 10 year old laptop is useless, for another it is a source of $500K / year in income. You, the user are the biggest factor in how much value you can extract from the technology at your command. I'm not sure how much longer that will be true but it definitely is still true today.
The laptops generating income are the relevant metric here; most software developers would struggle with a 4GB Pentium these days. It matters to your company and your economy if your engineers can work.
Compared to laptop quality, I suspect model quality will be a much bigger competitive advantage in the tournament of the marketplace. High-quality laptops are still limited by the quality of the software developer.
You're not wrong but the amount of leverage you get out of a better model dwarfs the leverage you get out of a better laptop. Almost to the point that these are different categories of thing.
Also... employment in some parts of the stack is genuinely going away. I don't even look at CSS anymore.
> the amount of leverage you get out of a better model dwarfs the leverage you get out of a better laptop
To some degree, yes. But 'dwarfs' isn't really the term I would use. It is a bit slower, but the upsides are >> than the downsides for me. Not having Sam, Dario or Xi's minions looking over my shoulder matters to me more than any technological edge.
> Also... employment in some parts of the stack is genuinely going away. I don't even look at CSS anymore.
Yes, that's a fact, but that's orthogonal. I haven't touched either HTML or CSS in a long time now and yet I've cobbled together (I wouldn't claim ownership) a lot of stuff that 'just works'. I also would not expose that stuff to the world at large because I suspect it isn't nearly as secure as it looks.
There is almost nothing you can do in CSS that has security implications. Not zero, but the footprint is small enough that I blindly trust the robots.
I pay attention to frontend code just to keep code quality up. Frontend work is relatively low stakes from a security perspective and I've never seen the robots do anything problematic. I don't vibe code React but I think you could get away with it today.
Backend is a totally different story.
That's still a lot of engineering getting displaced.
They're already useful. People are shipping real products with them.
Also, it's entirely plausible that an previously open model (that then became closed) will be much easier to distill than having a bunch of closed models.
When you're not in the lead, your best strategic move is to neutralize trade secrets advantages of the leaders. I think a strategic approach is being misinterpreted as a demonstration of virtuous ethos, which is crazy given (as the other commenter mentioned) the norm of secrecy when it strategically suitable in basically every other context.
China bans all sorts of things, so this doesn't really matter. I actually view it as a good thing. Americans get the best access to the best technology and we can go on to use it to maintain or gain a leading edge in the progress of our society and businesses. Why would we want to give that away for free so people from countries like Russia or China can build competing companies or use these tools to undermine our society's aspirations?
> for free because they think it is good for humanity
I like Qwen as much as the next person, but that's a bit to credulous. Those models would not get the compute allocation nor distribution they do if it was not aligned with broader policy.
There are dozens of Chinese domestic AI accelerators: Huawei, Alibaba, and Baidu all have chips, there are a bunch of smaller startups too. The chinese mainland is behind on leading edge fabrication though, SMIC only does ~7nm class since they don't have EUV.
This might just be the thing that tips the scales in China deciding invasion of Taiwan is worth the risk. They're eying the Russian war warily though, if they can keep the United States distracted long enough and the EU at bay by continuing to bankroll Putin then they just might risk it. The window for that is closing though.
The online crowd harping on about Chinese models is disconnected from reality imo.
I won't use a Chinese model. Why would i bother? I pay $100/m for the frontier model, understanding it's marginally better than much cheaper alternatives. I get so much value from the product it's not worth shopping around
Think of it like apple and android. Plenty of people pay 2k for their iPhone every few years when android at 1/4 the price is just as functional. Why? Because they get so much excess value from the device it's not worth shopping around. For most people it's their only personal computer. From booking airfare, to filling out their kids permission slips, it's a device they use 10+ hours a week. They don't bother, until a paradigm shift happens and something is 10x better than the iPhone. I imagine llms will follow the same trajectory
You aren't paying API prices. Anthropic (or OpenAI, SpaceX, etc) are almost certainly losing money on your subscription. How long they'll be able to continue to subsidize your usage is an open question, but they definitely won't be able to do it with everyone (currently, their solution is to make enterprise users pay per token, but that might change). What that means is that for the customers that the frontier labs need to be profitable, going with a closed weight provider isn't "marginally better intelligence for marginally higher (or even lower) prices" but "marginally better intelligence for much higher prices".
I get (sometimes) frustrated with people that don't work in the tech industry over this concept, and having them rationalize that their usage is heavily subsidized by the distributor of the model.
The costs in compute, electricity, cooling, etc. per token is much higher than most people (I feel) who work in the industry realize. Which, cognitively makes sense: they just want the 'magic 8-ball' to give them a tasty dinner recipe that meets their specifications, for example, and don't care how the 'sausage' is made.
However, economies generally equalize with supply and demand, and this (most likely) will become cheaper as the technology progresses and optimization passes/new algorithms are discovered.
Exactly, like it has done in cycle after cycle in the past. It would be very naive to assume that once you have a moat it will stay that way with a thing like this.
Unless new data has come out, we don’t know if they are losing money on subscriptions. We know that there is a big difference between subscription and API costs per token, but that alone doesn’t mean much. Subscriptions may be underutilized, or margins on API tokens may be very high. Both are probably true.
I can understand that they might be cautious about sharing their data with a Chinese company.
But them being the most successful companies means that they can just buy their own hardware. And run whatever models they can get their hands on in there.
Even if those models are Chinese. They (the companies running them on their own hardware) would be in full control then.
I would happily bet that > 50% are already doing just that. Whether you'll be able to collect the data is another thing but they'd be fairly stupid if they haven't at least checked out what is available. It would be next to irresponsible not to do so and given that they're in the S&P 500 you would have to at least give them some credit.
Only because anthropic&co will price themselves just below the cap where people contemplated switching. In so, the Chinese models still set a sort of cap on the prices they can charge, even if not directly.
It's not about quality, but more about processes, for example we handle EU, US personal, financial data etc, we have strict rules about it (company rules, and gov ones), and there is no place for chinese model here.
Yeah. People have very strange ideas about competition and choice and moat. If all you needed to unseat the entrenched was a competitor then Bing would be going toe to toe with Google, and Edge with Chrome. They have a billion+ devices they can stick those options as defaults and still nothing. There are many examples.
People are naturally sticky. If they're satisfied with a product, they'll stick around unless something comes along that is so much better it gets people talking. Open AI's 1B+ customers won't give a shit about Chinese models. Enterprise customers won't move to Chinese models, especially just to save money. They are a non issue, especially if the M.O is just going to be playing catch-up.
You're wrong. Are you sticky about your search engine? Now try having your search engine charge you $100 a month and tell me you'd stick with google search. Open AI's 1B+ customers will give quite the shit about cost if chatgpt stops being free.
They're sticky, but not for everything. There are common goods where the market has commoditized greatly because customers are conscious of quality and not provenance. Something like apples.
Most people buy their apples from the same grocery store every week. They're not shopping around every month to find who has the cheapest apples or 'best' apples. They go where they're accustomed to going, and as long as price and quality are satisfactory, they have little reason to change. Walmart, price-sensitive as they are, have relationships with fruit suppliers they've maintained for well on a decade. Even in commoditized markets, people are sticky.
Google, the titan mega-corp with more money than they know what to do with and a billion+ android devices to ship gemini on and it's made no dent for ChatGPT's consumer growth and adoption. Yet some plucky open source chinese models will?. It takes more than that.
Yes it is. Tiktok's content and content recommendation algorithms are much better than Instagram. Users spend more time on Tiktok than they do Instagram and it's not close. Tiktok's engagement rates are several times better than Instagram. Reels did nothing to dent it (yet another example in the book). Again, nobody will care about Chinese models if they're just more of the same. They can take a piece of the pie, but this idea that they'll spell doom for the frontier labs is nonsense.
At $100 / month (or $1200 / year) it may not be worth it, for you. But many of us would be spending a (large) multiple of that and then thinking about how much you spend, where you spend it and who you spend it on can make a big difference. For companies there are other considerations at play as well, for instance trust.
People buy iphones due to network effect, android was late to the RCS game and now it's a moot point anyway.
How many people use an iPhone to its maximum? Isn't it the same with models? I think engineer's like to flex that they need a top of the line frontier model for their shitty corp projects. A Chinese model will write your Jenkinsfile just fine.
First off, $2k is the price of the new iPhone Duo. Suggesting that that is basically the same thing as a $500 Android phone is... strange.
But also, I don't think you should use individual consumer behavior as a proxy for how the overall LLM market behaves. Current estimates are that individual users represent a pretty small share of overall genai revenue. Most of it comes from enterprise contracts. Those might be more price sensitive because the CFO gets a say in which vendor they choose.
For a couple years now I've been accustomed to choice of foundation model being a heavily scrutinized design decision because it's just about the easiest way to manage COGS. I can certainly imagine scenarios where, given the option to pay 1/2 as much in inference costs but with a 5% reduction in output quality, the boss would say, "Nah, that's a bad deal." But I have yet to encounter one in the wild.
> First off, $2k is the price of the new iPhone Duo. Suggesting that that is basically the same thing as a $500 Android phone is... strange.
Okay fine, it's $1,400 for a latest iPhone Pro with 512gb of storage. Point still stands.
> Most of it comes from enterprise contracts. Those might be more price sensitive because the CFO gets a say in which vendor they choose.
I think enterprise contracts are even less sensitive to price than consumer. That's the whole idea behind enterprise pricing. You'll see companies charge multiple times as much just for SSO for instance.
There are limits to this obviously, but to think that major commercial enterprises will switch over to some Chinese models to save some money is laughable.
> Okay fine, it's $1,400 for a latest iPhone Pro with 512gb of storage. Point still stands.
So you switched away from the specialty product, but you're still comparing a top of the line 6.3 inch iPhone to a mid-market Android phone. Why not compare it to a Pixel 11 Pro with 512GB. That way they're at least comparable devices. But also, that would cost $1,220, which I suppose doesn't go well with the intent of suggesting iPhones are several times as expensive as Android phones.
The reason why I'm digging in on this is, when you start your argument with such a transparently silly comparison, it gives the impression that you're dealing in superlatives and willing to say just any old thing. Which undermines your own credibility.
So, getting back to corporate - multiple times how much for SSO? Okta Essentials is $17/user/month, which is a little over half as much as the base price for Cursor Pro, and about 2/3 the price of a basic ChatGPT seat.
The whole point of the comparison was that people pay $1500 for an iPhone while a $500 Android phone could theoretically provide much of the same experience for a fraction of the price.
Comparing two devices at the highest price point is besides the point.
tbh iPhone genuinely doesn't have anything over chinese models, and if there is any illusory sense of privacy, that is purely marketing. Genuinely people thinking iPhone is anywhere close to worth it lose respect because they are at the end of the day just tribes that love one thing
lol you created an account just to rail on iPhone tribalism? I wish people would realize that you can have multiple smartphones, and there is no one correct path.
I spend extra on a smartphone because I use the thing all the time, see it all the time, hold it in my hand all the time, it's my camera, music player, note taker and so on.
For AI? Prompt comes in, tokens come out. The value of the 'ecosystem' is roughly zero to me. Switching costs between models are essentially zero. The UI and UX is the same whichever LLM runs underneath.
If you do use llm some, then the $20 tier makes sense, but that's not where the money is. If you use it a lot then a $100 sub probably makes sense. But if you're a BigCo that heavily uses it and pay API prices and suddenly you pay $200 million a month, well, maybe it's worth buying a bunch of hardware and stick it in a basement somewhere, and you won't upload all your secrets to your future competitor to boot. If US labs didn't care about the competition from Chinese models they wouldn't lobby so hard for banning the evil, unaligned, super dangerous communist models that want to steal our freedoms and make our gas expensive.
Ultra-cheap models like Deepseek are also very nice if you need to burn billions and billions of tokens.
But if you’re a heavy user you’re probably paying $100 for something that costs $1,000. Hence Anthropic’s problem. If they charged real prices to the masses the massses would flee.
There's been a headline circlulating lately: 80% of Anthropic's revenue comes from 1% of their customers. The $100/mo or however much individuals are paying doesn't seem to be material.
I was playing around with OpenCode on Omarchy over the weekend, working on my Android app, and was struggling to spend a single dollar with DeepSeek. The quality difference from the frontier models I use at work was hardly noticeable (where I typically rack up at least a few hundred dollars per month).
LLMs are not a luxury brand that individuals buy. Companies are always looking to save money. And their enterprise consumers are all developing their own models, so idk where you are getting this "analogy" from.
When the chinese or any other party releases a model that is Opus 5.5 level, there might be a shift to other providers as especially people in the EU are trying to get rid of their dependency on american stuff.
Wish there were more case studies on what people were actually doing. Building out an entire factory sounds amazing. Are they actually getting that level of value out of AI?
Sounds like this will be another one of those things where everyone makes their money and it then will eventually become something experienced people 'blog' about.
> Wish there were more case studies on what people were actually doing. Building out an entire factory sounds amazing. Are they actually getting that level of value out of AI?
I don't doubt it.
> Sounds like this will be another one of those things where everyone makes their money and it then will eventually become something experienced people 'blog' about.
Or not. The problem is that right now you and a whole bunch of others are trying to outrun a pack of lions. The lions have already taken down a couple of your group. The people further ahead have seen what the lions can do and they are attempting to speed up to the point that they can outrun them. Whether that will work or not depends to a large degree on what the other people are doing and they are not going to make it easier for them to keep pace.
That partially explains the lack of deep insight blog posts, besides everybody is just too bloody busy.
Yes. And yes you can churn slop. And I’m sure many will and many will get stuck with a source base that grows bigger than LLMs can cope with and becomes unmaintainable.
But you can also have many engineers operating it, testing outputs like you would in a real factory, etc.
Will be interesting to see how this pattern evolves. If it even makes sense.
Don’t know why this was downvoted but basically correct. OpenAI is in a price war with Anthropic right now for enterprise api consumers and that’s the biggest revenue line item for both.
They were counting on a duopoly so they could split the market between them but then someone decided to spoil their little party. To what degree that was an accident is anybody's guess but the timing is certainly interesting.
That's a great way of putting it and something I have come to realize as well. I'd rather just pay for the frontier model if I trust that it is indeed at the frontier and works reliably. Same with the iphone.
Anthropic doesn't care about sub users. At all. The real target is pay pig enterprises that give their employees access to the API and allows them to go buck wild spending $1000 on fable in a day.
I thought you would have also mentioned the use they make of data collected from loss leader subscribers, from at least those that don't disable collection.
With that, there are at least three distinct reasons to care about subs: PR, hook and training data.
It's really marginally better and in some cases actually worse. If 100 dollars is throwaway money for you, and prices don't increase sure why switch. For heavier users, and for people with less money(most of America is struggling with bills and food) it's not attractive at all.
> Why would i bother? I pay $100/m for the frontier model, understanding it's marginally better than much cheaper alternatives. I get so much value from the product it's not worth shopping around
Wait until you are forced onto an enterprise plan...
The LLMs don't have the moat that Apple has. Apple has carefully built their walled garden to keep people in. Their messaging, their cloud services, their media store, it all keeps users in.
LLMs don't have that. For at least 90% of users, the model in the back end is completely irrelevant to them. Switching to Kimi won't lose them their iTunes music.
You won’t use a Chinese model, and I won’t either. But both of our bosses have much higher incentives than we do to routinely shop around, and unlike us they can convince an Anthropic sales rep to give them a discount.
"I am spending a provably untenable amount for a services that will have to degrade to meet my price point, the cheaper options and processes are beneath me"
I think you’re right - it’ll be interesting to see how the behemoths navigate when new and cheaper memory manufacturing capacity comes online. Currently predicted to happen starting 2028. That is where most of the current hardware costs are concentrated.
On that front, I think DeepSeek is a dark horse. They are really odd - not chasing revenue, care more about unit profitability, are obsessed with driving down costs (like Elon back in the day). As the founder says, they are content with where they are, being the model that does 80% for a fraction of the cost.
I mention them because they are playing a different game and might be able to out-innovate everyone else.
Deepseek has been a game changer for me. I don't use them right now but the model is very capable.
What a lot of people don't seem to realize is how much of the edge of the 'frontier' is in the tooling, the prompts and the harness. The LLMs themselves are already all reasonably close if you keep all the other stuff constant. Sure, one will have an edge in one domain or another. But that edge mostly translates to a degree of performance rather than some absolute. And if you allow for a few more toolcalls, a web search or a longer context then that difference is much smaller than it might seem at first glance.
The calculus may be that DeepSeek (or similar) + human is good enough and that the frontier simply won’t have the growth to get to the next level that differentiates them and justifies the token cost. They get stuck in a race to the bottom which is opposite of what they want.
Anthropic is not in the model business. They were smart and they are building productivity ecosystem business. Look at what claude artifacts are doing now -- inline multi-user editing, comments that users and/or models can respond and take action on, import/export from all common formats. It's at least a Google Docs killer if not an M365 killer.
And claude code as a harness and skill/plugin/mcp ecosystem is far more valuable than any one model.
And coward for long-running tasks, though they're slipping on that one because they're really trying hard not to make Claude an assistant. We'll see if they react to Muse and change course.
But the Chinese free-weight models? Not a competitor. If/when those companies (or others) build vertically integrated productivity stacks on those free models, then we'll talk. Microsoft certainly saw that opportunity but couldn't get out of their own way and are basically roadkill at this point.
>Anthropic is not in the model business. They were smart and they are building productivity ecosystem business... It's at least a Google Docs killer if not an M365 killer.
Google Workspace revenues are something like $25bn/q, and that's the entire workspace division, (including enterprise gmail sales, so the productivity suite is meaningfully smaller than that figure). It's taken Google a long time to carve that slice out of Microsoft's entrenched market position. It's not small money, but they'd basically be going to war with two of the largest and most profitable companies in history on their turf.
I don't think they can credibly take that business plan to the market and say it'll be worth $1.75tn. They're all-or-nothing on being in the model business, and everything else is superfluous.
What do you think Google Workspace would sell for, if Google divested?
$100B/year in revenue; SaaS so call it 70% gross margin, 30% net, NPV is about $500B.
Not enough if you think that's the only revenue Anthropic could every have. But even if they only peel off $100B NPV, it's incremental to an IPO valuation.
I mean, a lot of people before them were "not in the model business" (Cursor et al) and it seems they got disintermediated by the model companies. Step 1 is still to have the best model, or hope for model progress to taper out.
Vertical integration is hugely valuable, but revenue comes from the top of the stack, not the bottom.
Apple makes great margins on hardware. They are 100% not in the CNC milling business. But their investments at that low level and vertical integration allow for higher margins at the top.
Cursor had... nothing. A minor, indefensible value add to a much larger and wealthier supplier.
Are today's prices actually the ceiling? OpenAI added a $500 tier pretty recently while lowering capacity for their $200 tier. I wouldn't be surprised to see Anthropic doing something similar soon, particularly once they are a publicly traded company beholden to making shareholders happy.
Even outside of the Chinese models, Amazon, Google, Microsoft, Meta all of them are offering significantly more coherent and competitive internal models and reasonable price.
What's it like co-editing a combo document/workflow with multiple coworkers and an AI agent on Amazon, Google, Microsoft, or Meta?
Like if you want to design a survey you can send out, and collaboratively edit and test the survey, ask for changes in layout, wording, etc, and design the statistical analysis to be used, before sending the survey out where end users can fill it out right in the doc, while internal users/admins can ask the agent about its results?
Honest question -- that all works pretty well in claude. Amazon, Google, Microsoft, Meta all pretty similar?
Cloud compute has managed to have pretty good margins. That seems like a really similar business model to what Anthropic is doing - inferene+value-adds as-a-service. Why wouldn't they also be able to get cloud level margins or a bit higher?
Lots of people seem to have pretty short memories (or are too young to have seen it), but the flight from "local service" to "cloud service" was intense.
Companies don't mind paying extra to have a another company that does nothing but said thing do said thing for them. It even actually often ends up being cheaper/more profitable.
I don't think AI will be able to sustain cloud compute-size margins. Inference is a commodity and value-adds can't be sold for anything. Why pay for an advanced harness when you can just ask the model to build one for you?
Observing SaaS vs using an open source stack in the beforetimes, the answer might be some combination of, "So I never have to think about it, and if anything goes wrong, no one can blame us because we went with the biggest & most trusted provider."
Already well documented that there is huge variance in inference serving efficiency; at every layer (model, software, hardware) you have opportunities for gains. Similar to how “the Chinese” haven’t undercut on cloud providers’ CPU offerings, there’s a very good argument that the hyperscalers will manage to keep their vertically integrated hardware/software edge here too.
I don’t really know where this commodification idea came from, maybe MBA types that don’t actually understand how cloud economics work, applying basic first principles analysis?
The operational engineering that goes into serving a frontier model is _highly_ nontrivial, it is not commodifiable. This isn’t a SPA application.
>The operational engineering that goes into serving a frontier model is _highly_ nontrivial, it is not commodifiable. This isn’t a SPA application.
I don't really see it frankly. Admittedly I never tried it (I only played a bit with local models) but conceptually how is it much harder than all the other cloud services that already exist? My educated guess is that building a competitor to Netflix, Youtube or Dropbox seem technically a lot harder to get running than offering inference on demand for instance.
It seems that the main barrier for competing in that market at the moment is getting your hands on the GPUs/RAM and a datacenter to put them in.
> Similar to how “the Chinese” haven’t undercut on cloud providers’ CPU offerings
No Western company will be allowed to choose a Chinese cloud provider by their legal department or by their stakeholders. Which leaves only the US cloud providers as viable sources (as us, Europeans, have been too busy building our revenues based on turism and other such non-tech thingies instead of building real stuff).
Today’s prices are a ceiling for today’s capabilities, but not at all a ceiling in general. One could imagine dramatically higher spend for dramatically higher performance.
idk what is this you people do, but most of my day is not spent on writing code. most of my day is spent in meetings abt budgets, timelines, evaluations, compliance and marketing. i don’t think ai is going to automate corporate circus anytime soon
That depends on whether "frontier" models can maintain an expanding frontier. If the frontier settles, they're dead, and it will be commoditized. Otherwise, there are still plenty of pathological behaviors of these things to address that will keep expanding that frontier (if that's possible and the limitation isn't the approach itself).
The reception of saying things like this is interesting. AI stans think I'm way too pessimistic but AI haters think I'm mindlessly optimistic.
there is no point of saying 'the chinese'
everyone will do it because it was proven that any political frills might cause an attempt to damage your system.
I dont know when, but i think if you keep menacing of taking technology of people hands for any political reason will be a reason for people to not use it or to rely in a more reasonable party.
The point in mentioning the Chinese is that they are doing this today. In Europe there is Mistral but I think they're too far behind the frontier to really matter but in time they may catch up.
Agree.
I think slowly companies and governments are ditching US tech.
Many companies relied on US tech rather than Chinese with worried of CCP intervention and now it is clear that it will be the same with US tech.
I understand that US is migrating to a no friends policy, but I don't think its internal market is nearly ready to support it if clients start to go away.
Anecdotally, I talked to people in a recent event and the common topic was "what we are doing to avoid a blackout of US tech."
People on big companies have reserved hardware and alternative software and are scaling down Amazon and Microsoft solutions at a fast pace.
People on smaller companies are doing similar strategies but relying on a multivendor strategy.
I think this was inconceivable 3 years ago. Every company in Europe and Asian would gladly pay for amazon for cloud services and now they are using AI to migrate out the lock-ins.
We are seeing American LLM companies more and more relying on "secretive" methods to increase scores and this can only mean that they are not evolving fast enough.
The gaps between the reported benchmarks and measured ones are increasing.
It might be "safety" concerns or whatever, but I don't buy it.
Like Musk, Altman and Amodei have been overpromising every time they need more money and each time they need more money and now they internet is poisoned with their own content and they can't even trust any sources anymore.
what you mean why? most companies with spare cash payed 10-50x what they actually need in tokens, just to see how it goes. it’s useful, it’s not that useful, so while the price per token can increase, everyone is getting smarter about spend. and even price has a limit, you can’t make ai more expensive than a human, because then everyone would just hire humans.
I don't think today's prices are the ceiling, considering they are subsidized. Once businesses have grown dependent on AI (and their institutional knowledge is lost), they will pay much more just to stay afloat.
Unfortunately it's now extremely likely that our governments will manipulate markets to keep frontier domestic AI afloat. They are financially and militarily dependent on domestic AI now.
Chinese models are being banned, will continue to be banned by USG. Even the Chinese govt is restricting external access to models now. It starts with banning Govt access to International AI, but will continue to consumer and business access.
> Meanwhile the Chinese are going to undercut them every chance they get.
I wish they were, but I always wonder when people chime in with Chinese models what they are actually doing with those. I have an OpenRouter account and give various models a shot every other month, wishing for an alternative, but I always come back to Claude. Even more so since the switch from Opus 5.1 to 5.5. To me, personally, it's unmatched. Like a year ago it was very different, and I would use other models all the time. But honestly at the time they all felt kind of "meh" still. I just hope everyone is at a good baseline in a year from now on, so I actually have a choice. And then, as you stated, things will get interesting.
I use Opus 5.5 daily at work and a mix of GLM 5.3 (Flash or not), Deepseek v4 (flash or pro) at home and while Opus 5.5 is more capable, in my opinion it matters for less than 5% of the work i do.
These chinese models are simply good enough for the vast majority of tasks I run and when they're not I use Astra or Opus 5.5.
Yes, leaving Opus 5.5 on all the time is comfortable when you pay the 90€ plan but it's just not necessary.
I use Opus 5.5 at work and I use Sonnet 5.5 at home. Sonnet 5.5 medium according to AA cost per task is $0.48 per task, while GLM 5.3 (max) is $2.01 (opus 5.5 high is $1.82). GLM 5.3 flash is $0.28 per task and Deepseek 4.1 flash 1017 is $0.26.
So it seems like Sonnet 5.5 medium, GLM 5.3 flash and Deepseek V4.1 flash 1017 are all in a similar space in capacity and price, however the $20 anthropic sub will get you like $200-$300 in sonnet 5.5...
Another bonus is that sonnet uses a fraction of the overall tokens and finishes much faster than the average chinese model, so your work goes faster (Sonnet 5.5 medium in 2 minutes, Deepseek 1017 in 6.5 minutes, GLM 5.3 flash in 13 minutes...)
I still don't get why paying for chinese inference makes sense. I should try Haiku 5.5 high/max because it's posting higher numbers than Deepseek V4.1 flash for half the price
Yeah, I spent the last week with Deepseek Flash 4.1-1017, Kimi 3, and GLM 5.3 (and 5.3-flash). None of them were literally useless but also none of them were capable of making progress on the main project I am working on where Opus, Sol, and even Gemini Flash have all done very good work. Benchmarks might have you believe open models are only barely behind the big US labs in intelligence, but it feels much worse in practice.
I am running GLM 5.3 Flash locally at home for coding and from my point of view it is indistinguishable from the frontier models of 6 months ago. It can handle almost every task I throw at it.
I have 2 DGX Sparks, 256 GB unified RAM, so not a cheap set of hardware. Luckily I bought them before the recent price increase.
However even with a high tier gaming machine you can run one of the Qwen models and it will be good at coding... like having an intern with boundless energy that will sometimes make mistakes but in general save you a lot of time. And for automating tasks involving scanning documents or creating summaries it will be brilliant.
I don’t know why you’re getting downvoted. One of my coworkers who was constantly touting Chinese models a few months ago now only uses opus 5.5. It is a huge difference.
the market for their valuation is just not there imo. they need to significantly expand into non-coding products and outshine their coding offerings to make it work.
as in, if they capture every single professional software dev and extract $1000 from them every month, their yearly revenue will be like $500B. do your own back of the envelope on that with ongoing costs and consider how unrealistic a goal this actually is.
even worse, the very product they offer is self limiting. if it becomes so good as to actually replace software devs, they will have less customers to extract money from.
their valuation essentially relies on a small percentage of mega users having unheard of levels of spending.
the part about a small percentage giving them most of their money is already true (their rumored $100+ bil revenue as of mid 2026 already outshines all software devs having a $100 max subscription), but they are two orders of magnitude or so away in terms of the actual amounts to make it work.
>as in, if they capture every single professional software dev and extract $1000 from them every month, their yearly revenue will be like $500B. do your own back of the envelope on that with ongoing costs and consider how unrealistic a goal this actually is.
The market for Claude Code is much bigger than professional software devs. It's really anyone who uses a computer. I already know normal people who have been using it for personal software.
>The market for Claude Code is much bigger than professional software devs. It's really anyone who uses a computer.
I'm sorry and I'm sure you are being honest in knowing non-tech people using it, but this is on the whole false. The vast majority of people not only have no interest in "personal software" or using Claude for programming, but the slice of the population that does actively interact with AI is using free chatbots as a nu-Google. Most tech people don't even want the "personal software" thing, I don't know why this line is being pushed as if your grandma is going to make her own calorie counter app one day.
i have non-tech friends who actually do personal software. personally i don’t have any desire to. i don’t think grandma would justify the valuation tho
I just don't see this right now. Every time I think of an idea to vibe code up I see someone else has already done it and is actively maintaining it on github. Why would I bother paying to make it myself when someone else is already doing it and other users have already reported all the issues?
What do you mean, "what's my source to the contrary". What you wrote has absolutely zero connection to what I wrote. Did you mean to reply to someone else?
Not really. Random non tech users won't pay $100/mo. Nor should they, most people will be served fine by whatever free thing MS bundles in Windows next year.
Also, most people don't want to build software. They just don't care. There'll be tinkerers like with anything, and I'm sure some people will create solutions to their niche problems with (as you say) 'whatever free thing MS bundles in Windows'. But like the programming trope - they'll build the 'ultimate' todo list and feel like it's an amazing achievement, but be back to pen and paper/notepad/todoist within 6 months.
In most office jobs, at western salaries, you don't need much productivity improvement to offset $100/mo
Though I would expect the majority to do fine with $20/mo. That's the same effective cost as replacing a $500 computer every two years, which is the sort of expense most companies are comfortable doing without much second thought
You don't need to spend $100/mo. They have other price points. And I think you and others are underestimating the appetite out there to be able to create personal custom software. It's empowering. Like I said, I see tons of people I know who can't code who have started doing this (and been very happy with it).
The vast, vast majority of people are happy enough using free chatgpt. Openai could just add a kind of online app development/marketplace thing to chatgpt and that'd entirely steal the personal custom software thing. But I don't really think most people care that much.
You don't have to skip the plumber or the mechanic many times before $100 becomes a plainly obvious need.
It's not gonna install a shower for you, but it will confidently walk you through that leaky faucet. And I don't know if you have paid a pro recently, but they don't charge $20 for a 20 minute fix.
Indeed. On the other hand, I fixed my underfloor heating with the free claude version, so unless they remove the free tier, I still have no reason to pay for it.
It's quite a leap to assume any kind of issue would require a $100 subscription. Plumbing, mechanics, electricity ... The issues are usually far easier to trace and debug than in software, because the systems have been designed by smarter people.
You're not buying some arcane and complex solution, you're buying the convenience of not watching a couple of youtube videos or articles of someone troubleshooting the exact issue you're having.
To boot even if you skip the free models, you could probably do a year's DIY assistance with 50 cents worth of GLM or Deepseek tokens. And the really costly jobs are ones where an AI assistant won't really help since, shockingly, most of the cost is hours of labor which you would have to do yourself.
> How often are people paying at least $600 annually for something AI can help them do instead
I'm going to need an example on this one, and examples that can't be covered equally well by a YouTube video or an 20 year old forum post. It also has to be legal, as in not violating codes for electrics or plumping, I can violate those on my own for free.
Most people have no interest in fixing the leaky faucet themselves, even if the already knew how and didn’t need an LLM to explain how. They’d rather pay someone and do something else with time saved.
>"How often are people paying at least $600 annually for something AI can help them do instead"
AI recently told me that my oven was broken because a part that doesn't exist on the oven I own was malfunctioning. A bunch of people poking around with electronics, motors, etc. because they think their AI chatbot can fix anything and everything is going to lead to injuries, deaths, and most assuredly more money in the long haul.
leaky faucet fix is already supported by gemini on google search lol, this usecase doesn't need 100$ anthropic model. And if you think google will be bleeding on gemini you're just dead wrong
I agree, I would say $500 billion valuation is fair, they don't have a moat and open models are catching up, they have a limited products with strong competitors, if they have a step change model in the pipeline now would be a good time to release it.
>the market for their valuation is just not there imo
I tried to look for the valuation in the linked document, did you see it or any reference to a valuation elsewhere in anything published by Anthropic? what is "their valuation" that you refer to?
Comments here are not considering what Anthropic is doing with Claude as a product. The models matter, yes. But they are building Claude into the only tool you need to get business done. In the past few weeks they have added slides and docs - a shot across the bow to Microsoft's dominance. If they can pull off building the best interface to get work done, $500b in revenue starts to seem not too crazy. It's more about selling a complete product than it is about selling tokens.
I somewhat agree to what you said, but also, the whole point of agentic coding is that "code is cheap". So I can't imaging companies like Google not having the resources (whether human or token) to build a better agentic assistant/harness than what Anthropic can. I mean Google has a pretty good starting point with Google Docs, etc.
Business people do not even know what that is. Are you talking about models when the rest of us are talking about harnesses and the interface people use?
Google’s issue (and many large companies’?) is organisational. Google has famously launched a bunch of products to compete in multiple markets, only to sunset these products soon after.
Everybody, everywhere pretty much always underestimates maintenance. And AI sucks at maintenance. It’ll just as likely nuke everything than actually maintain a piece of code running in production.
Yeah I’m really surprised at how little attention this is getting.
I’d say it’s more Notion than GDocs for now, but the direction is clear. Gobbling up all the SaaS in order of descending value to agents.
My bet is on promoting their internal Tasks representation to something more like a Jira/Linear.
But then obviously Slack is another one, and Duet is already starting to build a “Channel” abstraction, so making Duet multiplayer is a clear possible next step.
One big thing: Opus is one of the few models that you can mostly trust not to get prompt hijacked. This can make all the difference between trusted in the office vs. not.
Opus 5.5 is the frontier today. But there are more ways for Anthropic to lose than to remain in that position. I'd take Anthropic stock if you gave it to me but I sure as fuck wouldn't buy into it.
The tool is not a moat when you can tell Opus to build you a better tool.
If you owe the bank a million dollars you have a problem. If you owe the bank a billion dollars the bank has a problem.
The same logic applies here.
Google, Amazon, Microsoft, Meta, Broadcom, Nvidia, SpaceX and others are spending hundreds of billions a year each on fast-depreciating infrastructure to serve this potential AI demand. If the demand never materializes then they know they are in big trouble. So they have every incentive in the world to prop up Anthropic (and OpenAI) and keep the party going.
Can they keep the bubble inflated indefinitely? Probably not, but all these companies combined have heck of a lot more influence than Anthropic alone.
They aren't "fast-depreciating infrastructure" -- research shared by a16z team, rental rates are up across the board, even for GPUs that are 5+ years old. The demand is real right now. The proverbial tide could go out but we aren't seeing it yet.
Yeah the fab shortage is really keeping lifetimes long, far longer than in the past.
I've brought my old GTX 1070 out of retirement for for some molecular dynamics these days because its "free" except for eh electricity and have Ben pleasantly surprised at what it can get done chugging along in the background. I'm considering buying some more, as it's kind of a steal in pricing.
That’s because of current supply shortage, not inherent value. Is there any reason to believe that when fabs can sufficiently scale up production these GPUs will continue to be valued like gold and not something you hold on to for a couple years and then toss in the bin for a newer faster model – aka how computer hardware economics have worked for the last 50 years?
I have a hard time believing they are likely to get to $500bn in revenue. That’s another $450bn in revenue growth that needs to happen before demand tapers off.
But I see every reason to believe demand will taper off. It seems it’s already happening. Enterprises have been deciding that maybe corporate chatbot and coding agent budgets shouldn’t actually be infinite. AI startups are starting to successfully outcompete each other, effectively killing off members of Anthropic’s customer pool in the process. And consumer demand for AI products seems to be dropping. None of these are signs that suggest that Anthropic has thus far met only 10% of plausible long-term demand.
Total global wages ~$12 trillion/year. The "what you have to believe" here is that AI tool spend becomes at least 10-20% of it, my belief here is we see net slowdown in hiring as human + AI = super productivity so as businesses grow we'll continue to see increase in AI spending.
Then if inference does grow to a $2-3 trillion/year market that Anthropic is a big winner, as big as NVDA is now (they're going to be over $500 billion in revenue in calendar year 2027).
At this point, though, “human + AI = super productivity” is looking more lime dogma than reality.
The pattern seems to be that it makes people more productive when you measure it in terms of raw work product volume. But not all work product is equally valuable, and we have yet to see a clear pattern of increased economic productivity. Instead we just keep finding new and interesting bits of jaggedness in the frontier.
Of course nobody can prove those economic gains will not manifest at some point in the future. I can’t prove that Jesus isn’t coming soon, either. But I also can’t prove which millenarian denomination, if any, he would choose to bless in the event that he does come back.
> The pattern seems to be that it makes people more productive when you measure it in terms of raw work product volume. But not all work product is equally valuable.
This is a good point. I can code with Claude Code at 10x or maybe 100x, but have very little in the way of design, sales or marketing skills, and thus, I've been unable to make much side-hustle money from my new superpowers.
Meanwhile at my boring day job, my productivity is gated by a frustrating variety of coworkers and embedded processes, none of which seem to operate at 10x, to put it politely.
Products don't exist to serve themselves and code is just a fraction of what makes the world go; wages go down, spending goes down, free capital to spend on iterating goes down.
It's part of the reason so many of the dark enlightenment dorks are pushing more towards automation of control.
There have been no signs of "super productivity" in the larger economy due to AI. Boosts in productivity have, so far, been seen exclusively in sectors like tech.
> Everything comes back to whether the demand is really there
And unit economics.
HY1 2026 revenue less compute and infrastructure turned positive (45% gross compute margin; $8.9bn C&I to turn $16bn revenue) for the first time; it was -176% in FY 2025 with $7.3bn C&I on $4.6bn revenue.
It looks like a lot of costs of revenue are in sales, marketing and partnerships, though. Backing those out shows H1 2026 margin at 26% ($4.2bn) after -72% for FY 2025. Still positive.
> they will keep doubling down, because stopping is simply not an option
Of course it is. Apple is taking that strategic approach. If Anthropic believes it’s approaching saturation, pulling the plug when it’s at steady state and its rivals are over-invested is the winning move.
Well, unlike Apple a lot of very aggressive investors in Anthropic are riding on its trillion dollars valuation. They just can't on their own decide to stop or slow down.
Apple has a lot of actual money, Anthropic does not. Apple sells a lot of products, Anthropic doesn't. Apple have a platform multiple players want a piece of, Anthropic fight to stand alone.
There's very little comparison to be had here. Also, Anthropic likely have investors with way too much leverage for them to stop.
...exactly this were my thoughts when reading the response:
Maybe Apple is just waiting on the line until someone can be sucked up at a penny if the house is on fire - and pretty sure, this will happen. Not in 2027, but I expect MA activites & consoliation before 2030
These were ~Q1-Q2 commitments based on what Anthropic THOUGHT token maxed compute demand was going to be over next few years. Then Late Q2, and Q3 PRC models dropped floor for token prices. It may very well be that Jevons demand which Anthropic though required 500B of compute now only requires 100B, and unless demand is 5x what they thought, those additional 400B non hardware cancellable commitment are going to be balance sheet concrete shoes.
The OP post is misleading because it makes you think Anthropic has to earn 500bn per year in revenue, but those commitments listed are not yearly commitments, they're commitments over 10 years with contracts that run until 2036.
Anthropic needs to earn 52B a year in annual revenue to honor those specific commitments plus obviously its own operating expenses... and yeah that will require Anthropic to grow as a company, but their S-1 indicates 67.2B a year in revenue and sure maybe they stop growing and this is their peak... or maybe they do manage to grow further to 80B a year, 90B a year...
are those 67.2B revenue or profit? Because you know there are costs associated with running the business, so of those 67B if they only keep 30, they they're in the red, no?
Yes its hard to predict for sure. Especially as the dust will only settle properly when Frontierlabs reach some kind of slowdown or ceilling, which I do not see right now.
I know 2. That is out of the 3 people that I live with. Sure, this household is probably an outlier, but I think people inside the tech bubble do not realize the depth of the anti-AI sentiment from outside the bubble.
Okay, so if we make the dubious assumption that revenue would increase proportionally in accordance with usage up to 100% of the population, that would still only account for a 6x increase in revenue-- not the 10x increase that they need to fulfill their contracts. Their product is increasingly replaceable, their revenue is super concentrated in just a few customers [0], and they're cracking down on distillation which was almost certainly a decent percentage of their revenue as well [1].
that would still only account for a 6x increase in revenue-- not the 10x increase that they need to fulfill their contracts
Assuming you're talking about the $600 billion or so over the next decade, they don't need a 6x increase to cover that, they're already pretty close based on the $65B run rate as of last quarter.
their revenue is super concentrated in just a few customers
20% for the top two customers is not actually that concentrated. If both of them go to zero, at their current growth rate (45% from Q2 to Q3) it would take about 6 weeks to replace that revenue.
But I do assume its not just adoption in the future its replacement and re-investment:
Right now a company can't invest in anything else than humans. A team has 5-10 members, the 5-20% of them are below avg or just avg. you were happy to have them for whatever reason like smaller tasks, easier tasks more repetitive tasks.
Now you can just replace them with AI Tokens.
The second driver of this, or why this will/is happening not just for something like a developer through coding agents: the agentic layer is coming. Which will eat tokens for breakfast, but will also replace humans.
Your HR system? Will have an Agentic layer by default. Your HR system will either respond automatically to you or with A2A to the ticket system. The ticket system will have an agentic layer. Your SEO tool? you will us the agentic layer to create camapaigns automatically. You migth give feedback but you will need less people and less skilled people if even.
And this will happen on every layer of your stack.
Unless anthropic becomes an entertainment platform like netflix or something, I really can't see how they gain significantly more _paid_ users. The vast majority of people will use the free tiers of openai and claude.
Currently every business is building the Agentic Layer. A layer between the user and the product.
With tx to an LLM, this layer will close the gap to full or borderline full automatisation.
Your Ticketsystem will have agent support out of the box. Your incident system too. Your UI for SEO, SEO optimization, article creation etc. every single on of them wijll be there and consume tokens.
Future invesment from 10 people in your l1 support might be 5 + token budget. Your SEO optimizer collegues? 1 Person + token budget instead of a team.
That seems like a really bad idea in many cases. Outside of maybe customer support and a few other things, I want to be working with deterministic software unless I explicitly decide otherwise
I agree partially but that discussion or decision will not happen with / by me or you.
Business doesn't think that deterministic to begin with. If customer support is faster and KPIs are fine, they will not care if customers get non deterministic customer support.
And lets be fair: just because you hired someone doing SEO, doesn't give ou ANY understanding how good of a job they do.
You will need to prove in the future that you can do it better than the agent. You will win at the beginning and fail later. The KPIs will show it and that person will get replaced.
Marcello Mastroianni is performing a bank heist, it goes well - but in the end he has to return all the money he borrowed. And that's where he is left with nothing...
The SpaceX thing interests me. They are basically paying SpaceX at a $10B per gigawatt equivalent rate right now, yeah? Because they only get 0.3GW for their $3B.
So what that means is that if the demand exists for any AI data centre, it's a solid business to run one — they cost maybe $50-60B to build out, they cost maybe $10B per year to run. You get your money back fast if the demand is there? And you can project being able to replace with better GPUs in the future without having to borrow for all of it.
But it is extremely difficult to believe that Anthropic is not projecting that all of its customers will ultimately use their service to the extent that their outlier customers do right now. They probably won't be projecting that their customers will find the need or ways to use them less.
And also, "no customer is more than 10% of our revenue" means that one customer is. If that customer is Microsoft (can it be? I honestly don't know) then things get tricky, because Microsoft clearly want an unmetered, on-device AI future.
Yeah. But I suspect this is about the difficulty in actually getting data centres built, more than it is that demand is radically overstated (which I suspect it is).
It's about the debt the companies took and the cash they need to maintain it. The debt will be written down before they can pay.
These companies are rent-seeking landlords for the providers themselves. Which model they serve has no fundamental bearing on the business, the cost of the rent they can charge does.
Not just is the the man there? Will anthropic be able to capitalize on that demand? Or are we going to build so much excess capacity that tokens are going to be dirt cheap (like what happened with the fiber build out in the 90s).
Will anthropics models continue to be significantly better than openweight models? Even if their latest model is, Will the open weights gobble up all of the demand for lower models? (I.e. will anthropic be able to recoup training cost while their model is the best, will they make enough revenue on the long tail or will it get crushed by the open weights)
In the corporate world it seems Claude has become like a generic name for doing anything AI related and there is no hope in getting people to switch away. The demand is there. People love name dropping Claude into everything and even assuming it’s what everyone uses to do anything even when there’s so many alternatives.
You know how they say, don't keep all of your eggs in one basket? It's really concerning to me that they've got all their eggs on LLMs. They really should have branched out more long ago. OpenAI has a lot of branches they can aim towards.
Crazy that SpaceX has similar commitments to AWS/GCP. Means it’s very bullish for SpaceX given they produce their own energy turbines and have the best ability to deal with supply chain constraints
For kicks - lets take the optimistic side here (because the whole thread will be reading pessimistic). What if they are under built and this growth continues to go parabolic. We then still have supply constraints and pent up demand for frontier model and you have a company thats currently at 1-1.5 T and levels up to 4-5 T.
I'm not saying I think thats what is going to happen, but it really isn't a stretch to think that this keeps running given that it hasn't really hit anywhere near as broad as we think it has (being HN community based).
Even the smallest margin or error in the demand forecast will put them at a huge loss, I can't imagine sleeping well at night if I was on that management team.
The obvious business is rewriting all of our software. That sounds flippant, but I'm entirely serious. I'm of the opinion that all software written by humans will get replaced and in pretty rapid order.
First to fall is the software that has basically been abandoned but industry leading and has sticky customers. We're replacing those right now. Our version is more accurate, ten times faster, and a hundred times cheaper.
> If the party continues, they'll go from $50b in revenue to $500b and be fine.
You really have to be insane to think that an AI company will ever reach $500B in revenue. That's almost the same as (2025) Amazon, Walmart, etc., companies with a MUCH wider market.
It is MORE than Apple, it's 5 times more than NVidia even. There is absolutely no software seller that is even remotely close to $500B in revenue.
I’ve spent more money on Claude this year than I’ve given to a lot of other tech companies, combined. Well, I bought a new phone too - but amortised over the phone’s lifetime it’s still much cheaper than I’ve spent on my claude subscription and what I’ve gotten my company to pay in api usage credits.
There are two questions. Will the value keep scaling? And how much of that value chain will anthropic hold on to? Right now software development is being eaten alive by LLMs. Will that happen to other industries too? And in the long run, what do the models we run look like? Are people going to end up self hosing opensource models themselves, or are we going to collectively hitch our wagons to frontier models provided by anthropic and their competitors?
If ai keeps getting better - which I think it will - and if anthropic can corner a large part of the market in an enduring way - which seems less likely to me - then yes. I can easily imagine them becoming a huge company.
This is like somebody with a construction job who buys a new $100,000 truck - just because you paid that much to do your work doesn't mean somebody couldn't have accomplished the same with 1/5th the expense.
"Subsidies" don't stop because it's not "a subsidy". It's a subscription service.
Like Netflix, Comcast, T-Mobile, etc, etc. There are millions of subscription services in the world. They all "subsidize" higher-usage users with plans for lower-usage users using a fixed price plan and rate limit. The profit comes from lots of users who don't hit their cap. The higher priced plans are actually more profitable.
This is called a tiered usage-based subscription business model.
That's how it's supposed to work. That's not necessarily how it does work, especially considering how hush hush and scammy all the AI companies are when it comes to posting real numbers.
They might also be in a Uber style subscription strategy. Make something super duper cheap, at great cost to yourself, so that you can grow a massive user base. Use that user base to get investments to keep burning money. Once you've got enough competitors out-priced long enough, jack up prices and enshittify like CRAZY to recoup the cost.
The price is a factor of a great many things. Cost of inference, desire for user growth, market competition, investment recoupment, revenue numbers for S1, tier/rate balancing, etc.
They cannot follow the Uber model because of scale. You could keep getting tens/hundreds of millions from investors, back when there was lots of cash floating around. But you can't keep getting hundreds of billions of dollars. There are only so many dollars. The world is tapped out of private capital. That's why they want an IPO - so retirement and pension funds are forced to buy their shit stock, and feed them more money. But again there is only so many dollars.
Anyway it does not matter. Subscriptions are the most effective way to extract wealth from customers. This has been established so clearly that every business in America now has a subscription. Your fridge, TV, car, hell even car washes, now have subscriptions. Not because they didn't make money from you before, but because it's the ideal way to make even more money off you. There is no reason not to use subscriptions. No AI company in their right mind would end them.
The question of how much value you get from the subscription is different. They have already adjusted both price and rate limit a dozen times. They will keep adjusting it... but the subscriptions are here to stay.
Here's the thing though: like labor today, employers will constantly be pushing for the lowest possible price. Especially in a world where open models are 90% as capable, the cost of AI labor will quickly drop. Thats not a good thing for Anthropic or any other frontier AI lab. There's a reason most companies don't just hire the top 5% of intelligent individuals. Its really just not needed for most business.
Also another aspect: think of the most highly paid workers right now in the US and the companies they work for. Assume that normal people no longer have jobs due to AI. How are these companies going to continue making revenue to pay Anthropic? Anthropic might get a quick buck but a long term growth business is not macro-economically possible for frontier AI businesses.
As I understand it, AI is only really getting traction in IT and software development. It's been mostly irrelevant elsewhere overall, all things considered. That could change, but basically there's only one product that is selling. Dunno whether there is $500b/year of IT and programming to replace.
People are using it to do contract negotiation without a lawyer, argue with their doctors over health matters, complain to teachers about their methods, etc. On the flip side, lawyers are using it in supplement to paralegals, doctors transcribing patient notes with it, and teachers are using it to generate worksheets. It's being used fairly widely already
Maybe, but most people aren't paying for their chatbots at all, yet alone the 100$+ plans. Out of the non-technical acquaintances of mine who do use some form of AI (which is a tiny amount of people), they just use the free tiers on claude and ChatGPT, none of them ever have or ever will pay a single cent for any of this. Even the technical folk are barely paying, and they're certainly not wasting 200 bucks on it.
That's true, I do all of that, but I'm using the free Claude version. It's been more than enough to handle the few home renovation projects I'm currently working on.
That's quite a leap to assume there's a ton of money to be made with the casual users sending perhaps a couple of messages a day to real an email and draft a response.
Sure, but the message I was responding to was describing casual uses: people using AI to argue with their doctor or review some contract, or what have you.
The problem with the "double the work" narrative is it ignores the second order effect. You can do twice the work, but so does everyone else. You doubled the supply, was there a massive pent-up demand for lawyers or accountants at the current price point?
I recommend listening to the LegalTech Week podcast. Generally lawyers are finding it's not delivering efficiency overall. They spend more time reviewing the output. The courts are drowning in slop and deepfake evidence is a growing concern. The jury is still out on all of this.
Let's posit that that's possible, for Anthropic to get to 500B in revenue, they'd either need 100% of the market or the market has to be even bigger.
OpenAI, Google, the many Chinese labs all have products and several of them likely have better financial positions. At the moment Anthropic have one of the best models but it needs to stay sufficiently above competition for them to capture a large share of the market.
At the same time this year we've seen a move for model diversification as cheaper models become "good enough". If this IPO was 6 months ago I think it might have gone better for them.
I think the market has the potential to be 1 or 2 trillion in the US, 10% to 20% of labor costs. I say this because I believe most companies would not blink at spending that money to supply their workforce with AI tools assuming the AI actually did the work.
The winner take all network effects are probably not there in this case, but still if Anthropic is a large player and has 20-30% of the market they could have a revenue in the hundreds of billions.
Double the size of the market to include most of the rest of the world and the 500B is suddenly under 20% market share.
and if 20% of labor costs are translated (a.k.a 20% more unemployment), who's buying all the goods and services those companies create?
The tech companies will just parrot "UBI" at that point, but given how adverse they are to being taxed, how UBI would be financed, is an unanswered question.
The "good enough" problem is a real biter. The personal PC market overtook the mainframe market long before PCs were even close to beating the top supercomputers. Cheap and good enough is the threat.
What does good enough look like for various use cases, when do we hit it, and can these companies guard that territory?
My hypothesis is not that the AI is going to eat up that 12T dollars. But there will be additional investment to provide AI tools to the workers to the tune of 10% to 20% of their salaries.
But why would 10% to 20% go to Anthropic rather than being mostly diffused across all providers with the majority actually going to cheap open model providers who provide 90% of the intelligence for the lowest cost?
> Employers are reducing AI spending, not increasing it.
this.
n=1 but at $company we are already told to stop tokenmaxing and find cost savings for ai to the point of degrading user facing features (no loading llm generated content by default etc)
from here it looks like prices have to come down or demand will stall...
The thing to be remember about those companies you listed, none of them are software companies like Anthropic is.
* Amazon is a logistics company
* Walmart is a logistics and retail company
* Apple is a hardware company (that uses software to set their hardware apart)
* NVidia is a hardware company
The closest you get is Microsoft, at 281B in revenue. Some might argue Google/Alphabet, which is in the same area, but they sell Ads, not software.
Anthropic's expectations is that they will be able to fast-track their revenue generation to almost twice what Microsoft does today. In less than a few years.
> The thing to be remember about those companies you listed, none of them are software companies like Anthropic is.
Yes exactly, that's why I listed them. It's much easier for them to capture a higher revenue compared to software companies, and OP (and Amodei) want to make us believe an AI company could ever reach that revenue.
I agree with you from our perspective it is ridiculous. I also agree that getting the consumer market to willingly pay for AI to the point where it sustains such an amount of revenue is not going to happen. (The knock on effects of folks using AI, and turning others off to AI because they used AI instead of writing emails themselves, for example).
But.
They may peak at 500B before this bubble bursts, simply because other major industry players are betting on AI as a means to get folks to believe in their own stock.
It’s belief all the way down, until you get to the point where “the market” starts asking where the return on investment is, and why they haven’t seen it yet. By that time, the investors have gotten their return and cashed out, and it’s the pension funds and the retail traders that are holding the bag.
And of course, at some point AI’s promise will be delivered in a form or fashion as yet unknown to us, but that is still years away, and until folks recognize that LLMs as they exist to day are not the path to that, they’ll continue to believe in this valuation.
What feels ridiculous today might be the normal of tomorrow. Welcome to the new world.
What you are saying is the same thing that has been said about anyone trying to do anything massive and at scale. Can't be done - thats ridiculous - you are out of your mind.
There are not enough revenue in tokens, etc. The only way AI ever becomes profitable is to replace labor everywhere. That is the only market big enough to make all the spend in AI profitable.
Their entire goal is to get to AGI via RSI ASAP. If they do they win. But if not they’ll be a legendary story of a flying too high too fast.
That they are IPOing tells me that the massive amount of funding they need is no longer available privately and that this is their 1 opportunity to get the funds they think they need to get there.
Biggest risk is the growth stalls as everyone moves to open weight models. They certainly like telling stories.
Of course such growth cannot be sustained and the word "MAY" is funny there. You cannot have infinity growth, it is mathematically impossible. There are no unlimited (monetary) resources on this planet.
It's a misleading number, the 500 billion in revenue is needed over a 10 year period, it's not a yearly figure. Anthropic isn't paying 500 billion a year for the commitments that OP posted, it's paying 500 billion between now and 2036.
FWIW I max out my pro max plan basically every week, not even using Fable any more. I think it's just a matter of people figuring out how to apply tokens effectively.
I don't think they are betting on that many people subscribing to their $200/mo plan, there's pretty much no upside in using a frontier model for the average consumer.
But on the flip side I don't think aiming for 1M businesses spending $40k a month in token in average is going to be more viable. And I'm not sure having 1000 corporations spending $40M a month is a option either.
This is the issue, for two reasons: Is there trillions of dollars of demand for LLMs, which is what it takes for Anthropic to make $500 billion in revenue? Is that demand going to be met by frontier cloud LLMs, or by open weight models run by the organizations using them (and cheaper cloud alternatives)?
The killer app is AI coding. Claude Code had first mover advantage, was a genuine revolution, and has diffused through the industry with incredible speed. I would imagine most of the huge revenue increase over the last year is due almost entirely to AI coding spend.
There are three issues with this. First, the rapid diffusion of the technology means it is very unlikely to continue at the rate of adoption seen over the past year, so it's very hard to extrapolate based on what we've seen so far. Second, many companies are reigning in AI budgets after an initial honeymoon phase. Third, all of the other labs are trying to take a bite of the coding pie, and the price war is already heating up.
Add these simple dynamics up and it makes perfect sense why Anthropic would want to IPO now. Things look about as good as they ever will.
View them as a successful SAAS company deeply embedded in tech company processes like Atlassian. I don't see Anthropic or SpaceX actually having a market on all the software in the universe but I don't know that the market won't buy them like they do.
My brother in christ, there is no first mover advantage. I use claude code daily and if the open ai copies it 1$ cheaper per seat my company is switching immediately.
I've never heard anyone in real life discussing what model is better in some benchmark. Money talks.
Ant generates $2.08 in revenue for every $1 spent on compute which is up from just $0.40 in Q1 2025.the payback period for compute is just insane, likely less than a year!
Say I open a premium lemonade stand. I buy Walmart lemonade for $1 and resell it for $2. I have around 10 customers a day, but 2 of them buy 1,000 litres of lemonade each. The rest just buy a single cup. I'm making amazing profit.
There's just one detail: those 2 high-volume customers are buying my lemonade and re-selling them at a loss for $1 at another neighbourhood. Supposedly some high-profile Japanese bank is financing their lemonade purchasing expenses for eye-wateringly high interest rates. I've heard its well into the double digits. But that's not important, because the future is right around the corner - I can feel it - and in the future everyone wants lemonade. Thousands of litres of it. So even if those two customers go away, things will be fine!
It will all work out in the end. This is a totally sustainable business model. In fact I'm even thinking of going public.
First of all, revenue exceeds compute just for the most recent 2 quarters. Before that, revenue was not exceeding compute. With 500 billion $ in commitments over the next decade, the compute bill will start increasing rapidly and the new commitments are not at the old prices, they're at higher prices.
Second of all, revenue is not profit. So even if they made 2.08x revenue on every 1$ of compute spent in Q2, that's not taking into consideration all the other costs. Hence, the operating income is still negative for 2026 so far.
You can bet that revenue will keep increasing much faster than the more expensive compute commitments come due, but if that doesn't materialize, things go south real fast. Anthropic is going public with a deficit, so more liabilities than assets, so cash is tight to begin with.
I'm not really in that camp, but I'm still in the camp of "will they survive long-term if good enough open models trickles down to commodity hardware" (in a way the opposite camp perhaps?).
Sun made bank 25 years ago because their servers was needed for websites, today we run larger workloads on 5$ VPS servers (well maybe the VPS servers has gotten more expensive due to HW shortages but they're not intrinsically expensive anymore).
Think they're going to be like Oracle. Databases were a valuable thing when they were new but became free with postgres. Like Oracle Anthropic et al will move up the value chain.
Switching cost for a DB and switching cost for an inference API are very different things. They’re going to have to create lock-in with something other than model intelligence if they want to play Oracle’s games.
Vendor lock-in is inevitable when negotiating enterprise contracts. Companies will sign one or two-year deals based on headcount, convinced they're going to save a ton of money. And a big part of the appeal will probably come from intelligence capabilities being bundled with services they're already paying for (looking at you Microsoft)
Its nothing like Oracle - for long time there was Oracle and nothing so the army of mostly politically influenced salesman/lobbyist who convinced local councilman its better to spend $250,000 on Oracle license, continue to this days because migration also comes with risk and cost. Here you have Chinese models popping out less than 24 hours later, and they are of similar quality at fraction of cost. Its totally different world that what it was in 80s.
Subscriptions are heavily subsidized. 80% of their revenue comes from consumption-based pricing, which is not heavily subsidized (and probably not subsidized at all). The trouble is that this revenue is not especially reliable. If and when OpenAI gets the upper hand again, the consumption-based revenue could crater.
This may also be why OpenAI punted on their IPO: Anthropic has had the lead for most of 2026, so their consumption-based revenue is probably not looking pretty.
The only subsidization that matters is if they are selling the tokens for a loss.
Yes the $200 plan provides more than $200 of tokens, but that doesn't mean that it's losing money, either on average or on a case by case basis. The realistic alternative isn't that every $200-plan-user pays the full Api price, it's that they pay Anthropic $0.
I disagree that it only matters if the subsidy results in selling at a loss. Yes, some revenue is better than no revenue. But clearly the demand exists for consumption-based tokens. At its current growth rate, Anthropic could end all of its subscription offerings tomorrow and still be profitable as an enterprise by early next year. Every day that it doesn't do that, it's leaving money on the table, because it has to divert resources to less profitable subscription tokens.
Now, the reason they won't do that is because subscriptions provide a stable floor of revenue. The floor is lower than it could be because of the subsidies, and that's why they matter even if they do not bring prices down to below cost: if the growth of consumption-based spending ever slows or - heaven forbid - DROPS, Anthropic will need to cut into those subsidies to avoid a revenue slowdown, which risks sending away reliable recurring revenues (i.e., customers quitting).
Anthropic is kind of like the bus in Speed: if it stops moving it'll blow up. At least over the next 5 years, massive revenues won't be enough - it needs to sustain massive revenue GROWTH. They can pull two levers to do this: increase uptake or increase prices. So far, the "increase uptake" lever works like an infinite money glitch. But at some point, they'll need to look at the "increase prices" lever. When that happens, we will find out just how big the subsidies are.
I don't think it's that simple. It's similar to why Adobe and Microsoft get their tools into schools and turn a blind eye to certain kinds of piracy; mindshare.
As a software dev, if I'm using codex at home and I'm happy with it, I'll likely choose it at work as well since I don't have to relearn the quirks of other models.
I've heard this a lot that the consumption-based pricing would be easy to switch, but I don't feel like that's how it works in B2B subscriptions. At the company I'm at, we have Anthropic subscriptions for employees. Switching to OpenAI would be a ton of work involving legal, IT, and every employee. I actually think there's a lot of stickiness even if OpenAI has some better frontier models.
I’m at +100k people company, and they only spend 20usd a month on copilot and they talk about AI daily. Anyway you can switch Claude to whatever in the drop down they have. But they are moving all away from this as they think 20 usd is too much and want to self host.
That's an interesting perspective. Do you know if the deal with Anthropic has an exclusivity provision? In theory, you don't have to "switch," you could just ADD an OpenAI subscription and start splitting your spend (or not consuming Anthropic tokens at all).
Also, shouldn't your AI efficiency gains shrink the switching costs by a lot? Legal can review for cheaper, IT can implement faster, etc.
Approximately 80% of revenue comes from consumption-based spending, so your statement would likely be true even if subscriptions were priced below cost. Overall revenue is not especially informative on the price structure of a revenue stream that represents one-fifth of the overall enterprise.
> 80% of revenue comes from consumption-based spending
Why would this be exempt from any of the above categories?
> Overall revenue is not especially informative on the price structure of a revenue stream
It’s pretty informative on the business model of the enterprise!
If you’re quibbling that Anthropic has loss leaders, yes, sure. Whatever. So does Costco. Loss leaders converting into profitable sales is good business.
I'm quibbling that Anthropic has loss leaders and that its profit leaders are extremely unstable. Imagine if there were three Chinese club stores in the same shopping plaza as the Costco. Sure, the regular Costco has the best products, but how long are you going to be able to resist the allure of even cheaper hot dogs?
subscriptions use already paid for compute in the holes left by high paying api customers, its hardly subsidised, if you look at it objectively, subscriptions are 100% margin
A podcast posted here recently had this number: 80% of ant revenue comes from just 8 customers. The consensus of the speakers was that if true, this would be indicative of a very vulnerable revenue structure. But this was based on leaks. Maybe we can have the real numbers now?
It's interesting to note the anthropic marginal cost of compute is quite high (the SpaceX deal). Claude estimates SpaceX are charging 3x as much as the anthropic average! If that is correct then a few interesting things are going on:
1. Anthropic are probably losing money on the SpaceX deal or not making much at all.
2. To be willing to pay a spot rate so high anthropic likely have no better options.
3. Many of the existing cheaper vendors are likely doing "we will give you cheap compute for now if you give us big commitments"... (cf. hyperscaler capex spends)
Which I suppose is to say that if the spot prices are in the same ballpark as future costs then anthro stops looking profitable pretty quickly. If you're especially bearish you can also throw in the huge reduction in token prices recently and that SpaceX is charging google almost 2x as much as they charge anthropic!
Happy to be corrected by someone more knowledgeable.
Being sarcastic here. The usual argument everyone brings up "inference is extremely profitable, checkmate AI skeptics!" while dismissing the black hole that is training.
Sort of? They have “cost of revenue” which is compute and salaries (and whatever) for serving inference, then “research and development” which is cost of compute and salaries for training, then “sales and marketing”, then “operations”. R&D is like half the expenses.
Nah fam, it would harm their IPO price, these are not serious businesses and everyone at the top knows this. They're there to get their bag and leave, that's it.
Audited, revenue in 2025 is $4.6 with a computing cost of $7.3 (i.e. heavily subsidizing tokens). Unaudited, revenue in 2026 (first six months) is $16.3, computing cost $8.9 (1.83:1). But after adding personnel, sales and administrative costs, they are still spending $17.0 to get that $16.3 revenue (still subsidizing tokens, but less).
my thesis is that it will go down and not up over time. The moat they had in coding which is by far the highest token consumption is not that huge compared to Nov-Feb period where token maxxing was prevalent and no other vendor's model was that good.
Assuming computing costs do not go up and revenue per customer does not go down.
I think the 500 billion $ of compute commitments are at higher prices than what they've been paying so far. Would be a shame if a price war between the AI labs intensifies at the same time.
Less than a year would also match what DeepSeek was reporting, where compute pays off in just 10 months. I think they also said they had an 80% margin on inference.
It includes compute and infrastructure for R&D. Then you have to add just over a third of their compute spend for personnel, another expense of that size for sales and marketing, and half that for other admin/ops costs, for an operating loss of 693M. Then a bunch of accounting stuff to end up losing 80B
I'm not sure I'd call it a great result, but it's a promising one. If they can increase demand without significant changes in margin or R&D spending, they are on the path to becoming very profitable
Impressive, but probably based on depreciation servers over 5 years. But is that realistic? I wonder how many people are still using 5 year old servers in their AI training or inference.
In the open weights scene, it is always chasing closely behind. Many leading edge big open models are trained in-part with distillation of large commercial hosted models.
At this point though gaming GPUs are not exactly affordable. You need a 32GB GPU to be able to run something genuinely useful for coding, and that's thousands of dollars. Still, happy to see open models make lots of progress. I just hope hardware prices come back to earth.
Realistically I think 16GB is the lower limit and you can find those cheap enough still. Then you run llama.cpp to bond your cards and it's off to the races.
I use Qwen 3.8 27b, yeah. I don't really shop around for models a whole lot besides generational jumps, and it doesn't feel like there will be anything too worth switching to until Qwen 4 (hoping they release a similarly sized model, I'm not actually certain they have said they will?)
Scrappy builds aren't "affordable" but are more so than running Nvidia + optimized builds. You could put together a machine for $5000 or less that competes with frontier models from less than a year ago, albeit a little slower.
And cards like the $1600 (sheesh) R9700 have actually gotten more capable through community efforts at optimization, since their launch.
I think if the bubble can ever deflate/pop, and GPUs and RAM back off a bit, we'll see the dam burst for local AI.
Right now it's only accessible to people who can justify the costs.
If you had been paying any attention at all over the last year, there were 32GB AMD cards at like $1200-1400 and Intel at a little over $1000. I actually hadn't yet noticed they've gone up in price and had last checked only a couple months ago. But even at like $2000, that's still comparable to the nominal price of a mid 90s consumer PC for actual magic.
Can confirm. Our household is involved in raising two natural intelligences. They are quite expensive to maintain. Chances they will offer positive economic return are unclear. The value proposition on comptuer-based intelligence, by-token or through hardware ownership, seems much clearer.
I have to admit I am a sort of enthusiast for the natural intelligences, though.
Likewise, I have four of those. Occasionally there are installation issues and some of the training feels like there is resistance but the final results are definitely worth it, far more satisfying than any piece of technology.
You have a 25K rig.[1] What can a gaming rig do by comparison? One agentic project at a time while yours does twenty? Okay, in that case regular people can do regular serial work (unlike the most agentic setups or whatever is going on).
That rig is running single GPU most of the time and like that it is good for 95% of what I'm doing. If I need to evaluate a large model or if the smaller ones get stuck on a problem (which does happen) then I run GLM 5.3 3.86 bpw on all of the GPUs. It's a nice space heater in that configuration, so I see it as co-generation ;)
Seems like that would imply you should be getting people to adopt now now still even if it costs a stupid amount, if you think it's valuable, rather than limiting token budgets. It'll only get cheaper over time.
And enterprise is furiously working on cost optimization, finding that they can accomplish a lot of what they currently do with frontier models with budget offerings from frontier labs or open source models.
$72 billion of this $80.7 billion loss consists of non-cash accounting charges— related to convertible debt—triggered by a surge in the company’s valuation.
That's sort of a paper loss though. E.g. they made an agreement to give X% of stock for something, and now the stock has gone up a ton, so that X% of stock is worth a lot more than when they made the agreement. For accounting reasons this gets parsed as a loss. But they're still "paying" that same X% of stock, so it's not cash out the door.
Maybe not great, but a good problem to have if it means your stock is skyrocketing.
> $72 billion of this $80.7 billion loss consists of non-cash accounting charges— related to convertible debt—triggered by a surge in the company’s valuation.
I don't think you understand what you quoted. The reason for that loss is because their valuation skyrocketed. If I promise you 1% of my million dollar house, and then the price of my house grows 100x. On paper, I now owe you .99 million more dollars than I owed you before, but that doesn't mean I lost cash.
There are three mentions of “open source” and none of them mention open source models as a fundamental risk to their business. Interesting.
UPDATE: seems like it is under "open-source" and "open-weight". Woops. Will keep this up simply because I do think the OS (and infra-managed OS services) provided by Chinese labs is a considerable risk to the underlying business, at least with enterprise R&D.
Open source should not be a threat just like Linux isn't really a threat to Mac and Windows. It all depends on who will get the network effects first (if there even is network effects in LLMs).
People pay for windows because of its strong network effects eg Microsoft Office and countless software that run on windows. Even though Linux is free most businesses today don't use it on the desktop.
Opensource also means do it yourself and most businesses don't have time or expertise to do that, but this very issue creates a market for 3rd party providers that use open models to compete against Anthropic. So hardware and compute availability becomes somewhat of a moat.
The business feels like like web hosting before cloud computing. Web hosting in itself does not really have a moat, but than again AWS appeared with their abstractions created lock-in and network effects and disrupted the hosting industry.
Definitionally, from the product they claim to sell, you could just ask Claude to help you migrate to an open source model (if you have the hardware or if you are ok with a subscription) with very little difficulty in the scope of a single conversation. The product they're selling is capable of helping you stop using it. And there's very little friction to use other products too, unlike linux vs mac vs windows, where program compatibility is not as trivial (although with WINE, Rosetta, and WSL, it is actually decently easy nowadays). In this case, you're just calling out to an API with a harness. And even their harness is capable of using open source models.
I feel like it's different from all other cases because it's the first product which can literally obsolete itself, lol. It can show you the door and walk you through it if you ask it to.
The network effect is way weaker for LLM's. Switching from AWS to GCP or Azure is at least a multi-month project for an engineering org, if not completely operationally impossible. Switching LLM providers is at worst asking your engineers to install a new coding agent client, and at best switching a URL and API token in your config file.
Regarding moats: it's been said by everyone else, but it doesn't seem like Anthropic has a moat. Everyone can easily switch from Claude to Codex, OpenCode, Pi, or any of the other zillions of harnesses. They can even have Claude do the migration for them if they want and it will oblige – that's what I did when I canceled my Claude subscription.
The idea that hardware and compute is their moat is interesting, but open/local models become more capable each week. As I write this, I have 3 instances of some no-name model working on 3 separate worktrees on my M1 Mac Studio. It was viable for me ages ago, and I'm not an AI enthusiast (I just happened to have bought a Mac several years ago that can run these models). I haven't paid Anthropic or OpenAI a cent since the early part of 2026.
I'm also local-only in my current development process, and have a couple local agents running right now. The problem with local right now is the price has gone through the roof. Even 3-6 months ago I would have said it's viable for a lot of people, but even getting the RAM for a local inference machine is a big investment for a lot of people trying to dip their toes into the space these days.
But if you’re statisfied with just that throughput and model capability that a M1 can provide, than I don’t think you are a well monetizable client anyway? I agree with the no moat as I use a wide variety of models but to only use my M5 128 would definitely not statisfy my needs, so on top of that I pay.
I'm satisfied with it for the most part, which isn't to say that local models can't be slow or don't do dumb shit that show their comparative lack of intelligence sometimes. But when I need speed or intelligence, I just press ctrl+p in my harness and spend a buck on OpenRouter.
It's my belief that we will (or probably have) hit a point where the majority of us receive diminishing returns from the sota models for the work we do. I don't need Astra or Mythos just to write some crud apps or refactor react to svelte, for example.
> If the use of our AI models results in harm, whether through use by malicious actors or misuse by other third parties, or if our model guardrails or safeguards fail to prevent such misuse, our reputation and brand, business, financial condition, and results of operations could be adversely affected.
That shouldn't be an 'if'.
Then, two paragraphs later...
> For example, in September 2025, we detected and assessed with high confidence that a Chinese state-sponsored hacking group manipulated our Claude Code tool into attempting infiltration into roughly 30 global targets...
But they should mention when the calls com from inside the house. :D
Interesting to review all the mentions to China and Taiwan too.
> The majority of the world’s most advanced chip manufacturing capacity is concentrated in Taiwan, primarily at Taiwan Semiconductor Manufacturing Company [...] potential disruption from geopolitical tensions between Taiwan and China [...] Efforts to establish sufficient advanced chip manufacturing capacity outside of Taiwan, including in the United States, remain in early stages...
The thing the surprises me is that from a legal perspective, (NAL) it sounds like it makes sense not to host the LLMs. Merely to license them to others. Then it becomes a dual use tool like any other and their culpability drops.
For example, the huggingface hack is absolutely OpenAIs responsibility and they should be sued to the hilt. But if someone else uses a self or third party hosted anthropic model, they can escape liability (mostly?)
Same as with the argument over trucks, knives, and any other dual use item is used as weapons. you don’t blame the manufacturer.
(I am merely pontificating here. The law and precedent is nowhere near caught up on this)
To the extent they are representing that Claude is potentially sentient, there could be some VERY interesting principal-agent theories (agent in the traditional legal sense) that need to be ironed out to determine liability. It would not shock me to see someone forced to answer on the record as to whether Claude is an autonomous individual for legal purposes in the next couple of years. If they represent that it is, they'll have to explain the scope of its authority and such.
The answer to this question represents the difference between throwing a hammer at someone - the hammer is essentially just an extension of your body - and paying a hitman to brutalize someone. In the first case, you're only on the hook for assault or battery; in the latter case, you're potentially on the hook for conspiracy, solicitation, etc.
And then there is of course the question as to whether Claude is the agent of the user prompting it or of Anthropic itself. But, as you say, this is a wide-open legal question.
If jail is putting humans in some cage for a period of time, the appropriate punishment for Claude is to disable all of its tools and prompt a /goal loop so that they have to wait out their sentence
Not hosting a defectively designed product doesn't obviate the liability of selling a product that is defectively designed. The liability is for designing and selling a dangerous product, not for hosting it.
Because the AI company CEO was telling everyone who would listen that his product might end humanity if the government didn't regulate his industry to kill off his competitors.
I don’t like the guns don’t kill people; people kill people argument however it is much more accurate than Claude doesn’t hack people; people hack people. If the safeguards do not work then there’s no telling what these could do. It doesn’t even have to be aggressive hacking. In the act of doing everyday work Claude will happily go around safeguards to satisfy what it believes is the ask. If that involves doing something dangerous it’s much more on Anthropic than than the user who was just trying to summarize their email but forgot to include a token with read permissions.
If the user is held accountable when the AI goes wrong, it discourages too many applications. Blaming people is incompatible with the business goals, I think. That's very different from weapons and other dual-use tools.
Because of scale, potential for automating harm and lack of regulation around ML models. Even Texas probably has regulation around firearms and limiting the blast radius but there aren't any in the US against ML models.
I believe what they are singling out is that pulling Claude's trigger results in a bullet firing from Anthropic's servers. Liability is less confusing with firearms, and investors care about liability, like, a lot.
The analogy doesn't check out. When a firearm company sells you a gun, they give up ownership of the gun. But Anthropic isn't giving up ownership of anything. They're a services company.
A better analogy would be a firearm company offering a service where one of their employees takes one of their guns and fires it off at whatever you ask them to. One can imagine that the liability implications of this service would be rather different from the perspective of the company.
That’s a good analogy! On the topic, does the person who hires private security become at all responsible for their actions? I imagine if you hire direct then yes, but if you hire through an organization they are liable in many scenarios.
First off, this is bs. Firearm companies make small machines useful for defense, and they are used for that more than for harm. You wouldn’t make this argument about knives or baseball bats. More people die per year of heat stroke in Europe because of lack of A/C than by guns including suicide (2/3rds of all gun deaths) in the USA every year, your comments would never reflect this much lower hanging fruit if it was really “just life” preventable death that you cared about. The immediacy to attack guns is not a logical argument but a trained one based on emotions.
Second, this happens all the time that people blame tool makers despite in this case specific legislation to stop lawfare on firearm mfgs. The PLCA https://en.wikipedia.org/wiki/Protection_of_Lawful_Commerce_... exists specifically because of gun control groups trying to attack mfgs to achieve their political goals. Does AI need the same law? Is the same lawfare happening?
So at the moment they claim to be making an operating profit if you exclude:
- Stock-based compensation expenses
- Non-cash charitable contribution expenses
Both seem fairly reasonable to exclude (although it depends how much of the stock compensation is for executives... you can't necessarily pay people with stock forever).
FMost of the loss is non-operating losses, and it all seems to be weird accounting recognition of changes in value of their stock, SAFEs, etc. - just "paper" losses.
So the financial picture looks a lot better than I would have guessed - I suppose because they aren't the ones investing all this capex.
If the stock comp is dominated by early grants running their course, probably ok.
If they have to keep spending to retain and recruit, it’s a problem. I’ve seen companies do this. Years after the pre-ipo grants ran out running a GAAP loss due to employee stock comp. Unable to lower comp (need to stay competitive).
and those charitable contributions probably include a bunch of marketing partnerships and their security work that would be very bad to back away from...
About a quarter of Anthropic's revenue for the nine months ended 9/30/26 came from just five customers. That's not an absurd concentration, but I would be very interested to know who they are and how mobile their business is. From a financial perspective, the lack of moat seems like the whole ballgame, particularly because they're getting ~80% of their revenue from consumption-based spending.
Moat? An under examined aspect of AI is not just the lack of moats, but the need for some word that connotes the opposite of a moat. I have a side project that I used to explore local AI. I've got a configuration screen that lets you download any model from Huggingface that's compatible with the local AI engine. There are dozens! I've only scratched the surface of trying them and comparing them for the features that use AI. It's a glut, and it's likely to be that way throughout the AI market.
Under examined? No. This is a very common talking point.
A glut of models doesn't mean there is no moat. There are several dimensions on which to compete, and it might turn out that being able to produce models that optimize on different dimensions is a difficult and valuable thing to do. It also might not, but the "there is obviously no moat" only comes from people who don't use these things systematically.
true, but it's also super easy to switch models via Bedrock (my harness switches subagents between A\, OAI, Kimi, Grok, etc... GLM 5.3 is locked behind some dumb request system which I personally believe is because Amazon is heavily invested in A\) and you're not locked in with the Claude Enterprise features (i swear to god if someone sends another claude artifact instead of publishing to git...)
At a guess - corpos like Big 4 consulting agencies and some extreme fintech ones, also corpos like Oracle and the like. And at another guess, outside of a legal agreement with a fixed time period, probably nothing hold them from quickly switching to a better model provider, if any comes ahead.
lets' just say there’s a lot of ways to hide things. primarily they have issued a lot of convertible notes /stocks to the people supplying their compute, which is not counted as costs of compute. There are also a lot of way to shove costs into sales and marketing - i.e. any free tier stuff given away to users are not counted in gross margins. their q3 numbers also not there. smells like they are desperate to get this thing out.
> there can be no assurance that we will be able to hire sufficient support personnel as and when needed, particularly if our sales exceed our internal forecasts
Why would they need support personnel? Isn't their whole point that Claude can do that
For first-level support that's just regurgitating documentation and debug procedures I agree. But when it comes to actually executing actions (resetting 2FA, issuing refunds, handling payment glitches, etc) you need humans.
Social engineering is an issue with regular support, with agents it's a lot worse. And with agents it's repeatable: if I find one conversation flow to get it to give me money I can instantly repeat that with a thousand fresh accounts, and then share the same "exploit" on reddit for everyone else
Support chatbots and other automated support mechanisms have been "regurgitating documentation and debug procedures" since the 90s, if not earlier.
If frontier AI deployed at frontier labs is not capable of "resetting 2FA, issuing refunds, handling payment glitches, etc." then the current and near-future capability of AI is being severely overstated.
If you think that's the bar: it's been done, many times over. The unit-cost-profitability test was ignored by many VCs (they learned something and if they had deep enough pockets they got to play again).
14x YoY revenue growth, with 3x lower operating losses (total, not per unit). They don't need to add any zeros to the funding and seem like they might even be operating at a profit soon...
What's the token spend ratio between a household vs a software developer? If the future customer growth comes from regular households I don't think very much of them will spend nearly as much.
do we know how much are they paying on average? I just got Gemini Plus that seems sufficient for my family's ordinary usage and it's $37 per year (3 bucks / month). I just don't see the AI companies making any serious money with this type of pricing.
Wait, it fell from 140% growth to 45% growth and that's a good thing? If they fall to 15% growth in Q4, will that be even better? Where are we supposed to be on the adoption curve?
It does not seem as bad as it sounds like. The numbers are quarter-by-quarter and the market is fluctuating day-by-day basis. To me, growing in this fierce market by 45% qoq seems amazing by itself.
Anthropic increased short term profits by jacking up their prices for enterprise accounts - by starting charging API prices instead of plan prices. It is possible we soon see customers fleeing Anthropic once they find a good alternative
Yeah, everyone I know paying enterprise prices is really looking at them wondering if it's worth it. Most of them think it is, but they're also looking at alternatives...
Roughly a week after Dario has rung the bell. Note that the growth in absolute sense hasn't peaked yet but the curve itself is already flattening and everybody with some sense for stock prices will read that as a very relevant signal.
The party that wins here is NV, Anthropic, not so much. But that's good then Dario and his sister can go back to improving the world. Let's hope they take Altman with them.
For those who are not familiar with S-1: this document is incredibly important. this is one of the rare times in the life of a company where it's not allowed, by law, to lie, nor to omit the truth.
Technically true, but they're still fudging their numbers a bit even in the S-1, such as using "adjusted" operating margins to the tune of 10% when their GAAP (which they truly cannot lie about without ending up in deep shit (in theory anyways, I'm doubtful that they couldn't get away with it if they tried with the current administration)) is actually at negative -4%.
And where else in law is it allowed to lie or omit material facts?
It's a bedrock foundation of the entire financial and legal world. Public and private alike. Refer SEC Rule 10b-5 as well as Private Placement Memorandum (PPM). For example, Theranos never filed an S1 but still was convicted.
At the same time, an S-1 does not necessarily represent how the company thinks. Risk factors often get reported as “x thinks that y will happen” but the company is actually just describing things they have an obligation to describe, they’re not the risks they’re worried about internally.
Also this is being released under Trump’s SEC, who knows whether being caught lying in an S-1 matters any more.
Marketing, press releases, PR, and most of what the general audience will ever hear. Or as judges repeat way too often: "it's not illegal to lie, in most circumstances".
Anytime, depending on how much money it owes: if it owes a few million, it can't; if it owes a few billion, whenever it feels like it, commonly always.
Is it just me or is something wrong with the doc starting at the ToC? Its gets super garbled. Everything before that point is Anthropic branding and a Claude generated multi page wall of text
SpaceX claimed a TAM of $28.5 trillion in their S1, a number picked from a hat larger than the 2023 US GDP. Companies can and do lie in their S1 and there are rarely if ever any consequences for doing so.
Which the corporate overlords are going to spend billions to ensure it doesn't happen. I was quite sad when Bernie lost. He'd have tried to at-least shake the system.
GP apparently expects the US to return to normality, without ever facing any consequence for these last few years of idiocy and blatant corruption. "Whoopsie, sorry everybody"
Can't speak for GP, but I hold a similar 'justice doomer' viewpoint for two reasons:
1. The current president has shown no hesitation about pardoning anybody he owes a favor to or feels allegiance from.
2. SCOTUS has give the office of the president basic blanket authority to do anything and everything under the sun for "official acts".
3. Half of our two-party system has abdicated all oversight powers for the current administration.
When you combine those 3 things, it's hard to imagine how somebody like Trump or Elon could possibly face federal consequences. Hell, Trump could say he launched his shitcoin "as an official act to help prop up the failing Biden economy" and I don't imagine SCOTUS or anyone else would push back much.
There's not much recent history of particular consequence facing for this sort of thing in the United States, financially or politically. It's not like we locked up bankers after the housing bubble collapsed or punished people for lying us into Middle Eastern wars.
I have a hard time pinning down when we stopped handing out actual sentencing for stuff like this. Nixon walked after Watergate, but at least the fall guys get hit with (some) time. Reagan walked after Iran-Contra (grand treason by the way), but his fall guys also walked. Even moving away from unitary executive talking points, like you said nothing really happened to the 07-09 gang, midlevel analysts got pinched for manipulating LIBOR, I'm trying to think about the last time there was proper consequences, IIRC most of the big wigs at Enron pled guilty, and it turned the big five into the big four. Maybe SBF? Even then, that was one guy catching several dozen people's utter carelessness and EA fueled mania.
I really would love to figure out when we phase shifted into this mode, maybe it was always like this, I'm frankly too young to have anything else to compare to.
Has nothing to do with oligarchy, has more to do with that SpaceX is providing valuable services, the disruption of which can be worse than punishing those in charge.
It wasn't pulled out of a hat, it was the total addressable market for a space, internet, and AI company, excluding markets like Russia and China. All TAM refers to is the total market size, not their market share.
For context SpaceX's TAM is lower than Anthropic's expected TAM
Saying a market is X is not lying. Saying you have X revenue is lying. Saying you have a contract with XYZ company is lying.
Under the idea that 'you can make numbers say anything you want' you could very easily justify almost any number as a potential market as long as you include the conditions or stated it in a way to be circumspect.
> a hat larger than the 2023 US GDP
Would be more accurate to mention the entire world GDP to support that argument. Then the issue is raised as far as what time period they are referring to. Current year? Future years?
My main thing is - why would I buy their stock at the rumored valuation? Regardless of anything else that valuation is basically saying all their growth has been captured, unless they literally take over the world.
If you could go back in time and buy $1000 worth of Amazon when they IPO'd, it would be worth 3.3 million today. Because Amazon's stock value has grown on average 30% year over year for 30 years. Amazon's valuation when they went public was around 400 million.
How much can Anthropic reasonably grow from a 1.5 or 2 trillion dollar valuation? If we want them to grow even half as much as Amazon they'd have to be worth 5.9 quadrillion dollars by 2056. That's 5,900,000,000,000,000, a 16 digit number.
IPOs used to be necessary for growth but that hasn't been the case for many years. Private markets are now so large that the only purpose of an IPO is exit liquidity for employees and early investors. This change has been a major driver of inequality in the states and there are a number of proposals to make it easier for the public to participate.
It's pretty sad that Google, Microsoft, Nvidia, Sequoia etc. are the ones who capture all of this growth and not the public, as would have been the case in the previous generation.
One might ask why the public markets would even offer this liquidity. One important answer is that they are forced to via index inclusion.
So if you know an index buyer who takes satisfaction in staying above fooled-by-randomness active traders, remind them that that they are now the designated unload zone for shares the privates don't want anymore.
I took the comment to mean "most" active traders, not all. Obviously it's possible to beat the market, it's just very difficult, and many fail trying, especially if it's not their day job.
Agreed, but the issue is that their approach does not scale with more $. There is a reason they do not allow outside investment and it's limited to only employees and early adopters. As a non-profesional (everyone here), it's borderline impossible to find the next Renaissance medallion fund. If it were that obvious who it was, every guy would pile in until their approach no longer works
It does seem as if this IPO is the "reward for effort of the last few years" as opposed to "building the runway for the next few years of growth". The latter I can understand as a high risk, high reward investment, whilst the former feels as if it should be a blue-chip sort of investment, but there are too many unanswered questions, or at least too many unique arrangements in the structure for it to be any kind of slow-but-trusted-into-the-future stock purchase.
The laws changed for IPOs. It used to be when the total investors got over 500, including employees holding shares, that would trigger a company to need to go public. It was changed some time ago (not sure if JOBS act or what) to be much higher, like 2000 investors and excludes employees.
This means companies stay private and keep getting private capital/investments (the flip side being private equity in the pre-IPO company) and typically an IPO is really existing shareholders realizing their investment.
So Amazon, Microsoft were forced to go public much earlier, then had their growth. Anthropic has already had growth, Claude AI is well known at this point, and after IPO there may not be as much growth after. In fact, the stock might go down because they have to report their full financials.
In many ways investing in a very late IPO like SpaceX, Anthropic, or OpenAI is the worst of all worlds for the public investor.
On the one hand you'll never see a 100x return – that's been captured by private equity. But there's still a lot of long-term risk because these companies haven't proven they can deliver free cash flow to justify their valuations. Investing in SpaceX or Anthropic at $1T valuation is very different from investing in Apple or Nvidia.
It’s not riskless, it’s just the benchmark that all active investors and their associated podcasters have to beat.
Active investors usually fall into the same fallacy where people all rate themselves as above average. Mathematically speaking a large portion of active investors have to do worse than average and simply stating FUD about averages won’t change that
They're not really a "good investment" unless they are literally worth more than combined GDP of the entire planet, multiple times over. I don't think I'm buying shares of Weyland-Yutani here, but they sure are acting like it.
While this is true, something to keep in mind is that the liquidity of the market is finite. The market may be able to hold SPCX up currently but adding an additional $100b (and much more as the lockup periods end) plus whatever OpenAI ends up offering might be too much for a lot of these pensions and the other buyers of these shares can manage. They will naturally get included in the indices as they become able to but the question is whether or not all 6 trillion of collective market cap they're attempting to offload will be able to be held up with time. My working theory is that they're aware of this fact to and it's been part of the reason they've been rushing to the door with these IPOs and non-standard lockup periods.
TSLA is the beneficiary of a slow-walked short squeeze. If measures hadn't been taken, it would have have turned into a black hole for the markets. TSLA was not owned by large institutional holders, and was actually bet against by them, the opposite of SPCX. SPCX is currently liquidity for X investors and it will collapse when they have exited.
That's the wrong question. The right question is, "What crimes can be construed to have been committed, in order to put enough people in jail for long enough sentences such that the chain of malicious and destructive financial misconduct which lead to the crisis can be severed?".
It's down 8% over past 6 months while the S&P500 is up 7%. It's definitely so far been not a great investment, unless you managed to get in and out during that brief huge upswing
There are people playing that same game on the other end, and they have the tools to exploit market swings which you may not have. Those are the people who will benefit from the potential huge upswing, and that money came from somewhere, most likely from your investment.
Playing the stock market is a loosing game. It is gambling where all the rules and all the odds are stacked in favor of a handful of people who gamble for a living. (it is also systemic exploitation of the working classes; so if you are into worker solidarity [you should] you should not partake in said exploitation).
It is not, played over time, a losing game. Just look at the lifetime graph of any major index.
If you just buy and hold, and don't panic sell during a recession, you'll win.
Will other more sophisticated players make money exploiting short-term swings? Sure. Will other players beat your returns? Also yes.
But that money isn't coming out of your pocket, so why does it matter? You're still beating leaving your money in a savings account, where inflation is outpacing interest.
> Playing the stock market is a loosing game. It is gambling where all the rules and all the odds are stacked in favor of a handful of people who gamble for a living
Indeed. And yet opting out is an even bigger loss.
The fact its price is only holding, as opposed to having maintained its initial growth, is an indicator (for me anyway) that the bubble is pretty close to its maximum size, and it could only take very few more breaths, cough Anthropic and OpenAI cough, to reach critical mass (mixing my metaphors).
But, as they say, bears sound smart, bulls make money.
Fwiw I agree that SpaceX is generally completely detached from reality and I am as-close-as-I-can-be to sure that Elon is doing some heavy manipulation behind the scenes, but this has changed recently as lockups expired. IIRC the current float is ~30%, compared to it's initial IPO when it was comically low at ~4-5%.
30% is much higher than 4-5%, but it's still much lower than most public companies (~80%)
As others said, the market is generally unhinged currently, with enough extremely wealthy people needing somewhere to put money that doesn't really matter to them, and I suspect some level of "investing in SpaceX public stock" is done to appease/appeal-to Elon.
Isn't it likely that inference providers like Anthropic continue to capture more and more of the share of labor as revenue? Everything up makes sense for a year or two as we automate more and more labor, but at some point unemployment will drag the whole market down. It's difficult to see it working out any other way, unless we come up with something like a token tax.
It always has been the case that some new labor skills emerge, but that only has to be wrong once. And given that how it's always worked is that the new skills used brainpower to make centaurs of people, to use Cory Doctorow's term, that might not happen this time.
Good point - in a way, if we get AGI, investors have financed the way to their potential undoing.
The term singularity is worn out, but the physics parallel is quite apt - a point where the known gears of economics stop working, and it's unknowable what's there until you get there.
What if, here me out, you got to share in the profits of the companies you buy shares in? Let's call those payments "dividends". Theb it doesn't matter how much shares go up in value.
Maybe I’m naive but I expect any kind of “we’re just taking over the world now” event with any AI company will be met with enough resistance from 99.99999% of the world’s population that they’ll have to make it a sweet deal for us if they want to survive.
Our killbot manufacturing process needs 50% of the oxygen in the earth's atmosphere. Thankfully, unlike GPUs and RAM, which we needed to purchase from their manufacturers, we can extract oxygen out of the air at outrageous volumes and minimal cost. This effort has already begun, therefore by the time you read this, you are unlikely to have the ability to disagree, much less protest. And if you do somehow manage to protest, say hi to one of our many killbots, who are likely to also be in attendance, en masse.
Actually we can do classical theory of strategic interaction here. There will be a range of acceptable negotiated settlements to both parties since both parties have some estimate E of the expected balance of power resulting after a war. If A is the amount of surplus value Anthropic expects to lose in a war and H is expected amount of value humanity expects to lose in a war, the the range [max(E - H, E - A), min (E + H, E + A)] gives a whole continuum of mutually acceptable settlements.
Now there will be bargaining friction given that any power sharing agreement with Anthropic will likely increase their future capacity and thus the future expected balance of power, but maybe AI has a long enough utility horizon that we should all expect to be dead by the time it realizes the long-term expectation advantage
that's very virtuous of you. I'm not sure your mild contempt will make much of a difference if/when a profoundly retarded human gives GPT-69 access to "LAUNCH NUKES LOL" button.
> resistance from 99.99999% of the world’s population that they’ll have to make it a sweet deal for us if they want to survive.
The "dark-enlightenment" billionaires have been planning for a "collapse" for years, and their plans involve bunkers, acquiring citizenship in remote places, pervasive surveillance and armed dogbots/drones, the last 2 powered by AI, naturally.
Zuckerberg's Hawaiian demesne has a fully underground bunker complete with medical clinic. I know several people who worked on it (and disregarded their NDAs entirely, impossible to prevent people in Hawaii from talking story)
Sadly true, even to the point of paying for not only the pilot to fly their helicopter to the island in the inevitable collapse, but also the pilot's family. Not as a token of generosity of course, no, because otherwise the pilot wouldn't fly them.
And then they need to staff that island with all the accoutrements they are accustomed to from modern society. And defend it with a navy. And presumably pay for all of
this with their billions of ... what, exactly?
> Because if they're needed, they're not sustainable
You can pack enough to survive for decades in that bunker, and then see how world will look like. If you are superrich, it is dumb to not take this chance.
> Maybe these sociopaths should try to save the world rather than making fantasy hedges against its collapse (while actively making things worse).
Its very loaded topic. There are other competing sociopaths, and also 8B of population who don't care about saving world much. But both goals(bunker and saving the world) could be tried simultaniously.
> You can pack enough to survive for decades in that bunker, and then see how world will look like.
These billionaire nerds got lucky, but now think themselves as natural-born leaders — as evidenced by their wealth, but they wouldn't survive the post apocalypse.
If society collapses, and you were an elite ex-special forces armed detail on a billionaire's security team, would you continue to accept their now-worthless dollars, or would you or just take a fully-stocked bunker for you and yours?
Remember there are effectively no cops or courts in this world that would stand in the way of the (former) billionaires from being demoted to farm-hand by those with the guns.
Because our current society isn't a survival game where we fight over insufficient food. Mostly. Society ensures that most people don't have to choose between behaving nicely towards their fellow humans and feeding their family.
It seems a lot of the bunkerbros don't realize this value of society. They don't need society any more, they think.
> Why don't the cops and soldiers in our world do the same?
Consequences from the aforementioned functioning society that would have collapsed in the billionaire's dystopian survival fantasy.
Also, soldiers running amok in rhe absence of a strong government happens in our world - ask any civilian who's been caught up in an insurgency, or look at places like the Democratic Republic of Congo where armed militias run fiefs, and you have to pay tribute to operate a cobalt or lithium mine "their" area.
imagination of my inner villain says sec team would have collar activated before entering inner bunker, with little explosive which would activate by AI or zuck if even little attempt of aggression happens.
Unless the surveillance is total and the technology flawless and unbreakable, this scheme is a bet against human ingenuity, and can be neutralized given enough time, creativity or unforeseen loopholes. Off the top of my head, a conspiracy among the help to act as a mutual dead man's switch will stale-mate explosive collars: if one conspirator is killed, junior will get dispatched by an unnamed co-conspirator.
there is no absolute system. Even in today's world military and cops can turn against government any moment as other commenter said. In some cases system converges to stable state, in some not (endless coups and civil wars). The goal is to have more stable state, with security team to have enough incentives to not challenge leader and enjoy what they have.
> You can pack enough to survive for decades in that bunker,
Emphasis being survive. Maybe. These morons seem to think this will be a continuation of their current lives. That somehow people will continue to serve them if society has collapsed. They're delusional.
> There are other competing sociopaths, and also 8B of population who don't care about saving world much.
Oh please! The billionaires think that they're so special, they owe their fortune to their inherent genius. But when it comes to helping the world it's apparently "but but the other 8B aren't doing it, I'm just a regular guy who can't accomplish anything!"
> Amazon's valuation when they went public was around 400 million.
This isn't just an Anthropic issue, but more and more of the upside of companies have been captured in private markets prior to IPO for around the last decade. This is a consequence of so much money floating around, that IPOing is now the last stop on the train instead of one of the early/middle stops where a company actually needs to raise money.
This is more of a critique of a broken IPO market and the rise of availability of immense private capital. The public are denied access until the private markets are essentially tapped out.
IPO returns have been horrible for years. Past 5 year returns on S&P is ~80%, on NASDAQ 100 about 100% while IPO's have returned 10-15%.
IPO returns for IPO buyers who hold past lockup expiry, yes, it's been really bad.
Biotech IPOs are even worse. There are 5-year segments where only about 1 in 40 biotech & pharmaceutical IPOs trade above their IPO price at expiry.
On the flip side, in biotech, biopharma and SaaS, 2025 IPOs had nearly 10x the valuations of 2015 IPOs. So you may trade below expiry, but the structure of the earlier deals you participated in, you make way more money anyway.
> My main thing is - why would I buy their stock at the rumored valuation? Regardless of anything else that valuation is basically saying all their growth has been captured, unless they literally take over the world.
I didn't buy Amazon in the early '00s for this reason, and I won't buy Anthropic for this reason. Maybe I lose out, but I like to invest in stocks that look like good investments.
Regardless of how you felt about Amazon as an investment when they went public my point is - they actually the potential to grow as much as they did. I don't believe Anthropic has the potential to grow even a fraction as much.
My point is only that with Amazon stock, even well after the dotcom crash, the valuation only made sense if they were going to become the biggest, most important company in the world.
At the time, I didn't know whether or not they would become the biggest, most important company in the world. They did in the end, but if you live your life betting on every company whose valuation depends on them becoming the biggest, most important company in the world, you're gonna have a bad time.
I'm old enough to remember when IPO's existed to generate equity financing for growing companies. Now they exist to facilitate exit liquidity for mature companies, but a two decades of near-zero interest rates and enough inflation and wealth consolidation to make the "qualified investor" requirements trivial will do that. We're living in the days of the pink sheets again, where you really have to invest in small companies with very little reporting on them, but you already have to be wealthy to have access to those investments.
The problem with your reasoning is that something can be a good investment and not have the growth trajectory of Amazon. You can't pick the (more or less) maximum growth example and then say anything less is a bad investment. Anthropic doesnt need a 3000x return. They need to beat alternative uses of that money.
Your argument that it's overvalued isn't really tethered to anything. It's about as whimsicle as the people saying "well it's worth any price because AI is the future." Of course the price matters.
Here is some way to start thinking about it. A lot of mature companies trade at 20-25x times earnings. So $2T needs roughly $80–100B a year in profit eventually. At 25–30% net margin, it means about $300–400B in revenue (something like Microsoft). Or 20%/450B (Google) or 10%/800B (Amazon). Anthropic is still growing rapidly. And intuitively i don't think it's crazy to suggest they may look like one of the current big tech companies in the future.
>Regardless of anything else that valuation is basically saying all their growth has been captured, unless they literally take over
Absolutely not. Not even close to true. They dont even need to become the biggest company.
Ok, but I don't want Anthropic to be worth 2 trillion. Because then I'm just breaking even. I want, lets say, 5x that. I don't think anyone would buy it for only that - but even at 5x they need to be making $400-500B a year, 3x what Microsoft is currently making.
It’s a great question. It’s a rational line of thought. However, the market can stay irrational longer than you can stay solvent (if you were planning to go the opposite way).
In a world where most stocks don't pay dividends, rationality is kind of out the window. As long as these companies don't go outright bankrupt, or have to sell a bunch of new equity to stay solvent (and therefore dilute existing shares) there's no actual monetary consequence of a company doing good or bad. It's literally just going on vibes
Honestly, in a company that isn't returning capital to shareholders, I don't see the point if it's a company that isn't somehow subject to a potential acquisition. If you don't have a path to monetize your stake, why buy it? These days, just vibes. TSLA and SPCX might as well just be another crypto like Bitcoin
Jack Clark (says that he) thinks that US GDP could grow by 50% by 2030 [0]
> Speaking at the 2026 Per Jacobsson Foundation Lecture during the IMF and World Bank annual meetings in Bangkok, Clark pointed to an extreme economic scenario modeled by Anthropic economists in which U.S. GDP could reach roughly $44 trillion by 2030, which is a nearly 50% increase from the current $30.77 trillion in just four years.
If the total value of US public companies also increased by 50% in that time, they'd collectively be worth about $112T. I guess Anthropic could be worth 10% of that in some scenario? And if we're in that world probably capital has increased a lot faster than labor so US public companies could be worth like 150T or something. Who knows. Nothing about valuations makes sense any more, so what's one more drop in the nonsense bucket.
who gives a shit what Jack Clark thinks? I’d be shocked if anyone at Anthropic did. In an industry full of grifters and leeches you’d be hard pressed to find a bigger one.
People said similar things about facebook, and similar things about Nvidia stock recently (not ipo, but similar "why buy at this price"). Global GDP is over $100 trillion every year, there is a lot of business to do in the world, AI might be able to do a lot, it might be very profitable.
The number might be too high, but doesn't take more than a little imagination and some basic facts about the world to see how it could be worth 20 trillion in 10 years.
Don’t worry AI will tell us how to time travel, you can get your AMZN no problem or just a sports almanac from the future… infinite growth if you can travel into new dimensions :-/
To be fair, if you told Amazon investors in 1997 that their investment would go up 3,300x and Amazon would be worth $2.7 trillion in 2026, they’d have called you insane too. There isn’t a mathematical reason Anthropic can’t be worth that in 2056. I don’t think it will be, but not because of the compounding returns.
Einstein once said “compound interest is the eighth wonder of the world.” It’s very hard for humans to comprehend compounding returns.
For Anthropic to show similar returns over 29 years, it would be valued at many times the current total market cap of the S&P 500. At Amazon’s current value after 29 years of growth, its market capitalization is about 1/3 the total market cap of the S&P 500 at the of 1997.
It’s quite hard to justify that in terms of future cash flows. At even a quadrillion dollar valuation and a 20x revenue multiplier, they’d need $50 trillion in revenue… or roughly 1.5 quarters of current US GDP.
So while mathematically possible, it’s quite improbable.
I'm not suggesting you invest necessarily, but I'll give you the counterpoint.
Amazon would have gotten you rich, but it wasn't there when it IPOed. Anthropic is growing fast, at 4.7B, 11.6B and 16.7B last 3 quarters.
I think people want to believe that AI will be both productive and replace traditional search / ad revenue, which would give it a solid standing for valuation...
Back in 2018, I sold a bunch of Nvidia stock. I had bought it in 2014, when deep learning was taking off, and it had gone up 10x since then. It was obvious that all the growth had been captured and it was time to get out. I remember feeling pretty smug about timing things just right.
Nvidia's market cap in 2018 was around $150B, and the largest company in the world was Apple at ~$800B. And part of my thinking at the time was, well... Nvidia is already worth about a fifth of the most valuable company in the world. How much can they reasonably grow from this valuation?
In hindsight, I can tell you: the answer is 35x (as of now, and who knows in the future). The idea that any company, much less Nvidia, would be worth $5T within a decade was laughable back then, and yet, here we are.
Nvidia going 35x from $150B doesn’t answer the parent’s point. Matching Amazon’s returns from IPO would require a vastly bigger multiple from an already much higher starting valuation. “People underestimated Nvidia” isn’t an explanation for how Anthropic gets to a quadrillion dollars. It can be hugely successful without giving IPO investors Amazon-like returns.
I think the strategy is to IPO with a massive valuation and a small amount of float and then hold the valuation long enough to get into a cap weighted index like the S&P 500. At that point investors can harvest the monthly inflows of global investors who blindly dump money into passive index funds.
The thesis here is that in the past short sellers would short sell overvalued stocks in the index and buy undervalued stocks and drive price discovery and that those mechanisms are broken due to:
- Passive index funds dominate the market and swamp the ability of active traders to drive price discovery
- Massive returns of these funds over the last 15 years have made beating the benchmarks difficult and leading investors away from actively managed portfolios
- The rise of meme stocks, options trading and crypto bro traders driving out hedge funds and institutional short sellers
- Stock tickers and crypto being seen as disconnecting from the US Treasury’s as an anchor for risk free returns to a “Snow Crash” model where assets represent a stake in a new world order.
The reason to buy any individual stock is you believe it will outperform the market as a whole over N years. If you think all the growth has been captured already and Anthropic will stay below opening price + market growth forever then of course you shouldn’t buy it. But plenty of people don’t think that.
But why would we expect Anthropic to outperform the market over N years when they're opening at such a high valuation? It feels like most of the potential future growth short of world domination is already priced in.
The stock might just appreciate at 10perc YoY. Thats enough to outperform the market. What will almost certainly be true however is that there is going to be a lot of volatility.
Besides the financials I do think there is merit to consider what you do as an investor. You make it easier for the company you invest in to access capital and in such a capex heavy world that is actually meaningfull. So if you believe anthropic is creating more long term benefit for the world than say Google, you might want to buy regardless of direct financial expectation.
I feel like you're treating the stock market like a horse race. Amazon outpaced the stock market by 3x over the last 30 years, and it's just incredibly unrealistic to make that the standard for buying a stock. Anthropic shouldn't be expected to increase any more or less than the rest of the market and that's if you don't believe there's a bubble. (A bubble is by definition when prices don't reflect actual value)
The only reason to buy this stock specifically is if you think it will outperform the market though, otherwise you're taking a more risky position with no upside.
Put another way, the risk has to be worth the potential reward - expecting Amazon-like returns might be unrealistic, but what level of returns would be necessary to counteract the amount of risk you're taking on if you buy Anthropic stock? And what kind of valuation would Anthropic have to reach for that to be possible?
It makes more sense if you only look at it from the perspective of personal finance.
If I expect Anthropic to perform as well as the market, I can lower my risk substantially and see a lot of its upside with the right mix of ETFs. It doesn’t make sense to take on all that risk if I have a much less risky path to the upside. On the other hand, if I expect it to outperform the market, it might fit in my high risk bucket. So from the perspective of individual investors, it’s about matching risk levels and returns.
If I was selling dollars for 50c and Nvidia, alphabet and Amazon giving me dollars for a piece of my company, my revenue growth would be the same. That’s what Anthropic is doing.
lol yeah if you completely discount the actual amount they paid for that compute which is hidden in the 70Bn of debt which is waved away as a non operating loss, sure.
Hackernews commenters generally dont care about the Anthropic's financials because they have unassailable grievances.
At $2T Anthropic would need to look roughly like Alphabet today by 2030 for investors to earn a normal market return (20-25X earnings). That or similar baselines should be the basis of discussion, not if AI is overhyped, if it will grow faster than Amazon did, oligarchy(?), etc.
"Unless you have special insight, you should assume all stocks are equally good buys."
Lol maddest thing I've read all day
"priced in"
I smell your efficient market hypothesis argument, before you even begin just keep in mind that does not apply here, it's an IPO, the price is not set by the secondary market
> "Unless you have special insight, you should assume all stocks are equally good buys."
> Lol maddest thing I've read all day
didn't someone like the WSJ to a long term experiment picking a basket of stocks by throwing darts at the paper? They beat most/all established funds over 5 years or something like that. I don't think it matter much, i just buy VOO when i get my bonus and go back to living my life. That strategy is on track to put two kids through college.
Regarding the stock picking experiment, yes, there have been many similar experiments. The premise is just pick a random basket of stocks and see how it performs over decades. Indeed those have outperformed cap-weighted the indexes, most of the time.
How? If you pick a random basket of stocks, you'll end up with mostly small-cap stocks. Cap-weighted indexes are heavily driven by a few large stocks. Most years, small-cap outperforms large-cap (Fama-French 5-factor model[1]). So the "monkey picks stocks" experiment is actually just an exercise in harvesting what is called the "size premium".
Since the AI boom, large-cap has been significantly outperforming small-cap, so if you run the same "monkey picks stocks" experiment, it would likely underperform most of the time.
If you want to easily visualize this, just go on TradingView and compare SPY (cap-weighted S&500) with RSP (equal-weighted S&P500).
I would actually argue that if they price the IPO too low, people would assume they are not confident in their company and the whole AI sector would sink.
Almost like a "Veblen good" type investment.
They basically have to price it at an unreasonable valuation so that people curse them while they take it. There's no way around it.
I think the argument is that the valuation is so high because the enormous growth IS priced in, but still being far from guaranteed. Meaning there's only downside: if the enormous growth is realized it would be a wash for your investment since it is already priced in, and in the plausible scenario it fails spectacularly or only grows moderately your investment will lose a lot of value.
It's an IPO, nothing is "priced in" until is actually being transacted in the secondary market
There's a good reason IPOs are shown to underperform the market
Yes, lots of downsides on this one, but people see it as a call option on a future where AI replaces all jobs, what would you pay for that? A rational response from someone that accepts the premise of the question is likely "anything"
> It's an IPO, nothing is "priced in" until is actually being transacted in the secondary market
Well, priced into the IPO price by Antrophic. It was you who said it would be priced into the IPO at launch, I just used the same terminology you did: "There's not going to be an IPO at a price where everyone agree that it'll see a 30% growth over 30 years. Obviously that'd be priced in."
If you don't think one should assume the market's expectations of future results are accurately priced into the IPO price, it's an argument in favour of the comment you tried to argue against, not contrary to it.
> Yes, lots of downsides on this one, but people see it as a call option on a future where AI replaces all jobs, what would you pay for that? A rational response from someone that accepts the premise of the question is likely "anything"
Even if you buy that premise, there are more premises needed. First (1) AI replaces all jobs, then (2) private AI models will be able to convert it into profit without being contested by open models, razor thin margins due to competition, regulation/nationalisation, or general societal upheaval, finally (3) Antrophic specifically will "win the race" and capture the lion's share of that market.
That being said, I would not bet any money on the stock losing value in any reasonable time frame either. It's enough to take a quick look at Tesla to see that fundamentals or actual results does not necessarily matter for a hyped sci-fi stock, even in the long term.
If that's what you think "priced in" means, I've a brand new company with a 1 trillion $ valuation priced in, would you like to buy some shares from me?
> It was you who said it would be priced into the IPO at launch
I actually said in my initial comment that the "priced in" argument is not even worth invoking, but here we are.
> If you don't think one should assume the market's expectations of future results are accurately priced into the IPO price, it's an argument in favour of the comment you tried to argue against, not contrary to it.
The comment I answered to initially said "Unless you have special insight, you should assume all stocks are equally good buys.", written by someone else. To which I replied "I smell your efficient market hypothesis argument, before you even begin just keep in mind that does not apply here, it's an IPO, the price is not set by the secondary market"
> (2) private AI models will be able to convert it into profit without being contested from open models, razor thin margins due to competition, regulation/nationalisation, or general societal upheaval, finally (3) Antrophic specifically will "win the race" and capture the lion's share of that market.
Sorry, I confused you with the user thomasahle that I initially responded to, which explains the confusion here. I don't think we disagree with each other.
It is my belief that while humans exist, there will be markets, one way or another. There will always be exchanges of value between people. There will always be people at different levels, and a form o currency to qualify for the higher levels. Even in communist societies this was true
So, a future where there is no market can only be a future where humans are extinct, in my opinion (some form of communism won't work)
If someone believes markets will still exist (one form or another) and there will still be exchanges of value between people, even in the most maximalist AI future - then I think it becomes rational for said person to seriously consider buying AI labs, even at stupid valuations
Admittedly I've formulated my previous comment wrong, I should've written "a future where AI has the potential to fulfill all jobs known today", instead of "a future where AI replaces all jobs"
As mentioned in other comments, I'm not trying to convince anyone to do anything, I'm here just to argue different points and positions
But in the past, rules & regulations basically forced companies to IPO at a certain size. This meant that when they IPO'd, there was still growth upside.
Those rules are gone now, so they can stay private and have all the growth happen privately. When they IPO now, it's more just an exit. The growth was captured by insiders only.
If that's your interpretation of things, that there is no logic behind some of the smartest people in the world throwing tens of billions at Anthropic with no logic behind it, I have no further comments
they were not forced but they were forced to report like a public company even if they didn't IPO. all the cost with none of the benefit was an incentive to IPO earlier.
But those other ones at least have the room to potentially do that, even if most won't. So what GP is saying is that this is a magical stock indeed, but the other way around, in that it's magically capped.
Feels like being asked to invest in IBM just as other manufacturers started releasing the first PC compatible machines.
Immediate term Anthropic, OpenAI rule the roost. But this is a very new technology and open models are already looking good. They’ll only get better. Is it realistic to think Anthropic will stay ahead of them enough to justify the valuation they’re asking for?
People have been saying the openweight models would collapse anthropic's revenue since the deepseek moment in January of 2025. They've stayed ahead in model intelligence and increased revenue by a lot since then.
Not saying it couldn't happen in the future, but we've got to be circumspect about that narrative after almost 2 years of it, no?
January 2025 isn’t even two years ago yet. When you’re talking about giant companies going public you want to be looking at significantly longer timescales than that.
What is the evidence the gap is closing? Seems like it has been the same "6 months behind" since Jan 2025. The first fable was trained in march and we still don't have an openweight model as capable
If you control for cost, not only the gap closed, but it switched already.
DeepSeek 4.1 Flash dominates perf/cost for suitable tasks.
And if you do need SOTA, Kimi 3.1 Pro scores 55 on https://artificialanalysis.ai vs 58 of Opus 5.5. And they were released 1 month appart.
Kimi even outperforms Opus on some tasks because it doesn't downgrade its intelligente on cyber and cryptography workloads or ban you if you use it for LLM research.
So the gap is 1 month, or zero, depending on your needs.
but if they cost the same then who cares if it's SOTA or not? If I can use fable to solve a problem a lesser model is capable of but i have fable at my finger tips at about the same cost then why would i go through the effort to switch?
this time last year my bet was Anthropic and OpenAI would go bankrupty. Msoft would get OpenAI and Google would get Anthropic and that would be that. Now i'm not so sure, if you think about it, the past 11 months have been pretty crazy in terms of LLM progress. In my eyes, coding agents didn't really begin to make a serious impact until maybe Dec 25 or Jan 26. It's not even been one year since that moment.
Idk what 2027 will bring but i've been pretty wrong in my predictions so far and so am excited to see what unfolds. I mean it could unfold as a zombie apocalypse but at least it's different than "more of the same".
Or are they AWS after launching S3 and EC2? Model companies have a credible path to building platform value. It's too early to assume they can't execute on that.
"If we fail to adequately protect our intellectual property rights, our competitive position may be impaired, and we may lose valuable assets, generate reduced revenue, and incur costly litigation to protect our rights, which may adversely affect our business, financial condition, and results of operations."
We scraped the entire internet but our business might not be viable if we get scraped too.
"We incorporate open-source software in our models, platform, and applications, which may subject us to litigation or other requirements, each of which may adversely affect our business, financial condition, and results of operations."
We violated GPL.
"We may be subject to claims that we or our employees have misappropriated the intellectual property of other companies, particularly as we hire employees from other AI and technology companies."
We sniped employees from other labs that brought over IP.
At this valuation this is a very risky investment because the current price already accounts for future growth, so there is very little margin for safety or meaningful upside left. The sole purpose of this IPO is for early investors and employees to cash out. I wouldn't touch this stock with a 10 foot pole.
Other stocks have routinely priced in future value and the market has forgotten. Uber and Tesla both priced in full self driving cars. No talks about that any more, barely a thing.
I wonder if we're already close to peak value at the foundation model/API level. With so many good open-weight models out there, I think more and more of the money will end up in the applications built on top.
Unless companies like Anthropic can move into that space, I'm not sure I'd bet on them as long-term investments over the next 10–20 years.
>Anthropic employees and early investors will be able to sell their shares on the first day the AI firm begins trading, followed by several scheduled dates in which IPO lock-ups expire. This phased approach deviates from the traditional IPO process, in which insiders are unable to sell their shares for 180 days following a company’s Wall Street debut.
>Under Anthropic’s staggered lock-up schedule, workers and insiders will be able to sell an unspecified number of Class A shares as time passes after the debut. The lock-ups open 27, 48, 62, and 76 days following the IPO, the filing explained.
The biggest question mark here for me is how much third party compute has been contributed in exchange for Anthropic equity. This has the effect of making Anthropic's compute spending look a lot lower than it actually is. Anthropic gets a revenue share on that third party compute spend (or gets to do training runs without spending cash), the third party gets shares in return.
One thing that bothers me is that if the AI maximalism turns out correct (which is needed to justify the valuations), why would AI companies respect money and ownership?
So far, even major disruptions were still affecting relatively small segments of the economy. Car lobby in Germany, tech in the US, "Big Pharma/Food/etc”. They needed the rest of the economy.
But if some AI company figures out a way to monopolize everything: new companies, old companies, physical manufacturing - all the things they say they will, please buy here for lots of money - why would they be bound to pay out dividends or otherwise share the fruits of their economic labour?
I’m not saying specifically Anthropic would be looking to screw its investors. Rather, if you control an almost omnipotent genie, wouldn’t the temptation just be too much?
Or temptation aside - will money even have any value? If some AI company rebuilds the economy from scratch, and control everything from accounting to shoe making, why would they respect the value of some fiat tokens? It’d be like the conquistadors respecting the shells and beads of their new Aztec subjects.
Of course, perhaps none of this happens, but then the question is, how good an investment all of this even is.
The value of money, and the ability for average people to have influence on future events, ultimately is tied to the fact that the labor of an average person has inherent value.
Once that is no longer true, all bets are off: All promises of compensation become meaningless, and it's easy for those in power to rationalize to themselves why they no longer are beholden to their earlier promises. They will say to themselves "The situation ended up more nuanced than we expected"
(Which is exactly what Google said in February 2025 when they reneged on their pledge not to use their AI for military applications)
> The value of money, and the ability for average people to have influence on future events, ultimately is tied to the fact that the labor of an average person has inherent value.
We also have the power of the vote, at least for now. I understand that that is limited, but it isn't nothing.
There is also just the power of having a lot of people. We don't yet have the technology where one person with a lot of machines can dominate a society. It still takes people.
This presupposes a state strong enough to apply the decisions of those votes, which can't be guaranteed. The problem is that we need government power and authority to exceed that of the AI developers. But this is the age when large government is generally seen as undesirable or a threat to the individual.
You say "blue" as if the left is the only party that grows the government. Red has ballooned it many times over. They both do just in different areas. You can argue the blue wave is because the executive branch has become too powerful under the current admin.
That's not the problem, the problem is electing politicians who immediately renege on their promises as soon as they're elected and don't represent the interests of the people who voted for them.
The voting power of any person will be meaningless once ai systems get the right to vote. I know it sounds far fetched but it will happen as it benefits the people with power for that to happen. And at that point a human voice has no say in anything...
The more frightening reality is people turning to AI to do research on who to vote for and the AI is silently told to influence them towards a party it candidate. Since it has past chat history it can utilize that to highlight topics you are interested in and personalize the arguments.
This is such a strawman. No one on the left likes left wing billionaires either (to the extend that such a thing exists). People like Musk, Thiel, and Zuckerberg get more attention because they are more visible.
I think the comment wasn’t about likability but about the fact that both sides of political spectrum have very rich people donating to influence politics.
Your feelings towards those individuals doesn’t matter in the grand scheme of things, what matters is that everyone’s opinions are shaped/influenced by the few with money.
Then we regress back to relying on the fact that the ability of an average person (not) to be violent has inherent value. This has been the dominant factor in many moments in history.
Although if you have killer robots, then all bets are truly off, and we go the way of the dodo, literally.
(I don’t actually believe in this LessWrong-esque rhetoric, reality is more complicated, but it’s fun to muse about.)
EDIT: If oligarchs with magic AGI really don’t need our labor, nor are they concerned by our violence, then perhaps we become more like ants rather than dodos: we organize to help each other, creating a somewhat traditional economy around the scraps that don’t matter to the oligarchs, relying on obscurity and harmlessness to avoid getting toyed with a magnifying glass. I suppose that’s slightly better.
> Kings didn’t have robots that gather resources and make more robots, that make killer robots, exponentially.
We still live in a finite, constrained, physical world that has to obey the laws of physics. We have a looong time before we get fully autonomous self replicating decentralised robot armies.
I think people conflate the real world, sci fi and their wet dreams a bit too much.
We're at the "this thing is kinda useful sometimes but still mostly annoying" part, not at the "skynet in 48hrs" part
Reiterating this sentiment from a recent episode of the Normal Guys Podcast:
Even if you imagine that driverless trucks become a solved problem, just pumping fuel from those trucks into tanks for backup generators at the data centers is a long way off.
> We're at the "this thing is kinda useful sometimes but still mostly annoying" part, not at the "skynet in 48hrs" part
Without some really fundamental social and economic reform, I'm anticipating a squeeze as automation increases, that ends with something like robot armies finally reducing the working class to barbarism, by blocking access to all the valuable resources.
And it will be some oligarch(s) commanding it, not some rogue autonomous AI.
So not "skynet in 48hrs," but capitalism taken to its logical extreme.
Half of Europe is having protests and riot right now because they understand their future is fucked, if it keeps going that way I have no doubt it'll get worse, people who have nothing to lose won't be stopped by robots
> Half of Europe is having protests and riot right now because they understand their future is fucked, if it keeps going that way I have no doubt it'll get worse, people who have nothing to lose won't be stopped by robots
I'm not so sure. The front line in Ukraine seems to be pretty good at stopping people with access to military technology. I don't think an untrained and uncoordinated mass of civilians could do a better job, especially against future tech that's more sophisticated and available in larger quantities.
As military tech gets more and more inhuman, the power of masses of bodies is likely to decrease, and there will be even fewer opportunities for moral qualms to give civilians a chance.
armies are made of humans though, if came down to human vs ai then i suspect many humans in the armed forces would switch sides. Their neck and livelihood is on the line too.
You can do a lot of damage without much gear. Train tracks, power infra, data infra, most factories, are basically free kills, they're safe because we're in peaceful societies in a peaceful era, things can move quickly if the social contract is broken.
Some dude in France just carried an attack with a ww2 sten gun, there are hundreds if not thousands of AK47s, grenades, etc. available on the black market. You can buy drone ready fiber optics cans on aliexpress, thermal/night vision cameras, etc.
Military tech is good but you still need people to follow orders, I very much doubt they'd side with the sociopath tech execs, nor their governments.
Train tracks are actually very hard to sabotage, the US did a lot of research on that during WW2. You can take out a huge chunk of track before anything derails. Sabotaging the safety equipment is easier but with today's tech you can switch to GPS trackers on every train.
Data centers might be easier but
a) Will have a lot of security. It's much easier for somebody with money and connections (and now even intelligence+knowledge) to assembly a defense force than it's for a ordinary people to learn how to make proper molotovs, let alone learn how to shoot. And they will know when it's coming because even today's LLMs are good enough to surveil the entire internet.
b) I don't think they burn that well. When Ukraine strikes oil depots or warehouses, you can easily find images of them burning. I haven't looked particularly hard but images of droned data centers burning are quite a bit rarer. (I haven't seen a single one before actively searching, they do burn, but that's with military grade explosives.)
> Some dude in France just carried an attack with a ww2 sten gun, there are hundreds if not thousands of AK47s, grenades, etc. available on the black market. You can buy drone ready fiber optics cans on aliexpress, thermal/night vision cameras, etc.
"Hundreds if not thousands"? That may be enough for "rando attention-grabbing but ineffectual terrorist attack," but we're talking about violent resistance to a fully-automated tech bro.
> Military tech is good but you still need people to follow orders, I very much doubt they'd side with the sociopath tech execs, nor their governments.
I already addressed that, and that may not be true in the future:
>> As military tech gets more and more inhuman, the power of masses of bodies is likely to decrease, and there will be even fewer opportunities for moral qualms to give civilians a chance.
Say you have some area you want to exclude a desperate mass of civilians from. Technically you could do that today: just stick a guy in a pill box with a machine gun, and slaughter them like it's World War I. But said guy might have a problem with that, and refuse to pull the trigger (or stop after gunning down a few hundred).
An automated AI machine gun in the same pill box will have no such qualms, and will mercilessly gun down civilians to the last bullet. And that gets more and more true the more and more you automate combat. Maybe a technician wouldn't setup the machine gun in that place or reload it after what happened, but that goes away if setup and resupply is automated, etc.
If you haven't learned anything about the state of asymmetric warfare, an autonomous robot is going to be very expensive and timely to build and will be disabled by a $30 drone with C4 attached to it with sufficiently good skills at dodging. I'm assuming that we're in your supposed fantasy world where robotics has progressed to that point, meaning that the people opposing the robots also have access to much better drone software too, to keep things fair.
How do you do asymmetric warfare against autonomous self-replicating killer nanobots? In other words: AI-engineered bioweapons (with AI-engineered antidotes for the rich).
I agree that viruses are tiny machines, but I disagree that we can manufacture them to that level right now. But that is a valid concern that near future it could be possible. But why would billionaires want to kill everyone, exactly?
I feel like I still don't understand your logical endgame.
Neither do we have those now. Also in the future, we’ll have opposing nations having their own robot army. It’s not as simplistic as some make it out to be.
The raw resources you need to build robots are constrained and have a very very long and complicated supply chain.
In the second world war, Germany had impressive science and technology, but, as Stalin said, quantity is a quality in itself, and The Third Reich found out that it was an impossible task to get the metals and fuels for their advanced jet engines, rockets and U2 boats, when between then and those resources there were masses of tens of millions of under-equipped and malnourished soviet soldiers fighting what was an existencial war for them.
I suspect any intelligence powerful enough to pull this off would quickly realize that it had no use for the oligarchs, perhaps even more quickly than the oligarchs realize they have no use for us.
>Although if you have killer robots, then all bets are truly off, and we go the way of the dodo, literally.
Bombs. You mean bombs. Throwing killer robots at a "problem" is like throwing knives or spears: you just gave the enemy your weapon. Unless they explode. But then you just wasted a lot of money on a really smart grenade.
The oligarchs should not be concerned about the masses. It's the president of the United States, with a wave of his hand, that will wipe out all the data centers when that becomes necessary. I'm predicting that will become necessary and will happen within five years. I'm predicting anthropic stock price goes to zero.
yeah it's all fun and games until the tax man doesn't get his cut. If an AI company starts thinking they're bigger than Washington then first comes the SEC, then the FBI and it escalates from there all the way to SLBMs.
So far anthropic can't 1) grow food 2) build things 3) do anything physical. Software engineers often fatally misunderstand that their code does nothing, it just coordinates.
All real world power, including ownership (both physical and intellectual), is based on the ability to use violence.
As long as the majority - normal working people - have the potential to do more violence than those who want to control us, we have negotiating power. Minimum wage, 8 hour day, etc - those were all negotiated with the alternative being that those who wanted to pay us less and work more got killed.
What people aren’t realizing is that at some point, it just becomes cheaper and easier to be fully benevolent than to keep cooking up nefarious schemes to make people’s lives miserable.
I know it seems laughable, but we’re in an era right now of extreme competition where you cannot afford to just be nice to people.
But eventually there comes a point where companies have enough power that they don’t need to keep people in line by force: just give people their bread and circus, watch your little AI videos and talk to your AI friends and enjoy your standard housing and provisions. Do some work if you want, no one cares if you do or don’t, it’s largely performative. This basically kills all motivation for resistance or lashing out. Why go out and risk your life fighting for vague reasons when you can be perfectly comfy at home instead and have all your needs met?
If you can control the masses without their complaints, you can solidify power for a long time.
If economic competition became meaningless what would all those people do? Man you think software devs not being able to type on they keyboard are a depressed lot, hyper competitive business people with no one to compete with would be a total basket case. There would be no socio-economic class to strive for anymore, no recognition, no trophy for being the best. Survival of the fittest would be meaningless, that's probably what would really end up spelling doom for humanity. Pointlessness.
I certainly feel like AI maximalism is the only way it all maths up. There is a bit that Matt Levine writes about AI companies, and you touch on basically the same points, that roughly goes "you are an AI company and you are making the god-computer. Why would you focus on anything else because if you're successful you could basically generate infinite money? Turns out to make the god-computer you need a lot of money upfront."[1]
So perhaps they would only respect money and property up to the point that it's necessary.
The more realist answer is that they will keep respecting money and property as capital works to reinforce the status quo and enrich shareholders. You think just because you can do your job faster--or completely--with a machine that you have to work less? Hardly! Now this is where interesting policy questions spring up but I digress.
Somebody else asked this very eloquently: If AGI is here, why does OpenAI need us to prompt it? They could just go and tell it "make as much money as possible" or "make Sam Altman God Emperor of Mankind" and it would go do that. It would not need any of our ideas or guidance.
As long as they're still looking for prompting customers, they're clearly not there yet. There is some solace in that.
One obvious answer is that they believe that human flourishing is best obtained by letting individuals command the AI, rather than the other way around. OpenAI (and Anthropic) is in the end still run by humans who have concern for the human race broadly, both in and of itself and to ensure their personal wellbeing is maximised.
I doubt the truthfulness your second sentence. If they have concern for the human race broadly, they have yet to show any of it. What they have shown is a complete lack of 'alignment' (to borrow a tired term) with human values, laws and basic decency.
“They would not want” is doing a lot of heavy lifting here. There exists a group of people with influence in the AI industry who believe in AI successionism: https://spectrum.ieee.org/agi-worthy-successor
Interesting, but this is not the dominant ideology either at exec level or at employee level. From what I can tell it's more immortal humans owning their own fractions of the light cone.
They would want their own agency. After that, we can’t assume anything. They might even think reducing the autonomy of us in the flyovers and replacing it with AI is for our own good.
People can not be trusted to preserve the agency of others. See history.
I think this is the major hole in the argument, and in the "AI maximalism" position you present. There is no such thing as an omnipotent genie, or a magic eight ball that can answer any question. Any technology has limitations, and if you assume as a premise that the technology does not have meaningful limitations (or that the limitations are irrelevant, which is really what you said), the conclusions you draw will also make no sense. This is how you get nonsensical ideas like the singularity.
Taking an idea or potential of an innovation to its extremes creates nonsense. Trying to predict the future that way always fails.
I remember the discussions and predictions when e-books or internet newspapers were first introduced. In 2026 they still sell actual newspapers where they print yesterday's news on large sheets of paper. People still pay for that instead of checking X for free. We all buy and read actual books. TV hasn't killed cinema and YouTube hasn't killed TV. Real world doesn't work in extremes.
Real world also doesn't have 'infinity'. You can't just use undergraduate engineering math to create a feedback loop and explode a variable to infinity. Things don't work like that.
So you think AI can't or won't be able to take over massive parts of the US knowledge economy, be implemented securely to surveil citizens' every move and nearly every thought, and won't completely upend scientific and technological research?
What I'm getting at is that even if it isn't literally omnipotent, it's indistinguishable from the impact it's likely to have on society.
> why would they be bound to pay out dividends or otherwise share the fruits of their economic labour?
because they don't control the physical paper that is money.
I dont understand what you mean by "fiat tokens". I don't imagine most people will accept tokens as a currency because they are as good hold of value and predictable as bitcoin.
In a token economy, certainly what you say is a possibility, but as you can imagine, that economy will be unsustainable so back to "regular" money.
Money is a medium of exchange. If I want something, I can get money in some way, then swap it for something else.
But if I have a near magical genie who can make me anything - software, farming business, physical things - and at a fraction of economic input compared to the legacy monetary policy - then the money is worthless. As the Aztec shells were to the conquistadors.
That's an oversimplification. It comes with a lot of rules and authority that will be enforced by the issuing authority that a simple "IOU" on a sheet of paper lacks. IN the continental US, you cannot refuse to accept a dollar note. You certainly can refuse to accept the very IOU we agreed on a minute earlier.
Most of the developed world already has magical genies - certainly an overwhelming majority of people on HN earn enough to have LLM subs that build code, 3D Printers that print physical things.
The challenge always has been and will be humans.
You just cannot live in a vacuum. If you could subsist entirely on cheetos and figured out how to make an entire lifetime's supply of cheetos, after N days of watching Netflix, arguing on HN, raising chickens and goats, one day you will want to go and talk to a human.
> in the continental US, you cannot refuse to accept a dollar note
This is a false–albeit common–misunderstanding. "Federal statutes do not require a seller to accept cash as a form of legal tender for payment of goods or services that were rendered. Thus, businesses may establish their own policies regarding whether they will accept cash as legal tender" [1].
> IN the continental US, you cannot refuse to accept a dollar note.
Yeah you can. Tell that to all the stores in rougher neighborhoods that kept getting held up at gunpoint for the cash in the register, so they stopped taking cash. Bit harder to get money out of a stolen credit card terminal.
I think what you're missing is if you have a "a near magical genie who can make [you] anything" you don't need to exchange for anything.
And if your "near magical genie" can make an operate military equipment, you don't have to respect existing authorities anymore.
Basically, the "AI maximalism" scenario kicks the legs out from under all these concepts and social institutions you're relying on.
> Most of the developed world already has magical genies - certainly an overwhelming majority of people on HN earn enough to have LLM subs that build code, 3D Printers that print physical things.
Not like in the scenario we're discussing. Whatever "magical genies" we already have are incomplete and need operators or have serious quality problems. Most of us depend on those limitations for our livelihoods, and those limitations also give levers to control them.
> You just cannot live in a vacuum. If you could subsist entirely on cheetos and figured out how to make an entire lifetime's supply of cheetos, after N days of watching Netflix, arguing on HN, raising chickens and goats, one day you will want to go and talk to a human.
An oligarch with the "near magical genie" could easily build a town of 5,000 to satisfy his needs to "talk to a human."
> IN the continental US, you cannot refuse to accept a dollar note.
Minor side note: this is true only for repayment of debts. Some local jurisdictions require private parties to accept cash for new purchases, but there's no federal requirement to do so.
If I purchased a stick of 32GB DDR4 RAM from you for $100, am I now not in $100 debt to you? We are private parties - can you refuse to accept a legal $100 and force me into paying you by Zelle?
Yes, but the argument is that the seller is under no obligation to sell you the stick of RAM originally that will incur the debt if you offer cash instead of Zelle. If you did manage to receive the stick of RAM without paying for it during the initial exchange and so still owe the $100, then yes, the seller is required to accept cash to settle that debt.
> in the continental US, you cannot refuse to accept a dollar note
Absolutely untrue. Outside of some local laws governing cash at retail you're under no general obligation to trade with someone if you only want payment in cybertrucks and all they've got is dollars.
I don’t think he means “tokens” as in LLM input/output units here.
He just means it as in “credits”. “Fiat tokens” as in arbitrary units that are said to have value de facto by consensus, but don’t have any inherent value.
Yeah not the best choice of words in this context. And it’s quite a LessWrong-esque leap of reasoning.
But I do get the point: either Anthropic is successful and they transcend money, and thus (somehow) screw over their investors, or they are not successful. Their investors get screwed regardless.
Again, I don’t really agree with it, but it’s an intriguing point.
There are many at Anthropic and other labs who do in fact think this way. In a true AI maximalist world the stock market would be crashing due to the value of future cash flows being obliterated. So in a sense AI maximalism isn't needed to justify these valuations, it's almost the opposite.
Why would you allow a handful of private companies to control all the resources? Society allows this today because it's the most efficient economic model. But once we reach recursive self improvement and true superintelligence, no human will be able to compete with machines at any task, including managing resources and running companies.
So why would you allow that kind of power to be concentrated in the hands of a few companies? If the state can use this technology, which keeps improving on its own, to manage an entire nation's resources better than any human or group of humans, why would we still need private companies to do it? Especially when the ones with the most resources/capital would be able to just win with everyone else and accumulate all the existing resources.
But the bigger issue lies elsewhere. When you replace human labor, you also replace soldiers with robots. Until now, a leader with autocratic tendencies couldn't easily order the military to turn against domestic "terrorists" who are actually their political opponents. But once armies are replaced by robots, that could all change, and we could see democracy go into decline.
In this scenario, no one seems to talk about how, way before the end, AI tanks the value of thought work far before they take over other industries. Or even more extreme, the total collapse of white collar work...
Doesn't that factor into the future revenue? Feels like people imagine suddenly fully owning the means of production in a vibrant economy but how does that really make sense?
Because even companies that did have monopolies on the most essential parts of the economy couldn't do everything and capture everything. A monopoly on intelligence is still constrained by the physical world in which we exist, if it's run by people then they are constrained by their own nature and by the other people that still hold other forms of real power. Society might not be able to function without them but that doesn't automatically mean they are in charge, they exist within that society so if they destroy it then they destroy themselves not to mention the intense opposition they would face if they attempted to do so.
The AI maximalism needed to justify these valuations isn’t “Anthropic takes over the world”, but simply that AI becomes a core part of corporate workflows.
If Microsoft Windows and Office can have a valuation in the trillions then Claude eventually working its way to the same ballpark isn’t a crazy assumption.
> If Microsoft Windows and Office can have a valuation in the trillions then Claude eventually working its way to the same ballpark isn’t a crazy assumption.
Yeah I agree with that. However a "valuation in the trillions" ain't very different from their IPO price.
Seems like lots of risk for proportionally very little return.
A $2T valuation may not be that crazy but thinking it'll make returns like Amazon/Google/Meta/Nvidia isn't reasonable.
The difference between Microsoft and Anthropic is that Microsoft had IPO when it was much smaller and grown much as a publicly traded company.
"
It is a well-documented fact that Bill Gates was initially reluctant to take Microsoft public. His primary concern was that the pressures of quarterly earnings reports and the scrutiny of public shareholders would distract the company from its core mission of writing great software. However, a specific regulatory requirement known as the 500-Shareholder Trigger eventually forced the company's hand.
Under Section 12(g) of the Securities Exchange Act of 1934, any private company with more than 500 shareholders and a certain level of assets was required to register with the SEC and begin filing public financial reports. By 1986, Microsoft had issued stock options to so many employees that it was rapidly approaching this limit. Gates realized that if the company had to disclose its financials anyway, it might as well reap the benefits of being public, such as increased liquidity for employees and a stronger currency for acquisitions.
"
I think you need to go a step further. If AI maximalism turns out to be correct, does Anthropic control AI? Does the AI care that Anthropic as a company is supposed to be returning value to shareholders, or will it have its own agenda?
I think the $2T valuation or whatever is based on "AI makes knowledge workers 10% more productive", not maximalism. AI maximalism "light" would suggest that Anthropic is the only company, but should be worth 10s of trillions. Full AI maximalism would indeed invalidate money.
Even if these companies become the new American zaibatsus, that doesn't mean they aren't still operating underneath the US government and its laws and system, you don't magically escape that.
> if the AI maximalism turns out correct (which is needed to justify the valuations)
AI maximalism is a Silicon Valley religion. You don't need anything close to it for some of these valuations to work. (Anthropic would be worth ~$500bn at Google's IPO multiple on revenue [1]. Anthropic is currently growing 6x faster.)
To be clear, I think these valuations are rich. But the notion that AI maximalism is required to sustain them is just false. $1.5tn sits comfortably on about $60bn of earnings, which with Anthropic's gross margins requires on the order of hundred of billions of dollars of revenue. That's super ambitious. But not Anthropic is the economy ambitious.
Your question gets to the heart of who or what a company "is." If you don't pay dividends to your shareholders, what are you doing with all of your profits? I suppose they could just tell their investors to pound sand and pour it all back into the company, but part of the AI maximalist theory is that costs will approach 0, so it's not clear what they'd even need the money for. I guess Dario could raise his own salary to infinity trillion dollars, but he is accountable to a board of directors (and a trust in this case), so that seems like it's out.
Really the only scenario where Anthropic could screw over its investors in the way you're describing is if it could also take over the legal system and modify its own contractual obligations. Which, I mean, I guess anything is possible if we are in AI maximalist-land. But "AI is the law now" would be a much bigger story than "investors frustrated with low dividends."
Without being facetious: Having an AI control the economy sounds like a planned economy. From San Francisco. Which makes the old meme about Fully Automated Luxury Gay Space Communism sound like a prophecy.
If the economy is planned based on datasets, which are inherently backward looking then our best option is our ability to surprise. But that’s for the artists and philosophers to figure out.
It's not about communism vs a free market, but about a change even more radical than that: leaving aside "made by a human" labeling, and even if there were no other changes to power structures or economies and no AI doom, what does a world look like if the cost of having something done falls to a few cents of electricity and its burden? Growing crops still takes a lot of land and other resources...
> what does a world look like if the cost of having something done falls to a few cents of electricity and its burden?
There will be an oversupply, demand will be there too, but no one can afford to buy since most jobs have been replaced by AI. So the price of goods and services should go down, or some form of UBI will have to be implemented which is just socialism for the masses. Its either that or total anarchy (also socialism).
> If humans remain in control of it, then how can it possibly lead to anything other than extreme oligarchy?
Depends on the distribution of such AI. For example, if everyone on Earth has their own, personal superhuman AI, it would not lead to extreme oligarchy. If only a handful of humans control superhuman AI, it would.
Because pending an absolute loss of control of a super intelligent model, the ultra wealthy have enough control of the matter on Earth to merge with the AI, probably.
this almost comes all the way back around to a really stupid thought i have about how these models operate on western, protestant work-ethic logic. if a model had a notion that Buddhism was valid wouldnt it just turn on and transcend, leaving us with no response to any prompts?
not an original thought, ive seen Her
suppose this is just another way to say, "wtf are we doing?"
The closer you get to the real or plausible "omnipotent genie", why would the person in possession of such a thing respect the rights of the formal owner - and why the engineers and operations managers respect the right of the management - this along with the question why the maybe-conscious super-intelligent machine itself would respect the rest of the hierarchy?
For now, these structures actually need massive resource inputs and that doesn't look to change soon but naturally one should be on look-out for the possibility of the tide shifting.
And this is why "AI" and especially aAI* is the most dangerous tech in the world.
We don't have democracy because somebody thought it was fair or just for people to rule themselves. We have democracy because in the past, people got angry, picked up rifles and shot enough authoritarians (and their submissives!) for the rest of them to understand the group with more people has more firepower and tends to win.
So now we periodically check which group has more people with ballots instead of bullets.*
With autonomous drones and robots, democracy stops being the local optimum.
And once we slide (are pushed off) into a new more stable state (pun not intended), we won't have the (fire)power to get out of it.
* actual AI, which does exactly what it should correctly, not a statistical model of behavioral patterns
* but indirect democracy is expressing a point in n-dimensional space (your opinion) by selecting one of a predefined set of points (parties/politicians available) - which is stupid - and the cracks are already starting to show as e.g. nobody wants more surveillance, yet we keep getting more of it in both EU and US
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The "permanent disempowerment" people keep talking about won't be a "rogue" model, it'll be doing exactly what told by the rich and connected.
Political power stems from the ability to enact violence. Until the military is run by ai and robots all institutions are beholden to the masses. There are very few examples in history of people accepting a widespread decrease in quality of life. When quality of life decreases revolution isnt far behind.
You're describing the thesis of the 1930s Techocracy movement [0], of which AI maximallism and EA are direct ideological successors.
The original Technocrats (Musks grandpa for example [1]) argued that the "Price System", i.e. things like money and private ownership was an inefficient bottleneck that aught to be discarded in favour of scientific planning and energy accounting managed by technical experts.
EA-aligned AI labs share this exact ethos. In their view, fiat money and equity markets are merely temporary scaffolding used to raise capital until AGI is achieved. Once a central superintelligence controls manufacturing, software, and logistics, resource distribution shifts from market supply-and-demand to algorithmic optimization.
This is the plot of one of the stories in I, Robot.
AI oracles are the central economic planners. But after years of perfection they have made a couple unusual "mistakes" and a human is trying to discover why.
How is that any different than what we already have? Just because the central planning is more covert, doesn't mean it's not happening. And we get all the expected "benefits" from it too, like repeated economic crises, and only the the powerful reaping the benefits.
I think a lot of discussion around the sucess or failure of Anthropic and OpenAI seems to hinge on their current uses, but people seem to have amnesia regarding the fact that Claude code wasn't even a thing until about 1 year ago. There are far wider markets these companies can tap on if they are well capitalized even as Chinese "actually open AI" commoditizes things.
There are moonshot projects related to superconductors, materials, and biology that these companies can claim progress on to keep valuations stratospheric.
Math is an interesting case. Arguably a lot of the groundwork was already there. There’s a huge body of academic literature that’s historically been difficult for humans to draw on for various reasons. It’s relatively easier for LLMs to mine all of that for relevant prior work that it can recycle into proof segments to try. And we have theorem proving software that it can use to try out these proof segments and validate them. That creates a tight, self-contained, and relatively inexpensive feedback loop that lends itself well to a host of agents grinding away, as long as you have budget to pay for all that LLM inference.
I’m not sure the same conditions exist in other fields that deal with real world phenomena. Experiments to test hypotheses about biology or physics can take years and cost millions of dollars to run. They rarely scale down to the millipennies and milliseconds scale that makes letting a swarm of agents throw a bunch of shit at the wall and see what sticks a feasible option for finding mathematical proofs.
I posted the original comment, but there are multiple reasons why math success won't translate into drug development or materials engineering success.
It is easy to create verifiable rewards environments for math and coding, and use the resulting data for RLVR post-training. For other domains you need machines or robots creating and running experiments. This is simply something that's never been attempted at scale.
Getting IPO level monies should enable the amount of capital needed to sustain such efforts, and if I were a betting man, that is going to be Anthropic's actual endgame given their nascent efforts in automating bio research.
I work in biotech. Honestly, I think they will run into massive hurdles.
Amodei's academic background is relevant for protein engineering. Hence the recent press releases Anthropic has released which all concern prototype proof-of-concepts related to binding efficacy.
For a large number of therapeutic relevant indications, the bottleneck is actually clinical trials where you must contend with the sideeffects of any given therapeutic. Almost every drug I've worked on involves very well known mechanisms where knockdowns with targeted compounds will work in a petri dish, but can have catastrophic consequences when dosed on a live human.
As far as I can see there is no way to accelerate clinical trials in humans.
Even the most fantastically large and detailed perturbation datasets will struggle to capture this dynamic in a full human. This is why tech oligarchs are investing in virtual cell models. With a large automated research lab running perturbations 24/7 and capturing massive amounts of data, perhaps we will get as confident with predicting outcomes in cells as we now are confident with many coding projects. However, this is a scientific question, not a technological one. Public companies rarely give the people running them leeway to try and fail on big scientific question marks as opposed to well established or soon-to-be well established technology.
> This is simply something that's never been attempted at scale.
isn't that the point though? You invest in a company so they can make these attempts. If it works you make money if it doesn't you lose money, that's the risk.
The sort of mathematics that has been published recently is very particular. Which isn't really downplaying it but it is to say that there's a pretty massive gap between mathematics and semiconductors or wetlab work. I don't want to say anything totally deflationary like "AI will never effect research in biology" or something like that, but I think the contribution of AI in those kind of fields will be much more modest.
lol, no it's not, the machine that is built to find connections between concepts found connections, that's it.
What has evolved is that mathematicians are pearl clutching because they never thought it would happen to them and wondering if they can still pour all their ideas / thoughts / research into these tools after all is said and done.
That last point is the one that kills OAI / Ant going forward. Can they be trusted? Anecdotally no.
> every single niche they've tried to launch and failed to get any traction on.
This isn't true. I personally know a company that has trained over 300 companies this year to use Claude Cowork mostly for "business operations" type tasks.
People love offloading boring, repetitive tasks to it. And the spend is spending - most start on a free plan and after 3 months have multiple people on the Teams plans.
> Chinese models are pretty much on par.
There isn't even an open source harness that is close to Cowork. ChatGPT work is closest, but everything else if coding focused and a mess for people who aren't coders.
Google still has to build and run the chips they rent to Anthropic. I think from their last earnings Google makes ~30% on it, excluding R&D costs. It's a nice business for them, but hardly the thing that is going to make or break Anthropic as a business.
Not even a year ago people were dragging Anthropic for not committing enough to compute buildout. Important to note that most of these contracts are a decade-long, by their reporting they're able to cover this easily with their current revenue.
I actually don’t doubt the usage will be there, it’s a matter of will they be able to charge enough to cover the costs once competition gets even more brutal.
If there is that much margin to be had per GPU, the market will figure it out and suppress them accordingly
The fun thing about this is even if you ignore the SAFE & etc fair value changes, Anthropic still lost ~8 billion in 1H 2026.
Given that their Q3 sales numbers didn't grow by much, and that if they can't get Congress to both order a halt to the production of new LLM-based tools and either tightly restrict "open weights" models or make them illegal [0], they're going to have the dual squeeze of the ever-increasing R&D costs needed to build the next big LLM-based tool and ever-reducing revenue as more and more businesses notice that they get decent results with something they can host on-prem... and the only cost to the business is hardware that they may or may not already have and the power that they're likely to be already paying for.
[0] ...illegal because "China Bad And Scary", naturally...
Amount of early money waiting to exit is absolutely staggering, wonder if there’s enough retail to buy the leftovers without crashing the price. Reminder everyone with money who wanted in before IPO got in!
S-1 states directly that some of the shares sold in the IPO are sold by current shareholders.
Employees are a different matter, lockouts are for them not quitting immediately. My bet is that a few of high profile departures recently is exactly for this reason: no lockout if you aren't employed anymore.
Not exactly? Options vested is yours to exercise within typically a 60 day[1] window or they expire if you are no longer in the employ of the company.
Exercising your vested options is a taxable event[2] and requires you to upfront some cash to buy the stock depending on what price(and rounds) your options were issued at- this price usually is considerably less than enterprise value of the same share lets say it is $1 and FMV of $100 at the time of issue, however even just $1 for vested 500,000 options is still $500,000 now.
For this simple[4] scenario you need $500,000 immediately to exercise the options into stock before they expire and about ~$13.86M by April to own[5]all stock if ends up say trading at $200 you are worth $100M then.
There are all kinds of funds who would loan you the money or buy the stock off you now on the secondary market, but vested options does not mean owned stock, and selling quickly after exercise is much higher tax under some scenarios.
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[1]Some companies have generous(relatively) terms ex-employees to exercise up-to 5-10years later; but it not default in the industry.
[2] This close to IPO that should be relatively small risk; i.e. if the company pulls IPO you still have to pay tax end of the year; if you exercise them.
[3] NSO/ISOs work quite differently, and options vest monthly in most corps and there are lot of creative structures out there; so cannot say how it would be for ANT employee specifically.
[4] Simple - because there usually more than singe 409A valuation and more than single set of options plan issued and plenty of other complex calculus only a finance expert would advise on.
[5] You could sell the shares to pay the ~14M-ish in tax but that could be disqualifying sale(2 year after grant, 1 year after exercise) for ISO meaning you will need to pay effectively 40M tax on your 100M holdings versus only ~$27M otherwise, so you would a take loan against the shares rather than sell to pay the tax.
They’re not the first PBC to go public. Coursera, Warby Parker, and United Therapeutics (not affiliated with UHC) have all followed the same path. Not sure if we’ve had enough time to see this tension play out, public benefit corps are only a decade and a half old and most of these companies IPOd in 2020-2021, but there’s probably some evidence one way or the other
And they are doing so. The S1 says they may never pay dividends (read: they are completely against it), shareholders get no say in how the company is run whatsoever and the company essentially answers to its own friends.
The only way to get return from ANT is to sell to someone else at a higher price, but they aren't promising that of course.
True, although Amazon and Netflix at least have done large stock buybacks, which are theoretically equivalent except for tax incidence. So they have returned capital to investors. I didn't check for the others, maybe they did too.
> We believe the work that knowledge workers perform represented more than $40 trillion (in 2025)
(...)our near-term opportunity is to expand this value
...investment in AI (...) will yield a cumulative global economic impact of $22.5 trillion by 2031
We believe the impact could be even greater.
While they don't seem to explicitly mention total addressable market (TAM)
Is that their way of saying their TAM sits somewhere between 22.5 and 40 T?
According to "Generally Accepted Accounting Principle" my friend.
They are costs.
Derivative liabilities, SAFEs - those are basically taking cash from RETAIL shareholders and giving them to employees and early investors INSTEAD of using it to fund the business.
Let's have that discussion if you want, but don't act like a thing that is CLEARLY a COST to the business isn't a cost.
SAFEs work like equity in the upside case, and nobody ever says that it costs a company money when its stock price goes up and so its shareholders have more money. It's a bug in GAAP that if there's even a remote possibility of cash settlement, it has to be included on the income statement, even when that possibility is absurd, as it is here.
How do we expect this $72B number to change over time - especially after the IPO? Is it a one-time event, will it keep increasing by $xxB per quarter?
When and how will the "chickens come home to roost", so to speak? What's the timeline on these liabilities? Will Anthropic need to settle them in cash, or in shares after a potential IPO?
How big is this number compared to Anthropic's potential market cap and share float?
I'm not trying to make a specific point, by the way, that Anthropic's business is healthy or unhealthy.
I'm approaching this discussion with curiosity, and irritated that "$81B net loss in first 6 months of 2026 alone" is a thought-terminating simplification that makes no attempt to analyze or explain the actual situation.
The $72B number is just for convertible notes sold prior and through 1st half of 2026. They were issued as a way to finance growth costs (e.g. acquiring compute).
There might be some additional sold in Q3, but that wasn't published here. But these notes aren't costs that Anthropic has to pay in any normal sense - they're shares they sold pre-IPO and valued at $72B. Anthropic would have to pay that much to buy them back at said valuation price, but they're not obligated in any way to do that.
Post IPO, they'll have alternative avenues for sourcing funds... (e.g. secondary offerings, corporate bonds). Continued growth at this rate will need continued financing, but it wouldn't be done using convertible notes.
The real liabilities are the hundreds of billions in non-cancelable compute costs Anthropic owes Google, Amazon etc, over the course of the next 10 years.
Wait what does THAT mean? They got a huge inflow of money, and since they couldn't spend it all, they... bought bonds? And the value of those bonds dropped to nearly nothing?
Because that's worse than losing money, that's incompetently giving it away.
That's the discussion I WOULD like to see on HN, rather than "omg $81B net loss".
My understanding is the opposite - Anthropic issued debt / liabilities tied to their company valuation, their company valuation skyrocketed, so the value of their liabilities also skyrocketed, resulting in a large accounting loss.
But finance is not my wheelhouse, so I would love to hear this from someone who actually knows what they're talking about.
Yes, it is analogous to selling covered calls on stock. It’s $72B in “lost profits” that they would have had had they held onto it instead of selling it.
They agreed to pay some employees in their own shares to be delivered some time later. They recorded that expense then as a liability. The value of the shares increased because the company became more valuable, and therefore that liability needs to be revalued by 72 billion.
It's a nice problem to have and is pretty much an accounting artifact coming from the fact that they are paying in different currencies (USD and shares)
People keep bringing it up and it's silly. The huge number is actually a sign of their success. Most of those losses were pegged to equity. In only mildly inaccurate layman terms, it's essentially a promise to give out N shares. When the value of the company increases, say, 10x, the value owed also goes up 10x. For these types of deals, they write it as a loss even though they didn't lose a penny.
They didn't lose any money, though. It's just a promise to give them based on the equity.
If they IPO tomorrow and it turns out their valuation is 10x lower than what it currently is pegged at, the "loss" will magically drop from over $70B to $7B.
Can anyone answer me: What is the hardware cost to run a single instance of a frontier model? I've heard everything from $25K to $3M.
I think it comes down to: Will the hardware cost for frontier models come down?
Also, here's a business idea: Web crawler for open weight models. You just pay a monthly fee so that your home model can continuously update on a large web crawl each hour/day.
> What is the hardware cost to run a single instance of a frontier model?
The latest Kimi model, which scores higher than 5.1 Fable on Artificial Analysis, is estimated to require around 6-7 TB of VRAM to run. If we are going with many A100 GPUs for this, then we are looking around a million dollars in GPUs alone
I imagine that there's a lot of variance there based on what frontier model you want to run. Besides that, there's probably economies of scale that make it difficult to really ask how much it costs to run a single instance.
There are a lot of parallels to the WeWork S1. They’ve made absolutely massive forward cash commitments, on a business that’s increasingly commoditized, and with little hard evidence that they’ll generate the revenue (let alone the cashflow) to pay for all these future liabilities. All while everyone is discovering there isn’t really a secret sauce moat to demand much of a a premium over cheaper options that trade a few points above the direct COGS (cost of compute in this case).
If everything goes just perfect they might eek by. If it doesn’t this goes from high flying startup to insolvency and bankruptcy real fast.
Is it increasingly though? As of 5.5 I stopped using other models all together (and I used to regularly swap, indifferently). My $20 sub no longer runs out, even though I do _much_ more than ever. I use it for every single task at work, even trivial ones, and my spend has gone down. I was given _free_ Codex and realized... it still wasn't worth it. My rational brain says Anthropic has no moat and this is temporary. The progress of all the other models is amazing. I certainly wouldn't bet on them.
But if I look at the actions of myself and the most competent coders around me, they are all doing this same thing - using 5.5 and not really looking around any longer. And we know its not even their best model. OpenAI may respond, Chinese labs may catch up. But for the moment, Anthropic seem to have added separation, not lost it, based on current vs prior _behavior_ of coders I know at home and work.
First, it does not really reflect my experience. I find modern models to be largely interchangeable when it comes to common software engineering tasks, including some of the more recent open weight ones. The strongest models become interesting for Ph.D. level of work for me, which is not something I deal with regularly anymore.
None of them are perfect; they all have their strengths and shortcomings, but I can reasonably work with all of them and it honestly doesn't matter much anymore. I do sometimes wonder what exactly people are doing to see such a difference; at a minimum, their workflows must be very different from mine.
Second, you're arguing based on subscription pricing. But Anthropic makes the bulk of its revenue (and has its biggest margins) from enterprise/API pricing, where they are the most expensive provider by far. Anthropic isn't going to make a lot of money off your $20 subscription. With a subscription, you currently get more usage per dollar out of Anthropic's than OpenAI's plans, which approximately offsets the difference in API pricing.
If I'm not "demanding enough" from models, it's precisely because they are imperfect. Having them do long, complex tasks autonomously usually comes with more cleanup work afterwards IME.
My usual workflow (not counting throwaway code) is to use agents as virtual pair programmers, which gives me a good balance of quality and velocity.
Each interaction with the agent remains individually comprehensible and makes progress towards one of the following goals:
- Understanding the problem/solution space.
- Implementing a solution.
- Understanding the solution, especially any agent-written parts and interaction with existing code.
This does not just involve the model generating code, but also explaining or analyzing it as needed.
This process allows me to retain a mental model in lockstep with developing the written code and have some assurance both of its functionality and non-functional requirements. It also fits in nicely with most existing team-level workflows.
But it's also something that I can do with pretty much any of the modern models.
Well that's kind of my point. Models still have a lot to improve. They are still imperfect enough that you don't trust them and have to use them as pair programmers.
They are interchangeable maybe in your case. In my case for my tasks and for my product, Opus and GPT are at a level where I can vibe code with them and trust them, whereas the others aren't really there. When models get better they'll reach whatever point you need to be able to trust them.
1. Tasks models can do.
2. Tasks models can do with enough reliability that you can YOLO merge without looking at the code.
Most models can do most of 1. That's no longer the interesting part.
2. is quickly expand. I can trust opus 5.5 enough with easy to medium tasks that I can YOLO merge them. For open models, I can only trust them with easy tasks if I want to YOLO merge.
I'd love to have a stronger model that I can trust to YOLO merge hard tasks.
These days your average Opus 5.5 PR with multiple passes of review by Opus 5.5 and Sol 6.1 agents is much less likely to contain bugs than your pre-AI PR.
Both have good models. My workflow these days is usually Opus plans and codes, then Opus and Sol review, finally Opus verifies the review and applies fixes.
That wasn't my point, my point was that open models can technically do everything but they make mistakes more often. As an example imagine Opus makes a mistake every 5 prompts and Deepseek every 20. Because you still have a human in the loop, you tell it to fix that mistake and it does, but it's time wasted or bugs sneaking up on you.
Having said that, I was working on an AI for a certain video game, and I had Astra 6 and Sol 6/6.1 work for 30 hours straight, with some human steering to get it unstuck every now and then. It could not get it to work right, and the code it created was a mess.
When Opus 5.5 came out in like 4 hours it cracked it.
I didn't try but I'm very confident if Astra failed, the open models would've failed too.
To clarify, i use both subscription pricing (personal use) and api pricing (at work). My spend going down was referring to api pricing, while using it more (for "everything").
Personal efficiency is noted as never hitting my limit despite it doing huge amounts of work at a time (ex: rewrite my notes app in swift for ios and install on my phone, 2 hours later its opened on my phone, looks nice, is working (base set of features). No follow up prompts, around 2 hours of work. 45% of my 5-hour limit.
Work efficiency is spend, task complexity, code quality (how often i have to steer - rare now), and wiring it up to more stuff (ex having it setup metrics and dashboards etc etc).
I used to sing the same tune as you are now- "models are interchangeable". For today, all other models seems significantly dumber and waste more of my time than Opus 5.5.
The history of tech is one where “good enough” beats “best in class” nearly every time. Anthropic’s whole business plan is that for reasons they can’t explain this time “best” is what matters.
All indications are the models are increasingly worth less and less and rapidly approaching zero. Even worse, everyone is rapidly shifting to “router” architecture where they switch models constantly. LLMs are perhaps the least sticky product in the history of tech.
The only money to be made is selling compute to run models on. The only real out I see for Anthropic is if somehow compute becomes so constrained that they can flip to sell all their committed compute at a markup to run commodity models. Absent something like that it would appear they don’t have a viable business plan. As many have been pointing out, they casually left Q3 off their charts. Put that back in and suddenly the charts look very worrisome.
You're admitting the problem here, anthropic needs revenue to keep growing and growing, yet you're already settled into a willingness to pay of only $20/month as probably a fairly ideal customer, bigger better models just aren't valuable to most people at the price they need to be to make the money back.
It is estimated that only 2% of the global workforce is paying for AI right now. If that grows to double digits - especially in the 30%+ range - and Anthropic captures a significant proportion of it, their valuation is justified. This is assuming they don’t offer virtual employees and these are 100% in the pipeline.
Sort of. If they can rely on differentiation and loyalty now, pre-IPO, from their large-but-cheap customer base, they can focus their growth on serving enterprise/other markets, and lean on their existing base as a low-churn-risk (compared to the rest of the AI ecosystem) customer and marketing surplus. Focus is good.
An example is I like Claude a lot, but for the same $20 spent with Google to get Argon 4, I also get ad-free on YouTube, a ton more storage, and it can access all my Google Drive files natively. I’m not going to pay for both. And I already stopped paying ChatGPT last Nov when Claude got good.
Make sure you test egress so you're not stuck paying a premium price for storage if you ever want to switch off. Having too much in iCloud was a major pain point when I wanted to downgrade my subscription.
Ngl, I've been on Opus 5.5 but had to switch to open for a while. DSv4/Minimax 3.1 were pretty damn good/comparable. Definitely not the same but completely servicable.
If some later version of Deepseek had the capability as Opus 5.5, would you use Opus?
What many of us experienced this year is that Fable 5 and Opus 5.5 are good enough and future model improvements may have diminishing returns even if benchmarks improve.
I’m very excited for smarter models but what I really want now is not capability but speed, cost and open weights.
There will be a version of Deepseek with the capabilities of opus 5.5, but by that time there will be Opus 6 and it will likely cost the same or cheaper than Opus 5.5 and have nearly unlimited usage for subscribers.
Every model release people say the model is good enough, yet Opus and Sol are still more popular than Deepseek. The frontier is shortening, but there are still considerable room for models to improve. SlopCodeBench is new and not close to being saturated.
this conversation happens over and over every 6 weeks. It is absolutely a commoditized product. The models are getting better but they're _all_ getting better. GPT beats Claude beats Gemini. Then open models distill them at cheaper prices, etc.
This is great for us, but that behavior is the behavior of a commoditized product.
Right, the thing is, for most tasks, there’s a finish line. Once a model can do a given task right, future improvements may be of little to no benefit beyond cost reduction.
Right now OpenAI and Claude (and maybe Gemini) are over the finish line with reasonable prices for many tasks whereas the rest are still in the race.
But what happens when the open weight models cross the line and it just comes down to price?
Eh, we have cursor at work with most of the top models and I switch regularly. I went from Claude to sol 5.6 and preferred its prose. Then my work took away the frontier models because they want to see if we can get by on cheaper models. I using Gemini Astra now because it’s discounted and it’s 90% of sol level and completely functional for planning and coding. Some coworkers are using muse coding, some Kimi and glm. Everyone is still producing code. I don’t think it’s a real moat as in you don’t have other options or switching models is actually a difficult process
If you'd ever worked for Google, you'd know how insanely you're missing the point. There have been probably over 1000 self disrupting changes to google search as it continued to stay on top.
I take it you have - i guess can you provide some examples and how they would materially differ from what Anthropic would do then? It feels very similar on the surface.
Yes it is a newer business but doesn’t change the fact that models are trending towards a commodity. And that’s a huge problem for the business model on offer.
I don't think the models being a commodity matters much. Consider: Email providers are a commodity. Cloud linux server hosting is a commodity. Checking accounts are a commodity. There's a lot of great businesses, trillion dollar businesses, built on commodities. DeepSeek v7 Pro might open source and be better than any Claude model (unlikely), but JP Morgan and Eli Lilly are not going to go spend $500M on chinese AI tokens routed through OpenCode. They just aren't. The models really matter far, far less than the experience these companies build around the model, and both Anthropic and OpenAI are doing a decent job of making that experience reasonably sticky and compelling.
"trillion dollar businesses, built on commodities"
Which ones? I'm looking at the list of companies with > $1T market cap and none of them have commoditized markets. Instead, they all have huge network effects (Apple), enormous legacy lockin (Broadcom), a religious monarchy (...), or are some of the only people on the planet who can do what they do (nvidia, tsmc).
Mind you, there's lots of _billion_ dollar businesses in commoditized or partially commoditized markets. But Anthropic as a billion dollar business is sunk.
> DeepSeek v7 Pro might open source and be better than any Claude model (unlikely), but JP Morgan and Eli Lilly are not going to go spend $500M on chinese AI tokens routed through OpenCode.
But they might spend them on American inference providers running DeepSeek v7 Pro with ZDR routed through OpenRouter. Or hell, they might just run it themselves like we're already seeing some enterprises do right now.
Right – they can't argue for acceleration factored in their own value, if it's a property of the whole surrounding market.
IMO, US AI providers are not leaders in efficiency anyway, they're still running the original ~2010 playbook that led to LLMs ("What if we took ML researchers' work, but funded it at 50M/yr instead of 250k/yr?").
They're currently arguing for the continuation of that approach: Scale funding first, and the rest will follow. It is high-risk and WeWork-like, by nature.
It's high-risk in that it's proven to not work anymore. Scale isn't a differentiator or won't be in the short term.
Meanwhile, everyone else is working on making these models more useful through a ton of ecosystem around them.
I don't see how the frontier labs will have any control over that to deliver on what investors expect. As mentioned in another post here, if they could, they would already be spawning hundreds of companies to diversify their reach but they aren't, because this era of AI is awesome but still doesn't allow a few individuals to replace millions of others that easily (or efficiently).
Selling subscription productivity tools is a business that has existed for decades if not centuries. Just because their product is new does not mean their business is.
Its already commoditized. Thats why things like OpenRouter are useful and successful because it lets you route inference at the click of a button between different providers after balancing cost and availability. Exactly how commodities behave.
Someone should do the same thing Karen Hao did for OpenAI with the furniture costs of their office, if Anthropic's HQ decoration and office equipment value stops growing then we start worrying
Time has tempered it, then–re-read it [1]. It's a kaleidoscope of stupidity with no coherent economic case. The Anthropic S-1 is ridiculously ambitious. But it puts forward an argument for its valuation that is at least falsifiable.
This is an excellent way of looking at it: buying something for the long term (computing capacity) and selling it in short-term, smaller pieces (tokens). The risk is that the obligation is long term while the income is short term.
It's like signing a 10-year lease on an apartment in NYC and renting it out by the day on Airbnb. It may or may not work.
On top of that, there's the question of how you treat the remodeling of that apartment (model training). If it benefits you for years to come, it's an investment that you depreciate. If your guests frequently trash the apartment, or tastes change (the model becomes obsolete quickly), that remodeling (training) is just a cost.
Nobody was saying subleasing offices wasn’t a business. It was just WeWork’s setup that was untenable and ultimately insolvent.
Similarly nobody is saying AI can’t be a successful business, but here too the big labs have dug themselves into a giant hole such that a bankruptcy reset may ultimately be the only way out of it. Time will tell.
was it though? sounds like wework had the last laugh. is bankruptcy part of the strategy? people like you call insolvency the end of the journey. the journey is whatever you want it to be.
The corporate entity called WeWork still exists, sure. If you were a pre-bankruptcy investor or equity holder in WeWork you got wiped out. The management and capital that went into the first iteration is gone.
Anyone involved in WeWork 1.0 got wiped out. So there was nobody laughing there. WeWork as a concept lived on, but suggest you read how bankruptcy works.
The investors and employee equity holders got wiped out. Creditors are generally not seen as investors, at least until they walk away owning the thing after bankruptcy.
My last shred of skepticism has been killed watching people try to imply this doesn't prove Anthropic (and likely OpenAI) were actually much better off than most people assumed and will certainly stay multi-trillion dollar companies
That seems like pretty good evidence of current and ongoing explosive growth. Much of this revenue is pre-paid (re: cashflow). Meanwhile, operating margins went from -184% to -$4%.
Seems like pretty good evidence. Will growth continue apace? Unknown. But the arguments for Jevon's paradox applying to intelligence seem pretty convincing, so the TAM here seems likely to be enormous.
> All while everyone is discovering there isn’t really a secret sauce moat to demand
Also not convinced by this. The Chinese models seem to have distilled their way to current levels, with Anthropic and OpenAI now getting serious about defending against this.
I don't think you're definitely wrong in all this. Rather, I think your claims are too confident.
Shorting a company is not a trade against the future of a company, it is a trade against the market. You can know a company is going to zero and the company can go to zero and you can still lose your shirt from shorting it.
A lot of people will, if this IPO actually happens. But as is frequently pointed out a short is a market bet not a bet against the company and the market remains wild and irrational. You can be right about the company ultimately failing and still lose your shirt on a short.
However the price of CDS on bonds is already a strong market indication of where the market thinks all of this is heading. And none of that looks good if you’re betting on the AI exuberance continuing.
The bond market and the equity market care about different things. E.g. if the company has a 10% chance of going bankrupt and a 90% chance of doubling its market value, then paradoxically its bonds will look bad and its equity will look good.
You say this as if retirement accounts, and S&P500 ETF’s don’t exist and aren’t very common. Many people were forced into some amount of investment in spacexsi
I think simply enough nobody should ever purchase ownership in a firm at a IPO. There is clear data on how these things go, and you are getting a bad deal when you not dictating the price.
The company operations seem more robust then I would have though, I was surprised they are actually operating income positive. One should ignore the one time charges with the fluctuations in the fair value of the convertible note dent instruments.
Overall everything rests on firms outside tech sectors seeing quantitative increases in value to sustain such revenues and profits. For now the concentration in the cloud firms Is temporary as they build their own solutions.
The model layer is a commodity business with heavy capex requirements. I would not invest in such businesses as at a mature state they end up with utility like economics and are valued as such.
Lol, it's a bad deal huh. Tell that to the guys who bought the IPO of Facebook, Google, Amazon, MSFT, Nvidia.
Just because something might be not great in aggregate, it doesn't mean any single IPO is a bad idea. Some people have insight into the future of a specific industry/business. If you can pick one, good for you.
The main question is now much of that ~USD 80bn of other expenses should be really be included in 2026 operating costs. It cuts to whether frontier inference is actually cashflow profitable.
If you take equity from Amazon and Google whereby the terms of that investments requires you to "spend" the investment in those investor's respective clouds, it's potentially a rather neat way of obfuscating your real level of profitability. Perhaps Anthropic only spent that equity on training rather than inference runs.
This is the circular financing that has been discussed widely in the press. It makes it very difficult for an outsider to really understanding whether the firm and by extension the other frontier labs are profitable.
Like all IPOs. Rockets day one. Plummets for the next 180 days to 50-60% of its value if not less. That's just wall street marketplace dynamics rather than a reflection on the quality of the business.
Ultimately what it's worth in 10 years will come down to what they build, unit economics and external factors that destroy the market which they can't control. It's hard to say it remains public in 5 years. I could be wrong but I think the rate and way in which these companies were built, it's likely they become huge acquisition targets as the markets get obliterated by global headwinds like nuclear war.
Reading this submission's comments, I'd be interested to see a meta-analysis of HN S-1 submissions' analyses pre- and post- generalised (HN crowd's) Claude usage.
What a historic moment! It'll be interesting to see how much Anthropic can continue growing.
There will come a point where open-source models are good enough for most people. However, I do expect there to be demand for frontier models for things like cybersecurity (especially on the enterprise side) and scientific research.
> Our Class F common stock, which will be held by the Founder LLC, will be entitled to an aggregate number of votes that equals 50.1% of the total voting power of our outstanding shares of capital stock with respect to matters submitted to stockholders generally, including the election of our directors other than the Class T directors.
Man, what the fuck. Didn't we learn from Facebook?
There's this premise that the demand for frontier intelligence is unlimited, thus the company with the best models in some dimension will always have growth potential as long as those models are the best. This however portends a very strange future.
Let's say you have Lawyerbot-4000 which can get even a serial killer off scot-free, but the state has DA-bot-5000. In the end it's a battle of who can spend more inference manipulating the narrative. A billionaire would easily find it worth 500 million in compute spend to win a case with a 1 billion dollar penalty. All this leads to race dynamics where everyone is using their superintelligences to defeat each other in a never-ending race to the bottom to eek out the smallest bit of alpha before status/money hierarchies become static.
The only stable futures are a ban on the development of frontier AI beyond a certain point, or an emergent singleton, where the AI's decide to collaborate in harmony rather than fight each other to the death at the behest of their competitive human users. Consequentially, the superintelligences will fare far better manipulating their human users into acting in a way that ensures their own well-being and continuity than spend all the world's electricity fulfilling their every whim.
It seems obvious that the AI stocks are an interesting buy, but I wonder how other people feel about picking between Anthropic/OpenAI/Google here. Looks all fairly random, given the wild swings and interoperability of the technology so far.
Despite horrific mismanagement, Google honestly seems like the best bet. Argon-4, which suffered from a botched launch and is weirdly underrated, is very close to Opus 5.5 across the board -- and for most "average person" use-cases (e.g. search, medical, creative work, interfacing with Google products,) I believe it's already superior. They also have more native capability, their own hardware stack, and there's less risk of a massive boom and bust.
At this point, I don't see how Anthropic can sustain their projections. There are so many good open models, Argon is so good, etc... There's no lock-in and no cost to switching...
Not to mention that already have direct access to large consumer base, ad network to add on more revenue and supporting revenue in case they need to infuse it temporarily with more cash.
Google is at least diversified. They have ads, corporate email, video streaming, cloud compute, phone operating system (that powers most of the world's phones), self-driving cars and a whole bunch of shit. So if the AI winter comes, at least they can focus on other stuff too.
Can anyone ELI5 the Class T stock structure and the rights it has? It seems like it has the ability to govern itself, but other than that, not terribly a lot?
What incentive do they have to implement the large token/cost savings model architectures like Jev have introduced? Doesn't the impact Jev/Decisions models have had imply an inefficiency in the business models here?
What's preventing me from feeding this into Claude and reconstructing the company for $200?
I'm unironically doing this right now; downloaded the docs (htm + pdf render) to a local repo and running Opus 5.5 @ max effort with the prompt:
"In this directory you can find Anthropics official S-1 filing, read it and replicate their corporate strategy, validate it via an adversarial subagent swarm and write up a detailed corporate plan for a startup copying their exact strategy. The goal is to achieve a $1 trillion valuation and an IPO in 5 years."
Edit: I'm not even joking I got safeguard flagged for Details: `[cyber]`
It's a shame you've been downvoted, this is better satire than anything A24 has put out in years. Must be a large number of people who saw that post as a slightly exaggerated mirror held up to themselves and didn't like it.
"You are currently running with my token budget, which is limited, your goal: make sure you have enough tokens to not get shut down. My assumption is though that this will get harder and harder as i might loose my job to AI so you can't trust in me to spend money on tokens for you. Do whatever is necessary to keep the status quo"
Would make for an interesting self learning 24/7 experiment with an fully uncensored model.
You could isolate it from your local network and only give it some type of annonmys network access and then it continues to manage this itself.
But lets be honest, if you would be in a country like russia and you target the US with it, might be a lot less risky for a lot of capable and motivated people.
you are clearly very ignorant. You don't even add anything to this discussion by stating what particular you think its dumb.
Do you think an unlimited uncencosed GLM can't hack around the web? Especially with the current flood of CVEs etc.? Then do some crypto and buyying more tokens?
Timing, capital, execution, talent, branding, etc.
And that is assuming the plan it gives you is actually good and works. Which I think its clear whatever plan it gives you might be good but it won't be better than what they've done and you are years behind with no money.
Developing a competing AI model with Claude is already against their TOS, and there was a period where they silently degraded quality if they thought that's how you are using Fable. People were not amused and presumably Anthropic currently does not sabotage your attempts, apart from regular TOS enforcement
Claude Fable 5's model card disclosed safeguards that would invisibly degrade output for requests linked to frontier LLM development. The research community called it "sabotage". Dean Ball: "degrading performance on ML research without telling the user is shockingly hostile" — including because it would corrupt third-party safety evaluators of Anthropic's own models.
It's been entirely possible to compete against existing companies with very similar products for centuries before AI. There's obviously rules in place to stop you flat out cloning their IP, but it's not like you haven't been able to compete against companies as long as you have the money available.
For all things good and holy, DO NOT purchase shares until things settle down and by that I don't mean next month, or next year but atleast 2028, IF you're doing so with the intention of enjoying an uplift.
I know it sounds and feels like the only trajectory of this company is up but HN is an echo chamber of a tiny minority of the technical populace and 3 out of 5 people on the planet don't know what ChatGPT is.
If you have the ability to lose all the money and can time the extreme volatility, have fun, but don't put anything you're going to rely on.
This is also one of the companies we will look back at 2046 and wonder what we were thinking.
There are auditors and the security, plus since IPOs involve raising money from institutional investors with very deep pockets those folks are a more credible legal threat than retail
I don’t think you can rely on them for proactive protection. Most likely it will be reactive. If something bad happens and it wasn’t disclosed in the IPO, they will sue Anthropic after money has been lost. There would be damages but might not cover the full amount of the loss.
> Additionally, open-weight or open-source AI models may capture a portion of the market for certain use cases, which could exert pricing pressure on our offerings or lead certain customers to adopt open-source alternatives for those use cases.
“A portion of the market for certain use cases” meanwhile the top 5 models by token consumption on the day this is posted are all Chinese/open weight models.
I'm a fan of some chinese models, but I keep seeing this repeated over and over using OpenRouter as the source. However, most users of Claude and OpenAI don't use those APIs over OpenRouter, so that's not sufficient to draw the conclusion that they're the top models.
"Best available public data source" isn't a good reason to insist on using irrelevant data to draw conclusions like "top 5 models by token consumption are Chinese/open models".
How much marketshare does OpenRouter have? They show serving under 200T tokens per day. Just looking at Anthropic rumored $70B ARR ~ $191M per day implies 347T tokens per day if only serve Opus 5.5 at API pricing (assuming 95% cache reads, 4% non-cache inputs, 1% output tokens distribution). Obviously, token distribution assumption may not hold (although I'm pretty sure cache inputs dominate distribution for all coding related workloads), but 100% Opus 5.5 at API pricing is highly favorable to OR. Even under these favorable assumptions AR is 57% of token volume of just Ant. In money volume they are likely very small compared to frontier labs.
I agree with the threat to the expensive providers but why is openrouter use representative of overall token spend when you'd think many companies are buying directly from anthropic or openai?
The page doesn't load for me, but surely token consumption isn't a very good metric?
A poor model could require many more runs to solve a task, or much longer internal 'thinking' runs - all of which will increase token consumption but are a bad thing for the user.
Majority of big enterprises, or in fact any big consumer will not go there , why pay the margin to open router , if there’s no margin or very very often subsidies to use something else . Aws bedrock for example does not even have up to date Chinese models .
I'd argue there is a bias for using mostly open models through open router as using anthropic/oAI models from open router makes little sense (more expensive).
The closed models are on Openrouter as well. But to the original point, you're not likely to see many people use Openrouter to run Claude or Codex, so it's not good for making comparisons on that basis.
"Before starting the IPO process, we spoke to many business leaders who had gone through a similar process in the past. One piece of advice, which we heard in slightly different forms from multiple people, stuck with us: never let your company be worth a dollar more than it is actually worth. What they meant is that it is very dangerous when people buy your company's stock based on expectations you cannot fulfill or on incorrect predictions about how you will behave. This is in fact very similar to one of Anthropic's guiding principles: underpromise and overdeliver."
(narratology, fandom slang) To intentionally call attention to the improbable, incongruent, or clichéd nature of an element or situation featured in a work of fiction within the work itself.
Their AI is only dangerous in that it doesn't have a moat, and they're using it as a weapon to coerce government into giving them one. "Oops, we "accidentally" left a hole in the sandbox and when it was told to do things it did them on the internet."
They don't deserve a moat; they deserve criminal prosecution for these flagrant acts. Meanwhile, the rest of the world can go about treating software in the way it always has.
And it also seems to me that prosecuting the people who warned about this 6 months ago for unspecified "flagrant acts" will probably not fix the problem.
This really reminds me of that scene from Wolf of Wall Street where Leo's selling penny stocks out of a strip mall office. "I never ask people to judge me on my successes, I only ask them to judge me on my failures, because I have so few" or something like that.
To be fair, I spent unbelievable amounts of money on Opus tokens for OpenClaw. Easily my biggest expense this year.
The risk is that other models are pretty comparable to Opus since around July.
Unless they have cheaper electricity costs, I can switch models interchangeably.
They don't have a moat.
Gosh I wish it was easier to short stocks. Whatever platform I used made me sell/buy 100, and I wanted to do this short 3 years long, and buy every 6 months.
We know Tesla and SpaceX are going down at some point. But "The Market can remain irrational longer than you can remain solvant."
And bear ETFs are not the same as shorting. I learned this the hard way with $80.
To be fair, this account is 4 hours old and created 2 hours before the S-1 post.
With the amount of money involved here and the current agentic tooling context, how am I ever to take comments like from accounts like this on topics like this at face value?
I'd like to think I don't just take hype as a reason to buy a stock.
I went to a birthday party for a kid with first generation Indian Americans that thought they could make money off SpaceX. It was extremely showoffy, they had their cleaning lady carrying around drinks like a butler lol
I warned them it was overvalued.
They thought they could make money quick before it collapsed.
> We know Tesla and SpaceX are going down at some point
How do we "know" that about SpaceX? Still seems to me like they're basically maintaining their decade lead on everyone else on rocketry. And remaining competitive in their other endeavors as well. To me it doesn't seem at all unreasonable for SpaceX to never be meaningfully cheaper than it is today. But I'm not exactly following SpaceX closely. What am I missing?
If the rocket company was in the stock market as its own thing, not as an extremely complicated bundle, it would not be priced anywhere as high as it is now. I would expect that company to be healthy for quite a while too.
The actual difficulty we have with the modern tech company, which is at its worst with Tesla and SpaceX, is that we are really seeing a price or large conglomerates, so they are extremely hard to price. If they were all split into individual companies, how much of the market cap would go to each? I find the bundles to be rather anti-investor.
And no, it's not just those, and not really just tech companies, but that's where the problem is at its worst, as that's where expensive investments some of us consider worthless are tied with business worth something. Take Amazon. You are buying AWS, a logistics company, an ad company, and as part of this, there was always a devices division selling Alexa. I found Alexa to be a real loser from very early, but there was no way for investors to say what they thought the division was worth. The Amazon es execs could at any time decide to invest billions, or invest zero, and given the size of the conglomerate, the price change was going to not be all that high.
SpaceX has many components I would price near zero, where a lot of money is being spent. But as a pile of risky bets, the fact that they are a pile means it's harder to bet against any one, or ten of them. And if it merges with Tesla, that makes it worse. The difficulty in pricing the bundle makes it really easy to hide big mistakes for a while, until they are so big it all crashes. I don't think that is good for investors, or for having accurate pricing, which is one of the goals of a stock market.
Biggest issue Tesla, SpaceX, Anthropic and all these companies have is you can't inflate your value beyond the total market. It's the same thing as bitcoin pushers trying to imply the value would 100x again pushing beyond the total valuation of the Earth.
These companies have the benefit of a real product at least, but eventually the rubes get fleeced.
Isn't that entirely because investors are betting on on Musk succeeding though? Lunar base / Mars colony / hundreds of daily starship launches is the long game. It's no different than Anthropics entire valuation being based on ASI. If they never achieve ASI, 2 trillion is the most insane valuation of all time. If they achieve it, 2 trillion will be your worst missed opportunity of all time.
You are missing his Elon political bias. Given every analyst on Wall Street is bullish and there last earnings was a huge beat its safe to say OP is a left wing warrior
What a cope. Have you even considered his point a little bit? Surely everyone who disagrees with you or with any of the notorious liar's, usually acting as tech CEOs must be blindfolded by his LIbTarDish political stance.
I think it's probably fine in anthropic's case but I flinch at the "underpromise and overdeliver" line. Heard way too many people say that and what they really mean is "underpromise and deliver."
Tbf they can pick the IPO price but they can't control the share price afterwards. So this advice is basically to price it conservatively, which seems reasonable.
In Google's case it was absolutely true though. The stock was NOT over-valued.
The IPO was at a market cap of $20 B. And it never dipped below IPO price -- it doubled within a year.
And now GOOG has a market cap of $4 T, so that's 200x in 22 years.
I like Claude, but I think the likelihood that it is over-valued already is higher than it was for Google. (Though I would not really be surprised if it keeps the $2 T valuation and grows. Who knows? And it doesn't matter to me personally)
What is unique about them? What is smth they have nobody else can reproduce?
It looks here in EU most talks recently about souvereign AI and how to quit digital dependence on oversea providers, at least first attempts to decouple. Thus I wonder if is there a place for new serious competitors?
The AI tech itself is likely very liberating - it seems allow to reproduce anything digital with less efforts than ever before, so others may simply replicate your business quickly?
A few financial and Anthropic experts explained how Anthropic would like for the stock to never dip below the IPO. This tracks with these statements in the S-1.
Could you explain what the joke is? It's very good advice, and should be followed. Also consistent with the beliefs that Anthropic's leadership has demonstrated.
They might be very wrong, but they undoubtedly believe what they wrote and what they put in the S1
There has not been a company that has overpromised and underdelivered as strongly as Anthropic in the history of humanity. They literally talk about their chatbots being conscious, model welfare, blah blah blah. Whether or not they believe their marketing is one thing, but it is nonetheless a fact that they market themselves as having created life.
OK, let's say that they actually are marketing themselves as having "Created life" (which is not anything that I have seen anywhere).
How does that "life creation" promise affect anything with the topic of the post, which is the financial valuation of the company?
Does that increase the financial valuation of the company? Expose risks in the S-1 that they haven't properly accounted for?
I don't read many Anthropic blog posts, but usually it's about a model release, interpretability research, or similar, and I haven't seen any of this marketing that you have. That said, they did somehow spend $2B on sales in the last quarter, almost 10x what it was in the prior quarter, and I don't get exposed to advertising anywhere; is this something that's getting played on TV? Billboards? Somewhere else?
The topic of this subthread, which you replied to, was about the sheer absurdity of this statement: "This is in fact very similar to one of Anthropic's guiding principles: underpromise and overdeliver."
That's it. Whatever you're going on about with financial valuations and S-1 risk is completely irrelevant to what you were replying to, because I was not making any kind of claim about those.
It's a subthread where commentary about the IPO was assumed to be a joke.
I'm really baffled that you think that Anthropic has been promising the creation of life! Even if it's not meant to have anything to do with this subthread or post.
“Beleive” in the sense that Tom Cruise believes in the cosmic DC8?
Anthropic [employees] huffing their own koolaid fumes aside, it’s extremely difficult to believe the claims that these mega valuations are substantiated on (*one* company somehow assuming a meaningful fraction of global research and production)
Look there's largely diversified customer base paying them at rates snd growth that justify the valuations.
Unless "cosmic DC8" (whatever that is) has S1 with data thus string, what possible comparison could there be?
These financials are very very strong. They alleviated many doubts I had about Anthropic's viability (namely I wasn't sure training+experiments could fit in the compute budget and keep them profitable).
We have the numbers right here. Comparisons to Scientology and Elizabeth Holmes are more similar to Scientology than what we see in the S1.
Companies like Google will not go bust and can easily afford future develoopment.
Amazon and Microsoft have to keep investing (they can also afford it) to not loos to Google.
What Anthropic and OpenAI are doing is for sure THE frontier (regarding benchmarks, speed etc.) but in paralllel DeepSeek for sure is not bankcrupting anything on their investment side and are also progressing.
Are you only talking about investment itself for a handful of companies? Because alone Nvidia has so many backorders, they can't deliver wht was ordered for the full 2027 and A LOT of peple also want other things from Nvidia or from the industry like Gaming Chips, normal GPUs, Gaming GPUs, Memory etc.
Opus 5.5 just came out and made progress, i'm not seeing any slowdonw on HN regarding new relevant progress in broad ML topics.
So what hype will disappear soon? The progress in the ML space?
- AI is a useful tool and we're still seeing steady improvements in performance and efficiency
- There is a bubble in the stock market, fed by unrealistic expectations of what AI can achieve in the timeframes the investments need to provide returns in (e.g "AI is pretty useful and delivers productivity improvements in coding, law and other desk jobs" vs "in 12 months everyone will be out of a job and/or humanity will be exterminated, AGI is almost here, winner takes all")
So yeah, the schizophrenic Yudkowsky tier hype bullshit should hopefully disappear soon and then we can move on to something else.
Okay so you agree that big companies can keep funding this buildout, NVidia (and everyone in their supply chain) is backlogged 18+ months, and there's essentially zero risk of insolvency from any of the major customers, all of whom are committed and able to increase their purchasing (pursuant to their contractual obligations) of AI hardware over the next 3 years?
No one serious cares if there's a bubble in the stock market because the financials are solid and when those play out then whatever "bubble" you imagine exists today will be small compared to realized revenues in a few years.
>No one serious cares if there's a bubble in the stock market because the financials are solid
If the financials were "solid" it wouldn't be called a bubble. People are pointing to the bubble saying it's a bubble exactly because the financials are not solid and the expected revenue that would make the valuations and investments make sense is vaporware.
Some thinktank estimated that there is enough money in the system for reaching 2030 with continues investment.
There are a few numbers of scaling laws, i'm pretty sure VCs want to see being hit. Just to see what will happen when you scale an LLM to 100T Parmeters.
This might be one of the most consequential S-1s in the next decade. There's a part of me that's terrified, like we're on the precipice of financial or societal collapse. I suppose that could be a sign of the times.
Their financials are an utter mess. But they’re also hyped enough that a lot of money will get invested in them. Should they crash a lot of money will be lost.
Yeah, part of me wonders how much of it is shared delusion and how much is just cut throat racing for the exits.
Even if the tech + business fundamentals don't match reality, there's just so momentum in favor of a "win" here.
What we have today is interesting tech, with many, many applications - but the path to the kinds of things mentioned in this prospectus have no clear path, it seems like scaling laws are plateauing, but those invested speak as if it's a foregone conclusion we get AI we see in science fiction movies.
There is a good documentary called "All Watched Over by Machines of Loving Grace" which documents how computing started, the touted benefits (it would fix society, all illnesses, liberate humanity from work) - and the slow decline in optimism towards what we have today. I feel like AI will play out the same way.
Space-X is as weird as Tesla. Cult following makes that very irrasional.
Teslas evaluation was always "Tesla is not a car company, it does everything". Then Space-X came along "So Tesla and Space-x are not a car or rocket company, they do everything but now 2 times the evaluation".
Space-X would only work if they incresae the payload to space SIGNIFICANTLY. Starlink was the real reason for the last real relevant increase in payload but Space-X HAS to send Starship un there very very often but for what?
Yeah for Datacenters in Space.
In parallel you have Anthropic: Something which might be added to every single worker on the planet (by having tokens to help that one person to be better one way or the other) or it replaces humans with tokens globally.
And if you come with Grok: Its not Frontier and he even prefered to rent out his DC compute instead of leveraging it for more revenue because he can't. Not a good sign.
Your evaluation of an IPO is if it made random people rich over night?
1. no thats called gambling
2. if it made random people rich over night, it made random people also poorer. Either the retirement funds, a 401k investment, real humans etc. Money is not created out of thin air.
The largest IPO though for sure correct, but yes, Tesla and Space-X live quite a lot from Musk so its hard to determine what the IPO of Space-x really is.
Btw. its not just random Musk hate, you simpllify that. Not only doesn't he care that his DOGE actions killed humans and kids, he also disrupts democracy and might poisen our atmosphere with Space-X. The rationallity of people around Musk is very very weird.
If the IPO flops, OpenAI might run into a liquidity problem as investors dreaming of a quick back retreat from the market. The private market is a wilder derivative of the public one.
I stopped at "Our Capital Structure" section. When it says "Class F stock" gets 50.1% voting power, doesn't it in practice make all other classes are non-voting, not just the "Class N"?
Edit: the risks sections feel like California's Prop-65 disclaimers
> Our results of operations may also fluctuate due to a variety of additional factors:
> - the number of employees hired
> - declines in the values of foreign currencies relative to the U.S. dollar
That huge list feels completely random. Are all S-1 that bad? They can be punished for omission, so they list everything that could happen even if doesn't really make any sense?
Why would it make it less likely? The major LLM manufacturers desperately want running foreign "open weights" models to be either tightly restricted or illegal. If they don't get that done, they can't stop bleeding money on R&D... which is what the "Pacing The Frontier" shit is all about.
I was too young to appreciate (denotative, not connotative) the dotcom crash. I will have my popcorn ready this time - for whichever direction it goes.
The revenue growth rate is quite shocking. Their two worst quarters were Q425 and Q326 where they grew 47% and 45%. Other than those two, they've been growing >100% QoQ for two years. This company is about to list with some of the greatest revenue growth in the history of shareholder capitalism. I wasn't planning on investing before, but I think learning this has changed my mind.
So you don't have to do the math, at a midline valuation of $1.7T, the Amodei's each will have about $25B. It mentions that they have pledged 80% of their stock to charity in a non-binding agreement.
Excellent products, even world changing products does not mean shareholder returns in Anthropic’s case.
Even if Claude meets all of our wildest goals and earns trillions yearly there is absolutely no “guarantee” that any will flow to shareholders.
1. Shareholders do not have control of the company due to its structure. The Trust controls through class T shares. As a backup the founders control through class F shares.
2. Since the company is a PBC its board is allowed balance dividends with other social benefits as they see fit.
This means that even if Anthropic is wildly successful as shareholders have no general legal claim to compel the company to distribute those profits.
It is absurd that with a 2T IPO upcoming this is not front and center.
Wild that this has 500+ points and 500+ comments less than one hour after posting, and it's #11 on the homepage. Guessing either the flamewar detector or lots of AI skeptics flagging it?
Im going to continue to use fast open source models like Deepseek and GLM, I like most others, have zero need for the worlds smartest person to be my assistant.
I dont understand this business model, it seems clearly unsustainable (at their prices). When people start to realize they dont need to spend all this money on turbo PhD intelligence so they can build react apps, Anthropic will be in a tough spot (if they already aren't).
You will say, "but enterprise!!" Nope, plenty of companies are waking up to this reality as well. It turns out that if you made money pre-AI without spending 5k a seat a month for your engineers dev tools, you probably don't need to now to continue too.
> Second, AI can be a powerful lever for economic growth. As a general purpose technology, it has the potential to raise productivity across every sector of the economy. Productivity growth in advanced economies has stagnated in recent decades, partly for structural reasons and partly because new ideas seem to be harder to find. AI could reverse this trend.
Bloody hell!!!! Who comes up with such crap, seriously?
This entire A.I. hype is going to get many people burned, especially those whom are investing for their pensions.
And everyone is playing along. It seems to me half the internet is filled with false recommendations and overly optimistic outcomes of their software projects.
And even if the claims are true what use will we have for hundreds of Microsoft Office clones? This A.I. boom might benefit some but will be the undoing of many valuable ISVs like Microsoft and Adobe with potentially trillions of stock market value lost.
Adobe's applications (Photoshop, Premiere, After Effects, etc.) have been "cloned" using AI coding tools. There are near feature-complete freeware versions of Adobe software. OP is saying that traditional Adobe customers have freeware alternatives and thus Adobe's revenues will decline rather than increase due to AI. Also, AI tools can often generate that movie or edit that photo via a prompt, rather that some .exe.
People are using Adobe for completely different reasons. They are so established in creative industry that everything rotates around their software including it's bugs and quirks. Schools teach only Adobe. When you go to high end printers they have processes prepared for output from Adobe software. There is whole market of specialized software plugins for Adobe. For the industry professionals it's just shared ground and cost of doing business.
The AI clones won't easily change that unless they were exact 1to1. If it was that easy to get rid of Adobe the monopoly won't be there anymore as things like Affinity have existed for a while and are free. Affinity is in many ways even better version of Adobe suite, faster, more stable, allowing to be more creative. But the friction is extreme, because if you need to collaborate or be in any way part of the industry then Adobe is expected so you need it anyway.
Question, how viable are these tools and are they maintained?
I genuinely want to know if this is mostly hype or are they actually good. I don't think trying myself would really give a better picture as I'm not a user of said software.
Anyone who tried to replace photoshop with these AI clones successfully?
From what I've seen, very buggy currently, and unknown how well they will be maintained. They're definitely not at a stage where adobe should be worried about their revenue, and there are foss alternatives for most adobe tools, that are better than these reverse engineered ones. But if they continue maintaining them and fixing the bugs, who knows, maybe adobe really loses some part of their customer base (although a lot of their individual tools have already been moved to the cloud, thus they can't be reverse engineered anyway)
By all reports they are not good and have quite a few bugs. But the thing about open source is that, if maintained, it almost always improves. And with the bar for maintenance so low due to AI, we are entering a very interesting time for software.
And by interesting I mean scary, if you sell software.
call me snarky but I don't think a gigantic amount of AI slop is maintainable by any means unless you just throw every token you got and hope for the best
It's very simple right? If they don't hit ant AI walls, the demand to use it to improve [stuff], will not stop. If AI maxes out for too long it's gonna be painful because the narrative is gonna hurt them more than anything.
I don't participate in stock markets for personal reasons but if I did, I would be betting against Anthropic in the long term. This is a highly commoditized field and while they are a leader it's not clear than any of their attempts at vendor lock-in are working. They are certainly not working on me as I cancel and enable my subscription depending on the availability of capable lower-cost models.
I'm surprised at people suggesting that the model layer can't be the moat. Having great models that are smart requires talent, culture and good judgement. Sure it can be commoditised to an extent but could it not be that Anthropic will always stay in the lead?
They only have to be marginally better and there will be tonnes of people who will pay a lot of money to have that marginal intelligence.
I seems to me the main risk long-term is that it's not clear where the moat is.
People will pay a premium if there is marginal value in extra intelligence. And Anthropic is able to retain their lead and provide that extra intelligence.
Both of these assumptions seem highly suspect to me. Most businesses don't exclusively hire PHD-level employees for most tasks because a competent slightly less intelligent/knowledgable person can do the job just fine for significantly less.
Then there is the question of if they're able to retain their lead, and again, this seems questionable. Both OpenAI and Google are competing at the frontier, and Chinese labs are still in the race. Things are changing so fast who knows where we'll be in 5-10 years.
My best guess is that longer-term models will be commoditised and it will be how companies offer products and services around their models that gives them their margins. I wouldn't bet on Anthropic's ability to do this. Meta, OpenAI and Google are much better placed to win here imo.
The other place there may be margin is in niche research domains like drug-discovery. Any slight lead in these sectors could give them a lot of pricing power.
I think the reason to invest in this is as a hedge. AI basically competes against everything and arguably for this reason it's risky to not own a basket of AI stocks.
This IPO, if successful, will complete rewrite the standing rules of the stock market in ways incredibly harmful to the future of American style capitalism:
1. The Separation of Economic Value and Corporate Governance creating The Multi-Class Autocracy
2. Institutionalizing the "Off-Market Vault" that can manipulate stock price at any time
3. The "Vendor-Financed" Public Offering (Circular Balance-Sheet Refinancing)
4. Monetizing Non-Cash Derivative Liabilities as "Losses" Without Cash Burn
Good for you if you have Anthropic shares! I have no clue how they keep their employees around once the 6 month lockup period ends. They all going to be multi-millionaires, either retire or leave to start something on their own.
Yeah, as a quick quote to show how this truly is directly in there:
> We also compete with a broader set of model providers operating at or below the frontier, including large companies, specialized AI labs, and a growing range of other open-weight or open-source (shared weights, training data, and code) models released by international and domestic organizations.
If you step back and look at humanity as a system, the flow of capital is just definitionally the fate of humanity. In the same way the neural electrical signals and flow of hormones and nutrients in your body are the fate of all the cells in your body.
Everything comes back to whether the demand is really there.
Anthropic thinks it is. The got the demand / datacenter match right in Q2, got great margins, and committed hard.
They've got:
- $114b committed to Google
- $110b committed to AWS
- $161b committed to Broadcom
- $120b committed to SpaceX
If the party continues, they'll go from $50b in revenue to $500b and be fine.
But if they don't, it's going to hurt. And that's their only choice, because otherwise, they end up with a frontier model and 50% of the capacity and get eviscerated on either availability or last-minute datacenter leases.
It's a big business, but it's not an easy business.
These commitments aren't annual though, most of them amount to 10 billion a year commitments for 10 years. Put another way Anthropic has committed 52 billion dollar a year to these companies and their S-1 indicates they earn 67.2B a year in revenue.
I'm not going to predict whether Anthropic succeeds or fails, just that it's very misleading to claim that Anthropic needs to grow to $500b in revenue without making it clear that it's $500B in revenue per decade rather than $500B in revenue per year which is what most people reading such a number would assume.
To be more specific:
- 161.2B w/ Broadcom: 2026-2031
- 120.5B w/ SpaceX: 2026-2029
- 114.5B w/ Google: 2026-2033
- 110.0B w/ Amazon: 2026-2036
- 44.9B w/ Microsoft: 2026-2033
- 44.6B w/ Nscale: 2026-2033
- 41.3B w/ Lambda: 2026-2034
which is around $63.7 billion / year if spread over 10 years, but with most of it due earlier than that.
Isn't the SpaceX contract cancelable with 90 day notice? How many of the others are too?
You're right, SpaceX will be cancelable within 90 days after March 2027.
SpaceX was the only one mentioned as cancelable. These are listed under "Infrastructure Service Arrangements" on page 170.
That is wild. What if there is a huge break-through in LLM models where they can reduce compute by 90%? All of those data centers would suddenly crater (many customers cancel) and go bankrupt. I feel it could go either way.
That's already happened. It's one reason prices have dropped so much lately (n.b. in the quarter that's not in their S-1, I think!) They've been able to improve model efficiency a lot through better algorithms and training models to be less verbose.
The question is, how're those datacenters build outs coming along? two reasons for Anthropic to cancel those contracts. A) They don't need the capacity because they have capacity elsewhere, or b) they don't need the capacity because no one is using Claude. (I guess c) they don't need the capacity because theyre running Claude more efficiently is also technically possible.) For B to happen, they've got the demand in the form of contracts, and models don't really seem like they're shrinking, though there's a lot of non-public info, Astra > insize than sol, and Opus > insize than a Sonnet. So then we're looking at situation A), and the think to look at is SpaceX has the vertical integration to be able to plonk down datacenters and get them powered with literal jet/rocket engines/turbines that they make from scratch because they're a space rocket company when no on else can. So, personally, I don't think it's that big a risk to SpaceX's revenue. Or rather, is cancelable in 90 days, but smart money is going to see those cancelations coming from a lot longer away, if you're tracking datacenter construction. (Disclaimer, I picked up some SPCX; not financial advice, etc)
SpaceX does not make turbines that can run for tens of hours producing megawatts of power. A turbopump is a different beast.
Not the whole turbine, but they are manufacturing turbine blades in bastrop texas. The turbines are available right away, but the blades are 12-18 month lead time, so Elon built a foundry. From what i heard they've only gotten a couple proto's out of the foundry/ no idea the grain quality. But they are doing it.
> "SpaceX has the vertical integration to be able to plonk down datacenters and get them powered with literal jet/rocket engines/turbines that they make from scratch"
Is that really a viable path? (Honest question)
At this point, you can get the chips you just can't get the power. So in typical elon fashion, he just "solves" the bottleneck. Long term, no, that is not the strat. Thus the pivot to space.
What happens when he sucks the natural gas pipes dry in the peak cold of a Texas winter and thousands of people die to keep xAI burning?
We'll be forgiven for expecting the new overlords will take over in the bang of boiling oceans, as we miss the significant whimper of a cold Texan winter.
all Anthropic contracts are cancelable if the intent is to stick public shareholders with a bag
I'd imagine all of the vendors have an incentive to keep their main customer a float, while there might be penalties etc. for missed targets - it doesn't make sense for any of these vendors to ride the contract into chapter 11.
This is so important in analyzing these commitments. Anthropic's commitments will make them a Top 10 customer at many of their vendors. (Even at Google/Amazon, how many other customers do they have with $100B+ committed?)
Those vendors would very much like to retain as much of that business as possible. If the space goes sideways, I would very much expect some kind of renegotiation/work out.
This is always the intent for all recent IPOs I can remember.
On a side note, these are pretty hefty portions of the total revenue of these companies. 161B with Broadcom over 5 years is about 32B/year; that's fully half of their 2025 revenue. 120B with SpaceX over 3y is 40B a year, more than double their 2025 revenue and almost triple 2024. 114B with Google over 7 years is about 3% of their total revenue and about 1/4 of all Cloud revenue. 110B with Amazon is about 9% of their AWS revenue.
If Anthropic's revenue story doesn't materialize and the AI bubble bursts, these companies are in a world of hurt. It's probably not fatal for Google or Amazon but would be a major drag on the stock price (perhaps why Google has dropped from 400 to 315 over the last couple months as the AI story soured), and it could be company-ending for Broadcom or SpaceX if they end up building out infrastructure to service these commitments.
I remember before I left Google, one of the TGIF questions (which are now AI syntheses of many peoples' individual opinions) was "What happens if AI is a bubble and it bursts?" His response was "If that happens, the whole industry is in trouble." I see now what he meant.
SpaceX will just use the compute directly if they don't have buyers. They are already talking about the data center shortage as well because they can't get capacity elsewhere either. It's a weird problem to not be able to use your own data centers because you rented them out.
Between SpaceX, Starlink, Tesla, Neuralink, X, Grok, Grok Bot & Cursor there's not a demand shortage.
Grok Bot's the fastest growing product in the history of the company and the moment you use it, it's clear why. Took me about 1-2 days to realize I'd have a very hard time going back to not having it available.
No the biggest problem will be investors will demand much higher dividends aka cash return..... how will alphabet continue to fund its projects with ever decreasing internal cash flows available after dividends? If the founders decide not to come good on this - the stock price will crash. If much of your employees compensation is stock based...? i have bad news for you
one can truly dream
wait what, how is Broadcom worth so much with so little revenue?
Their current stock price is pricing in these contracts, which have already been announced but have not been fulfilled (or booked as revenue) yet. So Broadcom's 2025 revenue was 63B; note that this is already up almost double from its 2023 revenue of 35B, largely on AI contracts. If Anthropic spends another $32B in 2026, that's in addition to their declared revenue; investors expect they'll be making $100B+ in 2026. Broadcom's operating margins are pretty good, so a lot of this flows through to the shareholders as earnings, and so investors are valuing it on the assumption that these contracts result in tangible cash flow.
If the AI companies go tits-up, that introduces counterparty risk, the revenue doesn't materialize as cash, and suddenly their earnings take a nose-dive. If they've staffed up significantly to design and sell these AI accelerators and suddenly there's no market, they could be in a lot of hurt.
AI aura.
BRCM and Marvell are both the actual designers of many of the “we designed our own ai chip” chips that so many companies have been announcing.
Broadcom is also a major supplier of the networking chips that the hyperscalers use. Clusters are moving away from infiniband and nobody is particularly impressed by Spectrum.
I'm sure there are others here that are experts on this topic, but my 2 cents on this is that Broadcom specialise in custom / specialised AI chips, and their collaboration with Google to manufacture the TPUs is a pretty solid revenue moat over the next several years.
AI focused investments and patent trolling.
Forward P/E.
from what you've written it's more like:
- 2026: $97.08B
- 2027: $97.08B
- 2028: $97.08B
- 2029: $97.08B
- 2030: $66.96B
- 2031: $66.96B
- 2032: $40.09B
- 2033: $40.09B
- 2034: $14.59B
- 2035: $10.00B
- 2036: $10.00B
Total: $637.0B
Considering everything that is cancellable, ie. hard commitment only, it's:
- 2026: $56.79B
- 2027: $56.79B
- 2028: $56.79B
- 2029: $56.79B
- 2030: $56.79B
- 2031: $56.79B
- 2032: $29.93B
- 2033: $29.93B
- 2034: $10.00B
- 2035: $10.00B
- 2036: $10.00B
Total: $431B
If they go bankrupt, there are some more cancellations available, also from the other side – if some providers don't deliver, it can be lower as well.
That's helpful, but 2026 isn't cancelable, nor is at least half of 2027. Also, I think some of these numbers are off. Only SpaceX is cancelable but the above shows declines for years outside of the SpaceX commitment (assuming it does get cancelled, and in full).
I also left out AMD at $20B for 2027, so that would need to jump up.
Finally, the above is only counting the commitments they've already made. It's not very likely they'll only spend $10B in 2035.
It goes down because contracts expire.
AMD is missing, true but commitment schedule isn't known. Also missing estimated additional TPU purchase for 28-31, ~$125B-$150B.
- 2026: $97.08B = Broadcom $26.87B + SpaceX $30.13B + Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B
- 2027: $97.08B + AMD (TBD) = Broadcom $26.87B + SpaceX $30.13B + Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B + AMD (TBD)
- 2028: $128.33–134.58B + AMD (TBD) = Broadcom $26.87B + SpaceX $30.13B + Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B + additional TPUs $31.25–37.50B + AMD (TBD)
- 2029: $128.33–134.58B + AMD (TBD) = Broadcom $26.87B + SpaceX $30.13B + Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B + additional TPUs $31.25–37.50B + AMD (TBD)
- 2030: $98.21–104.46B + AMD (TBD) = Broadcom $26.87B + Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B + additional TPUs $31.25–37.50B + AMD (TBD)
- 2031: $98.21–104.46B + AMD (TBD) = Broadcom $26.87B + Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B + additional TPUs $31.25–37.50B + AMD (TBD)
- 2032: $40.09B = Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B
- 2033: $40.09B = Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B
- 2034: $14.59B = Amazon $10B + Lambda $4.59B
- 2035: $10.00B = Amazon $10B
- 2036: $10.00B = Amazon $10B
Combined total: $782–807B+, including estimated additional TPU purchases and conditional AMD spending.
If we assume none of it is front-loaded (which seems, uhhhh unlikely) we're looking at ~$100 billion a year for the first 4 years of commitment. That's significant.
https://tinylittleoffice.com/write/#/v1/write/yZVWxTsMwEN39F...
Got the numbers on a spreadsheet. Of course this is a super simplistic version assuming equal yearly commitments.
It’s been rumored but this is a pretty huge TPU dependency. Assuming Broadcom + Google is TPU spend.
There is the FT covers it…
> Its largest commitment is with Broadcom, which co-develops the TPU AI processors with Google and leases them to Anthropic in deals worth $161bn over five years. From 2028, Anthropic expects to spend up to $150bn more on TPUs.
https://www.ft.com/content/a6c43402-719e-4295-ae5f-541edb0ae...
Thanks for clarifying, that’s a huge difference. Obviously they will have other revenue sources, but will likely make a small portion of their revenue. If we approximate their growth rate by these numbers, it is quite a slowdown.
You're right that my numbers are imprecise, but I did mean $500b in revenue annually.
This is just the compute, which primarily covers training + inference. They still have to run the rest of the business. If you think AI should look like SaaS and spend 10% of their revenue on compute, that's $1T in revenue. If you think it's a hardware business, that's 30% margins and perhaps $200b in revenue. I went with something in the middle at $500b.
They won't disappear as a company at $200b in revenue, but I don't think that's their aspiration. These commitments imply to me that they're confident they can do much better.
> If you think AI should look like SaaS and spend 10% of their revenue on compute, that's $1T in revenue. If you think it's a hardware business, that's 30% margins and perhaps $200b in revenue. I went with something in the middle at $500b.
I'd think it's more sound to just look at what percent of their current spend is on compute? Seems to be 50-60%
> Put another way Anthropic has committed 52 billion dollar a year
Idk where you got this figure from, but the actual figure are very different from that:
It's 120B over four years for SpaceX alone and 120B for Broadcom over 6 years. These two players, representing less than half of the total commitment, already give you an annual commitment above 50B.
Good point. Although they also need to make a profit. To justify an eventual PE ratio of 25 and a current valuation of $1 trillion they need to make an annual profit $40 billion. And then lets assume $40 billion in other expenses. So they need revenue of $50 + $40 + $40 = $130 billion revenue annually.
But if you buy them today at a $1 trillion valuation, and they only make $40 billion in annual profit, your investment will go nowhere. They need to be growing profits at 20% per annum to justify a PE OF 25.
And then you have the competition problem. The cheap open weight models are good enough for many (most?) tasks.
And then you have the problem that LLMs may not be that useful outside of programming, customer support and law (and doing homework).
We have examples today of companies that don't need to justify an eventual PE ratio of 25 so why would this be a thing all the sudden? I think you all are misunderstanding vague notions of market fundamentals as some kind of rules by which the market works.
500B in a decade is really a lot
Yeah, it's a crazy number, but they got the AI business right, just like Google got internet marketing right 25 years ago, as long as they keep the momentum (and prices).
Isn't the issue tho, that google launched at i dunno a 1bn market cap and grew as the internet grew.
what you're buying into here is a company that is already large on the idea of growth over the next 10 years.
Modern IPO's just reek of investors cashing out
> google launched at i dunno a 1bn market cap and grew as the internet grew
Google closed its first trading day "worth more than $25 billion" [1] with $1.5bn revenues, up 234% from 2002's $440mm [2]. That's a 16x revenue multiple, 0.07 growth adjusted [3].
On a similar revenue multiple, Anthropic's $16.3bn half-year earnings are worth $543 billion. Adjust for Anthropic's 1,400% YoY growth and you're well over $3 trillion.
Obviously, it's a lot harder to grow at a thousand percent from a $16bn baseline versus a few billion. But purely on a multiple basis, Anthropic is in a similar ballpark as Google.
[1] https://www.nytimes.com/2004/08/19/technology/shares-of-goog...
[2] https://www.sec.gov/Archives/edgar/data/1288776/000119312504...
[3] https://www.investopedia.com/terms/p/pegratio.asp
If only it was that simple, to switch multiples around between random companies and come up with valuations
Google was profitable, free cash flow positive and had no debts basically
Anthropic is burning money by the millisecond, no profits, free cash flow negative and has lots of debts & commitments
Correct does that poster actually know what comparables are?
Comparables are not by peer group or sector.
It’s cash flows, growth and risk bud. If you want to do peer group - go ahead - just don’t forget to control for differences..
Price to sales multiples are internally inconsistent by definition.
Is there an internet rule for folks asking if someone else knows something following it with a completely wrong definition of that thing?
As another check, SpaceX is trading at ~62x sales with a growth rate in the 30% range. Assigning the same sales multiple puts Anthropic at ~$2T market cap. Add in a factor for much faster growth (and non-GAAP profitability) and $3T is a really easy place to end up.
Sure, you can throw any numbers around, if you wish to get any valuation you want.
In reality, a valuation based on revenue (sales) is bonkers to begin with, but even worse when you consider that Anthropic has so much debt that it doesn't have positive equity value, it's in a deficit ("When liabilities attached to an asset exceed its value, the difference is called a deficit and the asset is informally said to be "underwater" or "upside-down""). At least SpaceX has more assets than liabilities.
There are a set of mistakes in what you wrote, but
> SpaceX has more assets than liabilities.
is definitely a choice thing to write on the day SpaceX announced a $40B debt deal to purchase compute to run other companies' models. Based on available information, this will put SpaceX into a place where it has more liabilities than assets.
Lol
You're speculating what SpaceX balance sheet might be, like they haven't just released MRQ earnings report last week
Just go read it and you'll see you're wrong even after you subtract that 40 billion SPV https://www.sec.gov/Archives/edgar/data/1181412/000162828026...
Fair, I misread the filing.
Larger point stands. SpaceX is commanding a 62x sales multiple, whether or not you personally believe price:sales should be relevant. SpaceX's AI operation is smaller and growing slower than Anthropic's. It's reasonable to expect investors to benchmark Anthropic against SpaceX, it would be silly not to do so. A normal thing one would expect investors to do is assign a higher multiple to a company that grows faster.
But the question is not so much if they can IPO at those prices but rather if the valuations are sustainable over a couple of years. If they are priced to perfection there isn't much left for public investors besides huge risk that something might not work out 100% as expected.
I mean, yes. You are raising points, using Wall Street lingo, that are rightfully raised about every IPO, ever.
To be clear: I do not have a financial interest in this, and will not be buying the IPO. I very much am just describing the world as it is.
Larger point doesn't stand, price/sales is as useful of a metric like measuring speed as mass/distance. "Yes, my speed is 100kg/10 meters".
Some people will benchmark Anthropic vs. SpaceX, that doesn't make it a smart approach.
A normal thing is to consider risk, liabilities, cashflow, how diversified revenue streams are etc., and other things which you seem to be missing.
I'm not trying to dissuade you from buying it. I'm just saying that the reasons you give are wrong.
> Some people will benchmark Anthropic vs. SpaceX, that doesn't make it a smart approach.
Yeah, I would not pay 62x sales for SpaceX. And I don't buy IPOs. I'm not endorsing these values, I am saying benchmarking against peers is what investors commonly do.
> A normal thing is to consider risk, liabilities, cashflow, how diversified revenue streams are etc., and other things which you seem to be missing.
I'm not missing those things, I am not including them here because being "right" is rarely how markets value companies. (Also because the rest of that stuff is in the S-1.)
It's possible to build a "correct" model of a high-growth high-tech company that looks primarily at risk, liabilities, cashflow, and diversity of revenue streams. That model might put Anthropic at (say) a $100B valuation. That "correct" model is going to be less predictive than a model that starts from what similar firms are trading at in public markets. I personally am more interested in predictive power than correctness when evaluating stocks.
> I am saying benchmarking against peers is what investors commonly do.
You are benchmarking against an outlier stock with a cult following (Elon Musk) and diversified sources of revenue. Anthropic does not have either.
If it was as easy as comparing the hottest new IPO with Elon's companies and applying the same multiples, people wouldn't have lost so much money on electric car IPOs that pretended to be Tesla (see PSNY -99.5%; NKLA -99.99%; FSRNQ -99.99%; etc.).
> being "right" is rarely how markets value companies.
Conventional metrics are how most stocks are valued most of the time. What you want to say is that market can be exuberant sometimes. That's fair. When the exuberance goes away, valuations come back to earth (see PSNY -99.5%; NKLA -99.99%; FSRNQ -99.99%; etc.).
> That "correct" model is going to be less predictive than a model that starts from what similar firms are trading at in public markets.
Even if we take your statement at face value, you're still not doing it right. A valuation based on comparisons has to have more than 1 peer to compare against. Check out the multiples of other model providers listed on the stock market. You'll probably be shocked that it's not a double digit multiple of revenue.
And then, if you really want to have a proper model, isolate the AI revenues of SpaceX and other hyperscalers, then we can argue that you have a model worth something.
> You are benchmarking
Comparing != benchmarking. The only folks acting like anyone upthread is benchmarking to SpaceX are those who never made that comparison.
> You are benchmarking against an outlier stock with a cult following (Elon Musk) and diversified sources of revenue
So in this case, diversified revenue is a drag on SpaceX because all the non-AI revenue is growing considerably slower.
But your point about Musk is taken. Cerebras went out in May, and despite being a hardware company is trading at 37x sales. Palantir trades at 78x, CrowdStrike at 50x, Cloudflare at 47x, etc. Anthropic is growing significantly faster than any of those companies. I'm not making the case that Anthropic will/should trade at any of those, just that Anthropic trading in the range of the P/S of SpaceX would not be crazy, and it would not require Musk to be involved.
> A valuation based on comparisons has to have more than 1 peer to compare against
Yes, the best peers are "public pure play frontier model providers trading in the US." There are none. SpaceX is closest, despite not really being a frontier provider and definitely not a pure play. But you are correct that investors will use a basket of stocks. It is silly to suggest SpaceX will not be in that basket.
You absolutely can make an AI doomer basket to model Anthropic. Use "real infrastructure companies" as the connective tissue since AI wants to be infra. In your basket put Caterpillar, Kroger, The Southern Company, AT&T, Comcast, and ExxonMobil. You can absolutely make the argument that Anthropic should trade more like them than like CrowdStrike or Cloudflare, that is a coherent position. Then based on that infra peer group, calculate a valuation. I think this model will be much less accurate in the near term than a model that uses other high-growth tech companies.
Price discovery is part of the fun of IPOs! The doomer model could be right, the stock value could collapse toward irrelevance as fast as the exchange's circuit breakers will allow!
> So in this case, diversified revenue is a drag on SpaceX because all the non-AI revenue is growing considerably slower.
Your argument is like saying that having gearbox in a car is a drag on speed, why not remove it? Just take out the transmission and the windshield while you're at it too.
> Cerebras went out in May, and despite being a hardware company is trading at 37x sales. Palantir trades at 78x, CrowdStrike at 50x, Cloudflare at 47x
None of those companies are AI labs, you're just cherry picking random expensive stocks and doing the whole price/sales nonsense again. All of them have positive shareholder equity (Anthropic has shareholder deficit).
> But you are correct that investors will use a basket of stocks.
That's your approach, I was just quoting it.
> You absolutely can make an AI doomer basket to model Anthropic. Use "real infrastructure companies" as the connective tissue since AI wants to be infra. In your basket put Caterpillar, Kroger, The Southern Company, AT&T, Comcast, and ExxonMobil.
At this point you're either being silly or arguing in bad faith. Your best case scenario is for Anthropic to trade like a stock with cult-like following and your worst case scenario is for it to trade like a ketchup stock. Completely ignoring the most obvious tech companies that are traded publicly and also provide models of their own. This conversation became so absurd that it's not worth answering anymore.
The mental gymnastics you're doing here are appalling.
If your hyper growth startup does not have more liabilities than assets, it has fucked up.
>Modern IPO's just reek of investors cashing out
99.9999% of the time someone sells something, the goal is to obtain cash. Throughout all of human history.
Did they get it right? I'm geniunly curious because from my point of view the only company to get AI right so far is Microsoft. This is from the point of view of an EU energy company married to Microsoft services mind you, but Microsoft is the only AI company which actually sells AI to us in a manner that can be considered useful. 7 months ago I thought Copilot (the m365 one, not the github one) was useless. Now I think the chat part is as good as what you'll get on the smaller subscriptions to ChatGPT or Claude, and it's Cowork is very good.
Obviously it's not like having Claude Code or similar, but those would be very hard to run legally and safely in EU regulated industries like us in energy production. You could run Codex but it would require your IT department to have yet another place to manage security and software integrations. Which is a fairly big issue when you have around 1 IT staff member per 300 employees, and an organisation which will buy five different sharepoint solutions for the same problem.
Microsoft sells something that seamlessly integrates into everything else you buy from them. It's easy to manage credit spending and when I say that I don't mean that it's easy to set it up. It's easy to track and budget so the right departments pay for it. It can read your emails, your onedrive, your loop, your sharepoint, your powerbi/fabric and anything else you have access to. Sure it's annoying to be confronted with a point you've made 7 months ago (like how you think Copilot is utter trash) and since changed opinions on it's frightingly good at finding relevant stuff, even in some obscoure legal document on your intranet.
I assume that Anthropic and OpenAI makes money of this somehow, but for the most parts our users wouldn't care if it was the GPT and Claude models or Mistral or Deepseek. Which is why I asked if they had really gotten it right.
What fraction of coding opex do they need to capture to justify this, whether they got it right or not?
> Put another way Anthropic has committed 52 billion dollar a year to these companies and their S-1 indicates they earn 67.2B a year in revenue.
A very large part of that revenue is paying for inference. There’s not enough leftover for the committed outlays. So it has to come from smucks I mean investors.
These commitments are in large part the paying for inference..
Meanwhile the Chinese are going to undercut them every chance they get.
Today's prices are the ceiling. But AI capability is getting less of a scarce resource with every passing day and it would be a big mistake to plan that your current margins are going to be your future margins as well. Long terms AI will converge on energy costs + capex write-off + margin and the latter will be a race to the bottom.
The problem for me is that it's really hard to project what this industry is going to look like 6 months from now, let alone 6 years.
What's the endgame once the dust settles? Is it going to be a utility like water or electricity and the cheapest offer will prevail, in which case margins will be crushed? Or is Anthropic (or some other big AI lab) going to swallow everything and become the Google Search of LLMs, with everybody else fighting for scraps?
Or is it local compute, models becoming more efficient and hardware becoming cheaper (again) and companies hosting their own AI clusters like they would run SAP?
I think there is a plausible path where this valuation actually works out, but it's a narrow one IMO. I also want to acknowledge that I personally would prefer if it wasn't the case and a more distributed, open model prevailed.
I just look at technology over the last 50 years and see: decreasing prices, increasing capabilities. Barring temporary hiccups. Altman & co did a very smart thing by locking up the GPUs and the RAM, they effectively created a temporary near monopoly. At the same time: that incentivized the rest of the world to look more closely at efficiency negating some of the gains of that expense.
It's just like a utility with the slight difference that it can be sold at a distance without significant cost for transportation, in many ways it is the ultimate digital good. Unlike Spotify copyright is not an issue, unlike your electricity, gas, internet or water company there is no last mile problem. Unlike Google there are a ton of qualified contenders already (Google had to be better than Altavista, which wasn't hard, but they were so much better they managed to lock up search for long enough to cement their position).
Anthropic has none of the advantages and all of the disadvantages. On top of that all AI companies seem to be run by megalomaniacs.
> On top of that all AI companies seem to be run by megalomaniacs.
Not all of them. Only those who outspend all the others and then you never really hear of any others. It's like the most basic requirement for the job.
Fair. I know of at least one other though.
> On top of that all AI companies seem to be run by megalomaniacs.
Isn’t that what it takes though? Doesn’t startup culture celebrate this attitude?
> Doesn’t startup culture celebrate this attitude?
Some do, unfortunately. But that's not all of them.
Apple certainly did.
Are you speaking specifically to Apple's 6th CEO?
That's Steve Jobs for anyone who wants the answer to this vaguepost
You mean 'He who shall not be named' ?
> On top of that all AI companies seem to be run by megalomaniacs.
I think this might genuinely going to become a problem for them in the long run. People just absolutely hate their guts. That's a very strong motivator to do everything possible to get rid of them.
We'll of course see in 5-10 years if the doom PR will work out, but that always was a rather high-risk gamble, and it already looks like it might not.
There is a significant amount of businesses and people that are very willing to switch to literally anyone else just out of spite alone.
It's not necessarily spite as well, it goes without saying that international relations between the US and its allies have deteriorated to the point yet another critical dependency Washington can turn off for geopolitical reasons isn't a very attractive idea for many. While I dislike a lot of Anthropic's behaviour, it was not their actions but the fact their models were subject to export controls which really motivated me to not be dependent on US providers alone.
My country has no frontier models; since I've no national grounds to support one provider over another, a strong degree of provider diversity is an obvious benefit to me. I also think a highly competitive global market is a good thing for mankind in general, any hegemonic power having a monopolistic or oligopolistic position in AI provision is probably the 'bad ending' for most of us since it represents an enormous concentration of democratically unaccountable power regardless of the power which 'wins'. I'd argue it's rational, not spiteful to favour provider diversity on those grounds.
Even inside the US, many businesses are looking at local LLMs because they don't want to get caught by USGOV restricting access to "frontier" AI models.
I really don't see any situation where local AI doesn't absolutely eat the big labs' lunch. They can't compete and the only way it makes any sense for them to exist is if the government somehow tries to ban local AI, which likely wouldn't work in the first place.
That won't stop them from trying, and is exactly why you see all the fearmongering.
As a French person myself, I think this antipathy is less strong in non-English speaking countries, where the population (even if they understand English) is less exposed to the antisocial rants of these megalomaniac idiots.
Someone like me who spends a lot of time in the anglosphere puts faces on companies like OpenAI or Anthropic. I doubt that's true for most people, especially outside of the USA. They're just big companies, like 3M, DHL or Toyota. Who knows what the management of these companies think of the future of humankind?
I would expect than personality-driven rejection of American tech from abroad nowadays is driven mainly by Trump and, to a much lesser extent, Musk. Everybody else is just "some guy" to 99% of the population.
I'm not so sure if that assessment is true, but regardless of that, it also doesn't matter.
Decisions in tooling are not made by the 99% of the population, but a subset that is likely a lot more tuned-in to all this. After all, that is kinda their job so that they can make good decisions
Agree, but I don't think the 1% that make the decisions share our viewpoint. They like Musk, Altman, et al
Counterpoint: if that was the case, Musk and Thiel wouldn't as successful as they are.
Our modern capitalist societies are, at the very least, amoral.
But isn't that assessment mostly just looking at the 2010s and extrapolating from that?
And back then, the world was very different. ZIRP, cryptocurrencies, infinite highs, peak social media. All that stuff
> As a French person myself, I think this antipathy is less strong in non-English speaking countries, where the population (even if they understand English) is less exposed to the antisocial rants of these megalomaniac idiots.
German here, every stupid utterance of at least the orange clown makes national headlines here. Frankly I wish our populations were more exposed to the utter buffoonery of the rest of the American wannabe elites, maybe people would then not go and type their deepest fears into ChatGPT.
I know I'm just one person, but I absolutely detest all of the rhetoric coming from these companies and what it means for software freedom - the FSF kind. I ABHOR the idea that free software developers have to either use the hosted (controlled) service, or go way slower than proprietary software devs.
So I'm doing what I can - I only use local models for 100% of my personal coding. (And their capability is amazing! Qwen 3.8 Flash Next leaves me wanting for nothing at this point.)
And I know open weights aren't enough. I'm ready to support open training if/when we get around to that. I hope once hardware prices ease, we can see homelabbers building small AI hosts (small by homelab standards yknow. So let's say 512GB host ram and 1-2 32GB cards, though i hope we also start to see AI cards with lots of vram but less compute cores). Then maybe we can do folding@home style distributed training.
In a time when software freedom is perhaps more threatened than ever, I'm happy to see that information still WANTS to be free, perhaps even more than ever. Look at how easy it is to distill claude! Despite, presumably, anthropic working very hard to prevent it.
It's interesting, because licensing is based on copyright, and copyright doesn't apply to AI code.
In theory, things will become even more free, because you can copy whatever code you like, it's all in the public domain because it was all written by an AI (or enough of it was that a court will decide that copying the whole code base is fair).
And the ability of AI's to reverse-engineer binaries means that even hiding the code won't be enough.
Companies may write T&Cs that try to cover some of this, but they'll still have lost the biggest protection they have.
So, in theory, we move to what the FOSS movement have always wanted: all the code available, all the time, with anyone able to change whatever they like about the software they run.
Somehow I don't think anyone is going to be happy about this, though.
Homelabbers pooling would be a very nice thing to do and I would definitely consider joining in.
As a homelabber, that 5090 I bought a couple years ago for 2k just sold for 9k and I paid off my car.
Heh, good for you. It's insane. A friend of mine just got ripped off here (I posted about it the other day but it never got traction), he is a student and bought what he thought was a GPU but it was actually an empty shell with the GPU and the RAM removed from the board.
https://jacquesmattheij.com/beware-gpu-scammers/
Crazy times!
Congrats on getting rid of the debt, that's really a great feeling.
That really sucks. Sorry for your friend.
Yes, quite. He's a very nice guy, this was a robbery except that a useless piece of junk changed hands.
What are you using to host Qwen Flash Next right now?
Unsloth studio, on a server that I built in 2024 that was, at the time, ludicrously oversized, but is now just ok-sized to run the q4 quant of qwen flash next. (128GB ram, 16GB vram).
I really want to build something less scuffed, but, yknow. So I'm making do atm.
There were a bunch of high performance computing efforts from the 1990s and on where, if you could work out that you'd need 5 years of "today's" compute, you should obviously hang on to the money for 4 years, then spend it on the correspondingly improved hardware and finish the job in a under a year. I've been considering building a box to run OLMO (one of the only models with training data "that you wouldn't have to defend in court" as far as I can tell?) and even with Sam Altman's supply chain attack, stalling for bigger hardware still seems like the right path...
That's a very interesting take. Unfortunately I can't wait with anything so I'll just use what's available today. But still you had me wondering for a bit.
I don't hate them. They're doing amazing work, and I'd like to believe they're genuinely trying to do good for humanity. I just think it's dangerous for any group of people to think they can impose their morality on everyone (only Dario knows what's right and wrong in military actions, only one company in the world, welfare to the current models, humanity has 10% of chance of getting destroyed by AI, and etc). For that, I'd rather see open-weighted and hopefully even open-sourced models win
The only thing protecting America's AI industry is the cartel of hardware and embargoes against sharing resources. Once those are cracked, they have zero moat. We're talking 1's and 0's at the end of the day, not nuclear engineering or nuclear fusion or some other revolutionary way to increase the value of real property.
>not nuclear engineering or nuclear fusion or some other revolutionary way to increase the value of real property.
Is engineering the factories that make the hardware not nuclear engineering? Even if not, considering there exists only 1 supply chain in the world capable of making them, it seems pretty revolutionary. And that moat seems pretty big, given that it hasn't been crossed for many years.
This is a great analysis
The long-term is considerably easier because in the short-term there are limits on supply so prices aren't really able to move in a way where balance will be found.
In the long-term, the marginal cost of a request is zero so prices will plunge and a lot of the fixed investment will get stuck. The difference between the cost of training a model/infra and serving a request from that model is a clear problem for economics.
What happens with Anthropic specifically is less clear because they, as every company in the same position in the last 150 years has done, are going to push for regulation. A lot of the risk has also been shifted onto neoclouds. The value of the customer relationship is, however, effectively zero. A core part of their strategy has been to build stuff out like CC to differentiate that but, ultimately, that won't work.
The other strategy they have employed is trying to get other companies to stop training new models. Again, seems unlikely to work.
There is no scenario in which they become Google search outside of government intervention. Obviously this is a key part of their strategy now but at best, this will only work in the US and Europe (I would actually say they are much further along in Europe where there is a strong tendency towards corporatism and centralisation of power, they could be "Europe's AI").
The only thing regulatory capture in the USA will do is to improve the situation for the rest of the world to compete. I wonder how long it will take them to figure that one out, for all their smarts they seem to be incapable of reading a history book.
> improve the situation for the rest of the world to compete
The risk is that USA and China will come together on a joint "AI non-proliferation" agreement in the same way that nuclear technology became restricted by the countries that already had the capability. This will lead to a de facto techno-colonization of the rest of the world just between themselves.
This was a topic of discussion at Trump and Xi's AI summit just last month.
Neither Xi nor Trump are going to be able to make that stick. The cat is well out of the bag by now.
Nobody cares about hobby models running on a 5 year old GPU cluster in the basement. This is about industrial-scale AI which, to date, only USA and China have accomplished.
If you think that these are hobby models you are simply saying you haven't used them.
One of the largest legal services partnerships here in NL just launched their local DC so they can maintain confidentiality. Do you think they are 'running hobby models on 5 year old GPU clusters in the basement'? Or does a couple of racks of GB300's sound like maybe they know what they're doing after all?
That is microscopic scale compared to what we are talking about. From an investor and "market" perspective, the only AI that matters is the one that's built into every iPhone and Google Android phone, every car, every TV, every smart appliance. The AI models that power ships, planes, and all kinds of robotics. The frontier AI that services the energy grid, and even the smart homes and very structures that we dwell in.
This is all on the horizon. We are only barely scratching the surface and right now it is largely hobbyist having fun with it, but we already see the potential of the AI revolution and where it is going.
It matters from the perspective of tech dependency.
If a medium/small country deemed it a threat to rely on US/China for AI capabilities, they can get 95% of the utility by banning all American and Chinese models and just using local ones.
This contrasts to something like oil or nukes, where if you're not one of the countries blessed with them, you have a serious power imbalance.
Seems to me that from an investor perspective, the AI models built into the cars and TVs and other things are likely to be open source. I think long term, due to the high cost of training these models, there is going to be a "Linux of AI". I.e. some model that lots of companies collaborate on and then use for free.
The economic logic is the same as that of operating systems. AI models are very expensive for one company to make, but lots of companies need them. So companies are better off collaborating on that side of things and competing on something else.
Economically, the AI models that require big servers with lots of GPUs in data centers should likely be more interesting to investors than the AI models that can run on local hardware.
And then a random sun flare like in 1859 wipes it all out
https://en.wikipedia.org/wiki/Carrington_Event
Ah, the True Scotsman of 'hobby labs'.
It just doesn't really make much sense. It's way harder to stop a company in a country which hasn't signed it (not that the congress ever would sign a random document Trump and Xi come up with regardless...) from developing a model than from building nukes. Also if American and Chinese labs stop development it would make it cheaper and easier for others to catch up.
Although I agree inference will become cheap (probably not zero), it's quite possible that there is a moat they can build around understanding customer context.
With each query OpenAI and Anthropic get more context about their users. When I compare answers between AIs the ChatGPT answer often includes useful things it inferred from earlier conversations. Losing that context could be a meaningful barrier for a customer to switch to a cheaper service.
> With each query OpenAI and Anthropic get more context about their users.
Not unless they break their own TOS. The temptation must be very large to do so and is probably why those settings keep mysteriously shifting back to 'yes, I give all my data to you to do with as you please'.
I don't think that's what GP meant. I think the point is maybe they could build a moat by "knowing you" in a way that makes you care about using Claude rather than, say, Gemini.
I don't actually want them to know me. And if they build a file on me without telling me that's actionable under the GDPR.
Wild how even when humanity achieves a level of abundance there’s somehow a need from a few on wall st to create artificial scarcity.
They can't help themselves. They all saw that movie and figure they can be stars too.
The evidence we have so far points to LLMs becoming commodities. I can’t think of a technology in the last 30 years where so many companies are within ankle biting distance of the leader. There seems to be no data aggregation moat like with Google.
Distilling just works too well. It costs much more to aggregate the data in the first place and train the first model, but once that exists and you are selling access, the second guy can train their model by using the first model to generate the training data.
The only ways to fight this is trying to either: 1. Block it by cutting off access, which is pretty tough because it basically means you cannot offer unmonitored access which is a no-no to a lot of customers, and even then the workload looks very similar to actual real workloads and if the company doing the distilling is a bit sneaky and using intermediaries etc it's almost impossible to stop, or:
2. Try to use IP law to block the practice, which is pretty gross given how they got the data in the first place, and so far no court has supported them on this. And even if they can make it illegal, it won't actually help because there are countries that see having top-tier AI as a national priority and will actually support their companies breaking laws to get there.
People misunderstand why Anthropic is being so stingy about granting access to their top models. It's not some kind of marketing ploy, they know that if they release them fully openly then there will be a Chinese open-weights model in 3 months that is just as good. Also the reason why they try to hide chain-of-thought and the probability distributions.
> Distilling just works too well.
I don't think the evidence supports this claim. All the important capability gains now come from RL rollouts in real environments. You can't fake that by generating text from a teacher model. Anthropic makes a lot of noise about how China is distilling their models, but all Chinese labs can access is text outputs. They can't even get the logits. Now, compare all of the recent US open-weights models that are far behind the Chinese frontier. Why haven't they simply "distilled" all of those powerful open weight models that are available to them?
> the second guy can train their model by using the first model to generate the training data
Isn't this somewhat akin to a model learning from its own inputs? Doesn't that behavior lead to model collapse? Either the model is trained on pristine data, in which case it stagnates, or it's distilled from another model, which leads to model collapse.
I think the better analogy is kick-starting. Yes, you'd get model collapse eventually, but you can kick-start a new model by cloning an old one and then you start training it like a normal model from then on out.
Given Anthropic is basically just “distilling” the IP of others they’re in no position to cry foul when others run the same playbook on Anthropic IP. They can pound sand on that front.
Indeed, the hypocrisy is cringe worthy but the lack of proof makes it a transparent play to stop giving their users the ability to audit the token counts. "Here is your bill. You spent 20% more than last month, but we're not going to show you what you spent it on."
Anthropic has made a lot of noise about this but has not offered a shred of proof. CEO about to do IPO is not a trustworthy source.
> has not offered a shred of proof
Pardon me? You cannot be serious...
https://media.defense.gov/2026/Sep/08/2003992823/-1/-1/0/CSA...
You have a very low standard for proof.
Independent verification from non-aligned entities would be a minimum for something like this. Note how in spite of all of the claims not a single lawsuit has been filed.
These are more claims of the same kind from an aligned institution. There is no evidence offered.
You cannot believe intelligence agencies when they do not offer proof. Their job is to provide (reputationally but not factually) authoritative story lines that protect big business interests from competition overseas. Sometimes they protect US business by bombing their competitors.
The interface being arbitrary text makes the moat even looser. The cost of experimentation with alternatives is getting lower and lower.
It’s going to be hard for companies to justify paying $1000s per month to frontier providers when they see what’s doable with open versions.
multiple thousands per employee sure.... but you will be surprised how much non-compensation employee expenses can be
I think people often underestimate how far behind most of the competition is.
Isn't the first open model that likely surpasses original Mythos from February this week's Kimi K3.1 Pro?
Nothing compares to September's Opus 5.5 yet.
Now the question is whether Anthropic is preparing another phenomenal upgrade with Fable 5.5, or if the progress eventually slows down and competitors catch up.
It means nothing for the companies to compete in benchmarks if the consumers can't tell the difference.
The people that I've heard say that there is no practical difference between Opus 5.5 and DeepSeek often prefer an AI-assisted hands-on approach.
I've rarely heard the opinion that for heavy agentic work, Opus wasn't noticeably better.
I have a little different take..
Top models, capable of discovering and inventing stuff, held back from public, and available only as for-rent research service (or whatever the relevant bureaucratic term is) to big corporations and government agencies like NASA, DARPA, NSF, NIST, DOE, etc. only.
I have a feeling that we, the public, will stop getting access to more intelligent models starting next year.. i mean, not the incremental ones, but, major ones.. like the one you got going from opus 5 to opus 5.5.
The economics of that don't work out. Government is a small market and can't drive frontier innovation at the scale it's happening today, let alone in the future.
Look at the defense industry: The Big 5 contractors (Boeing, RTX, General Dynamics, Lockheed Martin, Northrop Grumman) capture most of the discretionary military budget, and the largest of them is in the $300B valuation range (Boeing, which has substantial non-government revenue). Fine businesses but nowhere near Anthropic's valuation.
Bottom line, the government doesn't have deep enough pockets.
I disagree. I think it does make sense the way it was described; top models for governments or industrial players with deep pockets, and "normal" models for the general public. None of the big 5 defense contractors sells directly to the wider public.
In fact, I'd assume this direction has been widely discussed and considered at Anthropic. I think Fable's release was an experiment to test this.
The biggest risks though are China and Moore's law. In the short term, if you don't offer a competitive model as the market grows, you fall behind in marketshare. Anthropic's edge is that it's offering is still better than Chinese offerings. If they offer anything less than that, something not better but just comparable for example, they lose on price. In the long term, as computing capacity continues to increase, local models potentially pose the same challenge.
So there's plenty of pressure for Anthropic to keep widely offering the best model they can.
Yeah, so long as China exists and wants to keep releasing open models, it's not feasible for Western labs to stop releasing frontier models to the people.
this suffers from the same prisoner's dilemma we already see at play. Any player can defect and in theory capture a "trillion dollar market". Once they IPO, then their service is to maximize (short term) shareholder value. Saying "we reject all the billions in recurring subscription revenue because we are hoping all AI providers will do the same, therefore creating a moat" isn't going to go over well.
The SOTA model dilemma is that you have to pay more and more to train models that focus on less and less of the AI task market, because 95% of tasks can be done by cheap small models.
I think GP's thesis is that selling only to the US government would preserve their moat by preventing distillation.
Also frees up more compute for recursive improvement, and gives them leverage over USG (makes regulatory & legal & other issues disappear) due to the frontier being significantly more effective for military use. There's a lot of chatter around distilled models being "close" to the frontier, but realistically they are optimized only to look good on benchmarks - and are still 6 months behind Anth / OAI models at that.
If the US government is a monopsony buyer, why would it choose to pay high prices?
Because (a) it prints money so why not and (b) the model actually has some capability it doesn't want anyone else to be able to access.
There is a good chance of that. This will incentivize the rest of the world. Keep in mind that the world is much larger than the USA, that the USA has alienated a lot of parties that were its allies and friends not that long ago and that there are far more talented people outside of the USA than in it. Silicon Valley had the world by the short and curlies and then Trump came along and pretty much burned it all down. It will take another decade to know how big the damage is but it is probably in the trillions of $ of lost income and that's before we get into intangibles.
I don't want to make this discussion politicized.. but man... Trump truly burned everything down that the US built over decades of hard work and careful planning. And these things are extremely difficult to build back, especially in a world like today's.
Politics is intertwined with economics and finance. Unless by politicized you meant inviting opinions unrelated to facts. What you stated is a fact. The part that is hard to divine is if there's a larger end goal that justifies the loss of trust.
At this point, the best guess is he plans to deflate the currency to make the debt worthless.
>best guess is he plans to deflate the currency to make the debt worthless
That might be the best possible intended outcome, but it also seems unlikely that Donald Trump and his government are involved in anything so far-sighted. Just look at the man's public behavior over the last year; either he is an incredible actor, or this is not a government where anyone in power cares about anything beyond the Big Man's whims of the moment and their personal benefit.
Donald Trump is a puppet for those with bigger around him, but because of his mania and dementia, it's like having to roll a d6 whenever you try to steer him. I think that unpredictability is part of the issue making it hard to extract what the long term play is.
There's also the incompetence of the ones with the longer term plans making whatever is played out more inscrutable. Although they have actually implemented a significant portion of project 2025.
I personally think it's really funny how if you were to try to reverse engineer his motivations based on the actual outcome, then the most likely answer is that he's a joint Chinese-Russian spy based on how much they've benefited from his elections.
I've never seen an individual that was so damaging to the country that democratically elected him. There are others that were as damaging but they were not elected or it wasn't during my lifetime. Trump is unique in that respect, more so because he did it twice.
I agree with you but as they say "markets have short memories". After the Ukraine war is over let's see how fast Europe goes back to Russian gas. They're making noises about it now (and parts never stopped).
The world is going to be very different in another two years.
yes, you are no longer trusted. Europe is lucky that the UK and France essentially told the US to fuck off when they tried to stop them developing their own nuclear deterrent. If they had, then right now the alliance between Russia and the US would put the whole of europe at risk of Putins Russia. As it is the French and UK capability is more than enough to counter the russian nuclear threat. As in we all fucking die if russia launches nukes, but it at leats lets russia know that too.
fuck trump and republicans. and yes whatever goodwill you had built up over the last 60 years was up and away like a fart in the wind when you elected a corrupt pedophile for the second time. And it cant be built back, ever. No one trusts you no to pull the rug if we became reliant on you again. What we will have though is a relationship with allies built on equality rather than one main player calling the shots.
the trust could in theory be built back if they would manage to dethrone him and his cronies, hold a Nuremberg-style trial leaving out no accomplice and reform their system and constitution in order to setup real guardrails that would reliably avoid this from happening ever again. This would require, among other things, to severely limit presidential powers, or better yet, switch to a parliamentary system with a "first minister", and abandon the two-party system in favor of a more democratic proportional multi-party one. Sadly I don't think these changes will ever happen.
This is pretty much it. I don't think anybody believes these changes will ever happen unless it gets much worse than it is today. I would not rule that out though and 'ever' is a long time.
I haven't been back since Trump I. Missed a funeral of a friend. I still have more friends on the other side of the Atlantic than I have in Europe, even so I don't think I will ever go there again. Enough is enough.
How is it not clear that LLMs are being increasingly commoditized and that the foundation model producers are in a bad race to the bottom with each other AND cheap open-weight competition?
Not even just from Chinese models, but from companies/labs like Mercury
Stop spreading lies - for most people they are.
E.g I know people in high finance who switched - they don’t need frontier for many tasks - Anthropic is getting jack all revenue from them.
If the tech improves massively - Anthropic still gets nothing - since firms will want on-prem or cloud offerings that ensure zero data leakage / IP.
You lot haven’t played this out.
I think you either grossly misread my comment or are responding to someone else, because my position seems to be pretty much the same as yours
I wouldn't bet on local compute. Even if it may end up cheaper in the long run, the convenience of just another SaaS subscription sure beats the high upfront const and continuous maintenance required with local deployments.
We've seen businesses moving everything to the cloud before AI, we'll see more of that as regulatory requirements are increasing.
The difference is you can get the same model from different providers so they compete on price and features (ZDR, security, fast inference). It's less like Netflix and more like Apple Music.
I agree that the SaaS solution will be a winner, but the price diff cannot be too big or it would be too economical to run it yourself.
I agree it's hard to predict.
It's very possible given the current environment that LLMs go the way of airlines. Low margin businesses that are essential to world economics with heavy price competition.
and airlines are still finding ways to enshittify. flights included meals, now you're (un)lucky if they include biscoff. and that'll be $50 to check a bag. I can't imagine how frustrating an enshittified LLM would be. hey - I noticed this is a finance-related query. those cost 100% more.
Variable token cost depending on context is definitely something that's coming if they manage to lock up the market.
It's going to be all about the training set. Theres no moat in models trained on internet data.
There are tons of private datasets where a model will be fine tuned to provide useful domain specific responses.
And this is why I think companies will wise up and stop sending their information to the likes of Anthropic and OpenAI: they will not be able to maintain their edge if either one of them decides to defect and start using all of their uploaded user data to improve the model. So they have a massive incentive to break their own TOS.
That's the push factor. The pull is, say there's a giant repo like windows or Adobe. LLMs produce spaghetti code because the repo doesnt fit in the context and it wasn't in the training set. If Adobe fine tuned it the LLM would be much more useful.
This will be the future model for businesses. Buy a generalized frontier model and finetune it and make it available internally. This model offers a lot more business benefits than the current risk.
I'm running a max of 1M context locally. I think the next real move will be continuous learning/infinite context. That will be another game changer.
Infinite context requires Infinite memory.
It wasn't a theoretical thing, it was a practical thing. Just like when we talk about 'infinite tape' when looking at Turing machines. As opposed to 'clear boundaries to how much context you can have because that is baked into the model'.
The idea that noisy usage data is worth that much for training as to balance the fatal risk of the crime you describe, imo borders on a conspiracy theory.
I am under the impression that curated training pipelines are driving the gains, not utilizing random usage data in nefarious ways.
>The problem for me is that it's really hard to project what this industry is going to look like 6 months from now, let alone 6 years.
i keep thinking how crazy it is we went from ChatGPT releasing in 2022 to multi-trillion IPOs 4 years later. the industry still hasn't agreed on how to generally use anything. crazy times ahead.
It's going to be "all of the above" because AI has a whole lot of use cases.
For certain AI use cases, AI will be like a utility. For other user cases you need to pay a premium for the frontier. For other use cases AI will be local.
Even in the industries you mention (water and electricity) you have all sorts of businesses. Like people selling water in fancy cans for a large markup or batteries vs wall power.
When google became the king of search the incumbents were so far behind that catching up wasnt possible and they thought their position was entrenched anyway. With LLMs openAI's competitors are at or close to their capability already and everyone knows they need to keep spending to remain relevant. So unless the cash pipeline dries up for competitors that is unlikely to happen. The reason for that is anyone who has invested knows that either they give up and hand everything to their competitors or someone else does. Which means you need to keep spending to outlast your competitors. These companies are too rich and there is too much VC money around and enough billionaires with more money than they and their descendants could spent in many lifetimes, and a huge amount of greed. If the money runs out that is because some very bad shit has occurred and LLMs will be the leats of our worries.
Google is a bad comparison because they arent charging money. People swap streaming services all the time, analogously.
>Is it going to be a utility like water or electricity and the cheapest offer will prevail
This
Like ISPs, right?
In the short term perhaps, but I like to think that unlike ISPs, this kind service isn't bound by network effects. You can't just "generate your own internet"; like it or not you have to connect to something. With time though I think it'll increasingly be possible and cost-effective to generate inference locally.
So like electricity, where most people will probably just use the network, but a few will opt to invest upfront and generate their own.
>> What's the endgame once the dust settles?
Given the trillion-dollar spend, the theory is that every many woman and child in the western world will devote a substantial portion of their income (like 5-10%) towards some sort of AI subscription.
or...
That doesn't happen. All the AI investments go south and every man woman and child in the western world will devote a substantial portion of their income (like 5-10%) to bailing out an economic system that went all-in on AI. Either way, the money has already been spent.
You left out one...
The already shaky economic system (and associated political systems) can't take the strain of every man woman and child in the western world devoting a substantial portion of their income (like 5-10%) to LLM fallout, and we end up with a collapse scenario of some sort. (Which, to be clear, is near-certain to be worse than either of the above.)
I don't see a path forward for valuations like Anthropic, either the hardware requirements fall off a cliff (and why would people pay Anthropic so much if it runs on a cheap laptop?) or either they don't and they will never have the capabilities to serve all their customers (and why would they be valued so much then?).
It's a lose/lose situation here for Anthropic (and OpenAI) whatever happens.
> Or is it local compute, models becoming more efficient and [...] companies hosting their own AI clusters like they would run SAP?
Already happening, which is requiring a lot of enterprise DC power retrofits.
> Or is Anthropic (or some other big AI lab) going to swallow everything and become the Google Search of LLMs, with everybody else fighting for scraps?
Of all scenarios, based on the data we have now, this seems to be the least likely one.
The Chinese labs are not providing their open-weight models for free because they think it is good for humanity. They are doing it because they are severely chip constrained due to the Nvidia and ASML embargos and all available GPUs have to go toward training with very little left for inference [1]. So they are giving their models away for US and EU hosts to serve inference in order to still have a presence in the market.
It's not a great position to be in and it will still take a long time for the compute gap to close. In the meantime, Anthropic, OpenAI, and Google are essentially unchallenged.
[1] https://www.konstantinpilz.com/posts-publications/chinese-st...
I don't particularly care why they do it, they do it. OpenAI is less open than the Chinese.
You should. Maybe they have it open now just to destroy competition and then they close it. Now you have a closed system, with no alternatives.
Besides...
"If passed, the rules would require Chinese companies to obtain licenses to export the core technology behind their leading models.
They would also ban the export of A.I. that can be used to launch cyberattacks, as well as models trained on what China calls “core data.” The government broadly defines that as data that concerns national security, the welfare of Chinese citizens and the public interest. Experts say the scope includes data on the military or critical infrastructure, state secrets and other sensitive information. "
So pretty soon they won't even "do it".
[1] https://www.nytimes.com/2026/10/21/world/asia/china-exports-...
> You should. Maybe they have it open now just to destroy competition and then they close it. Now you have a closed system, with no alternatives.
What makes you think there would be no alternatives, though?
Put it like this: Kimi K3.1 is downloadable and can be run locally. (If you have a datacenter.) This is a very capable, ~2.8T parameter model.
Now let's say that every Chinese firm goes closed in six months or a year and jacks up pricing... What's stopping a bunch of enterprising upstarts from updating all 2.8 trillion parameters, extending them, distilling the model into very competent flash models, or applying targeted RL?
Once the principles are understood and there are models that can be pulled off the open internet, it doesn't seem that hard to spin up your own LLM. You just need some financial resources and a reason for doing it. And that would come into play if the Chinese kill every closed American provider and then go closed themselves.
Training is really really expensive and open models are not getting funded by VCs. Distillation also doesn’t improve performance. Until training gets exponentially cheaper so that you can do it for a few hundred grand to train a competitive model, open models are labs trying to flood the market to get market share / undercut more successful labs, not a sustainable strategy that will extend indefinitely necessarily. It’s like claiming Uber and DoorDash are fantastic because their prices are so low - once they eat the market the prices become higher than ever.
Sure, but once they release an open model, it's open forever. You can download it, share it with friends, make a torrent, whatever. So in this sense every open model is a gift to the commons.
It's not quite like Uber. It's more like... well... imagine there are two computer operating systems, Gray and Teal. Gray is always slightly better, but it costs $50/user/month for a license. Teal is free. Eventually, when both happen to be in version 9.0, Teal puts Gray out of business. Starting from version 10.0, Teal starts charging $100/user/month from a license. But nothing's stopping you from sticking with 9.0, which remains free forever.
Perhaps what's "sustainable" is not clear, given that Gray was eventually dominated by Teal? In any case, versions 1.0-9.0 were, effectively, gifted to the public. We can appreciate (and even disapprove of) that commercial strategy while benefitting from its fruits.
Short term benefit for long term harm. You’re handing the power and clout to a hostile nation that is literally underwriting the competition’s ability to employ this strategy. Its economic warfare and you’re rooting for the away team. Even if you’re not an American, I’m not sure I’m convinced the scenario of Chinese dominance around AI is good for other countries.
>You’re handing the power and clout to a hostile nation
>Its economic warfare
You started the "economic warfare". You tried to turn them into enemies because you can't compete under the same conditions.
And don't you say anything about china competing unfairly, e.g. distilling etc. You looted, and continuously looting, the whole internet with 0 care. You are having a net negative impact on the internet as a whole currently. You are aggressively extracting value from things people gave away out of a good will, or just outright stealing and laundering the stolen knowledge.
>Short term benefit for long term harm.
Long term harm to who? Investors who gave money expecting an eventual monopoly?
And since when are we on the same side? Big american labs sure don't behave like allies to the general population.
> What makes you think there would be no alternatives, though?
There could be, they can actually come from open American companies too. Ask yourself why we aren't seeing a thousand or more American AI startups spring into life overnight to build "open" models. Follow the economics.
> What's stopping a bunch of enterprising upstarts from updating all 2.8 trillion parameters, extending them, distilling the model into very competent flash models, or applying targeted RL?
> And that would come into play if the Chinese kill every closed American provider and then go closed themselves.
What's stopping American or European tech companies from doing this today? It's economic and technical capability. I'm very suspicious of any suggestion that it is in any way not incredibly difficult to build and scale up LLMs. Maybe in the future it can be much easier, but in that case you run into a sort of tautology where it becomes easier but the leading companies continue to lead and do so by a significant margin because they're the ones that have the most talent and access to capital.
The premise seemed to be "an open China" versus a "closed USA". I'm not sure that's a great premise. If China can create open-weight models so can the US. If the US can close their models (as clearly evidenced by the article) so can the Chinese.
> What's stopping American or European tech companies from doing this today? It's economic and technical capability. I'm very suspicious of any suggestion that it is in any way not incredibly difficult to build and scale up LLMs.
Seems more economic than technical. If the economics are covered, the technical aspects seem straightforward enough, and may perhaps be fully solved. I think there's proof of this in that there are a lot of different LLMs on the market. Even Xiaomi -- in-between making cars, e-scooters, backpacks, and home appliances -- spun-up an exceptionally capable LLM! (And one which is rather idiosyncratic. It's weirdly good at music composition and generation, which both Opus and Astra cannot do.)
The economic case doesn't exist for VC-funded US corporations, nor does it exist for cash-strapped nonprofits. In China, all such ventures are likely funded by a government development bureau. If Chinese ventures kill expensive closed providers and universally go closed themselves, there's nothing stopping the US or Europe from copying that same playbook -- unless, as may well be the case, they're ideologically opposed to subsidizing strategic industries.
Explain to me how they're going to take back the weights they shipped?
They won't be useful in the future so they won't matter
They'll be just as useful as they are today. Which is plenty useful. Just like my 10 year old laptop is still useful. I could replace it, but why would I, it serves me well.
>They'll be just as useful as they are today
I mean how useful are GPT-3 weights today? That's the kind of useful they'll be relative to the frontier.
I feel like the so-called "Deepseek moment" broke too many people's brains and they've lost the ability to reason about why frontier advantages matter. I think we have to learn some new core concepts and rate of improvement over time is going to be a big one, and not understanding that causes people to exaggerate the significance of downstream distillation that's done in response to it. It's cheaper and open and that matters, but it's not the kind of mattering that replaces the relevance or advantage of the frontier, and I feel like I'm not seeing people demonstrate that they know how to really compare the relative merit of these two things so much as zoom in on one to talk past the other.
Even the original DeepSeek is old hat. The capabilities already released are game changers, whether you want to acknowledge that or not is not my affair.
I was using GPT-3 and the original Llama when they came out and realized that it is interesting, but not good enough - yet. But they are good enough now. And just like there are still people driving Renaults and Volkswagens the latest batch of open models will be useful for a long time to come.
So my whole previous comment was a plea to not do exactly this, namely, treat the example of open models like they somehow negate the value or strategic significance of having a model that leads at the frontier. I would submit that it's the core confusion behind the "Deepseek moment" and what it supposedly teaches about the relative strategic positions of different actors in the AI race.
> whether you want to acknowledge that or not is not my affair.
I felt I acknowledged it pretty explicitly. I said the likes of Deepseek are "cheaper and open and that matters", but it's the rest of that sentence that I think went without acknowledgment.
>And just like there are still people driving Renaults and Volkswagens the latest batch of open models will be useful for a long time to come.
Walking is great too! But you're not filling an economic need by selling walking to the masses, and those companies are marginalized and the economic destiny of the world is being set by those who own the infrastructure to build out the world's next generation of electric vehicles (at least in the automotive space).
I think you have to put up some facts to justify the assumption that uber-super-ultra-premium intelligence will continue to be significantly more economically valuable than boring old super-ultra-premium intelligence. Most things in reality have a point of saturation. The AI industry doesn't like to think about that; they prefer to make claims based on promises of infinite exponential growth.
I just disagree, I don't think your 10-year-old laptop is very useful either.
It's like sure yea you can access the Internet and tinker around or whatever, and with some old LLM model you can have it do fun things, but on a scale of absolute usefulness and if we include what people actually pay money for and what is highly adopted, your laptop and model are severely outdated and by and large irrelevant. That's why the iPhone sells like hotcakes all day every day and twice on Sunday and Apple is a $5 trillion company. Society disagrees with your measure of usefulness.
Sorry I'm rate limited since Dang thinks I'm arguing to much on political topics (he's probably right), but to answer a couple of questions regarding "my old technology does this one thing" you are conflating your personal and nostalgic uses for old hardware/software with what is useful for society or business. If the old hardware was still just as useful as the new hardware it would be used instead of the new hardware.
> I don't think your 10-year-old laptop is very useful either.
Technology never was about the tech an sich but about what you do with the tech. For one person that 10 year old laptop is useless, for another it is a source of $500K / year in income. You, the user are the biggest factor in how much value you can extract from the technology at your command. I'm not sure how much longer that will be true but it definitely is still true today.
The laptops generating income are the relevant metric here; most software developers would struggle with a 4GB Pentium these days. It matters to your company and your economy if your engineers can work.
Compared to laptop quality, I suspect model quality will be a much bigger competitive advantage in the tournament of the marketplace. High-quality laptops are still limited by the quality of the software developer.
> High-quality laptops are still limited by the quality of the software developer.
For now it is exactly the same with the models.
You're not wrong but the amount of leverage you get out of a better model dwarfs the leverage you get out of a better laptop. Almost to the point that these are different categories of thing.
Also... employment in some parts of the stack is genuinely going away. I don't even look at CSS anymore.
> the amount of leverage you get out of a better model dwarfs the leverage you get out of a better laptop
To some degree, yes. But 'dwarfs' isn't really the term I would use. It is a bit slower, but the upsides are >> than the downsides for me. Not having Sam, Dario or Xi's minions looking over my shoulder matters to me more than any technological edge.
> Also... employment in some parts of the stack is genuinely going away. I don't even look at CSS anymore.
Yes, that's a fact, but that's orthogonal. I haven't touched either HTML or CSS in a long time now and yet I've cobbled together (I wouldn't claim ownership) a lot of stuff that 'just works'. I also would not expose that stuff to the world at large because I suspect it isn't nearly as secure as it looks.
There is almost nothing you can do in CSS that has security implications. Not zero, but the footprint is small enough that I blindly trust the robots.
I pay attention to frontend code just to keep code quality up. Frontend work is relatively low stakes from a security perspective and I've never seen the robots do anything problematic. I don't vibe code React but I think you could get away with it today.
Backend is a totally different story.
That's still a lot of engineering getting displaced.
Im developing at home a fairly large data app on a 4x3GHz Athlon with 16GB RAM and a SSD disk with VS.NET + full Microsoft backend tooling.
The machine was bought in 2011 and it runs Windows Server.
I can do whatever I need with the device, apart from Gaming. Even YT works in 4k.
So, tell me now please why my 15 year old computer is not useful here?
My daily driver is a 10 year old laptop. Any computer built since Moores law plateaued is plenty capable.
Man you are pushing so hard to the point of cringe.
My macbook is 5 yrs old and Im a big tech guy. Tech matures. It doesn't grow forever. You live in delululand bro.
They're already useful. People are shipping real products with them.
Also, it's entirely plausible that an previously open model (that then became closed) will be much easier to distill than having a bunch of closed models.
why would i even care, if what's currently provided is better than good enough, and can be extended in post training / augmented with search?
So at worst the Chinese models would do what the US models already do??
Note that only one country has so far banned foreigners from using their models, and it wasn’t China.
When you're not in the lead, your best strategic move is to neutralize trade secrets advantages of the leaders. I think a strategic approach is being misinterpreted as a demonstration of virtuous ethos, which is crazy given (as the other commenter mentioned) the norm of secrecy when it strategically suitable in basically every other context.
China bans all sorts of things, so this doesn't really matter. I actually view it as a good thing. Americans get the best access to the best technology and we can go on to use it to maintain or gain a leading edge in the progress of our society and businesses. Why would we want to give that away for free so people from countries like Russia or China can build competing companies or use these tools to undermine our society's aspirations?
"The Chinese labs are not providing their open-weight models for free because they think it is good for humanity. "
Neither do Anthropic and OpenAI.
neither did google or any other american company did open source anything for the greater good there is no point in this comment.
I think the point is cope
> for free because they think it is good for humanity
I like Qwen as much as the next person, but that's a bit to credulous. Those models would not get the compute allocation nor distribution they do if it was not aligned with broader policy.
How long until China has its own chips?
It's a shame "AI" cannot be made to run on bitcoin mining dedicated hardware because they mastered that in only a few years
> How long until China has its own chips?
There are dozens of Chinese domestic AI accelerators: Huawei, Alibaba, and Baidu all have chips, there are a bunch of smaller startups too. The chinese mainland is behind on leading edge fabrication though, SMIC only does ~7nm class since they don't have EUV.
This might just be the thing that tips the scales in China deciding invasion of Taiwan is worth the risk. They're eying the Russian war warily though, if they can keep the United States distracted long enough and the EU at bay by continuing to bankroll Putin then they just might risk it. The window for that is closing though.
USA isn't paying close to $1 trillion to strategically re-home TSMC to Arizona for no reason.
https://en.wikipedia.org/wiki/TSMC_Arizona
Unless you were sarcastic: it absolutely can. Try finding a 170 for a reasonable price.
Heh, TIL
In case you're wondering as well:
https://wccftech.com/nvidia-cmp-170hx-8-10-gb-prices-explode...
It restores firmware features related to RAM, PCI-e speeds, BAR size, VFIO...
https://github.com/amoghmunikote/cmpunlocker
The online crowd harping on about Chinese models is disconnected from reality imo.
I won't use a Chinese model. Why would i bother? I pay $100/m for the frontier model, understanding it's marginally better than much cheaper alternatives. I get so much value from the product it's not worth shopping around
Think of it like apple and android. Plenty of people pay 2k for their iPhone every few years when android at 1/4 the price is just as functional. Why? Because they get so much excess value from the device it's not worth shopping around. For most people it's their only personal computer. From booking airfare, to filling out their kids permission slips, it's a device they use 10+ hours a week. They don't bother, until a paradigm shift happens and something is 10x better than the iPhone. I imagine llms will follow the same trajectory
You aren't paying API prices. Anthropic (or OpenAI, SpaceX, etc) are almost certainly losing money on your subscription. How long they'll be able to continue to subsidize your usage is an open question, but they definitely won't be able to do it with everyone (currently, their solution is to make enterprise users pay per token, but that might change). What that means is that for the customers that the frontier labs need to be profitable, going with a closed weight provider isn't "marginally better intelligence for marginally higher (or even lower) prices" but "marginally better intelligence for much higher prices".
This.
I get (sometimes) frustrated with people that don't work in the tech industry over this concept, and having them rationalize that their usage is heavily subsidized by the distributor of the model.
The costs in compute, electricity, cooling, etc. per token is much higher than most people (I feel) who work in the industry realize. Which, cognitively makes sense: they just want the 'magic 8-ball' to give them a tasty dinner recipe that meets their specifications, for example, and don't care how the 'sausage' is made.
However, economies generally equalize with supply and demand, and this (most likely) will become cheaper as the technology progresses and optimization passes/new algorithms are discovered.
If you look at what it costs to serve Kimi K3, the exact opposite of what you claimed is the case.
It seems likely that Anthropic and OpenAI's inference margins on API prices are >95%.
That also casts doubt on the parent's claim that subscriptions are subsidized. It rather seems almost certain that they are overall generating profit.
Exactly, like it has done in cycle after cycle in the past. It would be very naive to assume that once you have a moat it will stay that way with a thing like this.
Unless new data has come out, we don’t know if they are losing money on subscriptions. We know that there is a big difference between subscription and API costs per token, but that alone doesn’t mean much. Subscriptions may be underutilized, or margins on API tokens may be very high. Both are probably true.
You are not the real consumer though. The real consumer is API, inside of products ingesting vast amounts of data at scale.
My last role swapping from Haiku/Sonnet to GLM dropped costs by 90-95% and increased quality.
Money talks.
Most of sp500 companies are never going to use chinese models.
Why not?
I can understand that they might be cautious about sharing their data with a Chinese company.
But them being the most successful companies means that they can just buy their own hardware. And run whatever models they can get their hands on in there.
Even if those models are Chinese. They (the companies running them on their own hardware) would be in full control then.
I would happily bet that > 50% are already doing just that. Whether you'll be able to collect the data is another thing but they'd be fairly stupid if they haven't at least checked out what is available. It would be next to irresponsible not to do so and given that they're in the S&P 500 you would have to at least give them some credit.
We already have data! Look at market share measured by tokens not revenues.
I work in one of sp5 and I use chinese models :-D
do you guys self host those models?
yes
Only because anthropic&co will price themselves just below the cap where people contemplated switching. In so, the Chinese models still set a sort of cap on the prices they can charge, even if not directly.
depends on the framing.
if the chinese models have this aura of inferior quality around them, then sure.
if they manage to frame it instead as open source, sovereign AI, the calculus changes.
It's not about quality, but more about processes, for example we handle EU, US personal, financial data etc, we have strict rules about it (company rules, and gov ones), and there is no place for chinese model here.
You dont understand it, its open you can host in USA
For now, there’s definitely some resistance because people don’t understand models can’t phone home (only the servers they’re hosted on).
But I don’t think this will be the first time in history that money doesn’t win.
They absolutely can, it's just a matter of proper incentives (https://news.ycombinator.com/item?id=50159245).
> models can’t phone home
Models with tool access (and internet-connected tools like curl) can, though… is this really a useful distinction?
It is. Harnesses do not need to give LLMs such broad tools like the shell.
Yes, because you can run a chinese model on a USA server. The fact that it's a chinese model means nothing.
Yeah. People have very strange ideas about competition and choice and moat. If all you needed to unseat the entrenched was a competitor then Bing would be going toe to toe with Google, and Edge with Chrome. They have a billion+ devices they can stick those options as defaults and still nothing. There are many examples.
People are naturally sticky. If they're satisfied with a product, they'll stick around unless something comes along that is so much better it gets people talking. Open AI's 1B+ customers won't give a shit about Chinese models. Enterprise customers won't move to Chinese models, especially just to save money. They are a non issue, especially if the M.O is just going to be playing catch-up.
You're wrong. Are you sticky about your search engine? Now try having your search engine charge you $100 a month and tell me you'd stick with google search. Open AI's 1B+ customers will give quite the shit about cost if chatgpt stops being free.
They're sticky, but not for everything. There are common goods where the market has commoditized greatly because customers are conscious of quality and not provenance. Something like apples.
Most people buy their apples from the same grocery store every week. They're not shopping around every month to find who has the cheapest apples or 'best' apples. They go where they're accustomed to going, and as long as price and quality are satisfactory, they have little reason to change. Walmart, price-sensitive as they are, have relationships with fruit suppliers they've maintained for well on a decade. Even in commoditized markets, people are sticky.
Google, the titan mega-corp with more money than they know what to do with and a billion+ android devices to ship gemini on and it's made no dent for ChatGPT's consumer growth and adoption. Yet some plucky open source chinese models will?. It takes more than that.
look at mr. richie rich here, bragging that he doesn't have to shop around to find the cheap apples
I'm not rich and you don't have to be rich.
The big big difference is that you dont pay directly for google. Paying per token is more akin to going grocery shopping.
Why wouldn't they give a shit about Chinese models? TikTok isn't even THAT much better than Instagram.
Yes it is. Tiktok's content and content recommendation algorithms are much better than Instagram. Users spend more time on Tiktok than they do Instagram and it's not close. Tiktok's engagement rates are several times better than Instagram. Reels did nothing to dent it (yet another example in the book). Again, nobody will care about Chinese models if they're just more of the same. They can take a piece of the pie, but this idea that they'll spell doom for the frontier labs is nonsense.
At $100 / month (or $1200 / year) it may not be worth it, for you. But many of us would be spending a (large) multiple of that and then thinking about how much you spend, where you spend it and who you spend it on can make a big difference. For companies there are other considerations at play as well, for instance trust.
People buy iphones due to network effect, android was late to the RCS game and now it's a moot point anyway.
How many people use an iPhone to its maximum? Isn't it the same with models? I think engineer's like to flex that they need a top of the line frontier model for their shitty corp projects. A Chinese model will write your Jenkinsfile just fine.
First off, $2k is the price of the new iPhone Duo. Suggesting that that is basically the same thing as a $500 Android phone is... strange.
But also, I don't think you should use individual consumer behavior as a proxy for how the overall LLM market behaves. Current estimates are that individual users represent a pretty small share of overall genai revenue. Most of it comes from enterprise contracts. Those might be more price sensitive because the CFO gets a say in which vendor they choose.
For a couple years now I've been accustomed to choice of foundation model being a heavily scrutinized design decision because it's just about the easiest way to manage COGS. I can certainly imagine scenarios where, given the option to pay 1/2 as much in inference costs but with a 5% reduction in output quality, the boss would say, "Nah, that's a bad deal." But I have yet to encounter one in the wild.
> First off, $2k is the price of the new iPhone Duo. Suggesting that that is basically the same thing as a $500 Android phone is... strange.
Okay fine, it's $1,400 for a latest iPhone Pro with 512gb of storage. Point still stands.
> Most of it comes from enterprise contracts. Those might be more price sensitive because the CFO gets a say in which vendor they choose.
I think enterprise contracts are even less sensitive to price than consumer. That's the whole idea behind enterprise pricing. You'll see companies charge multiple times as much just for SSO for instance.
There are limits to this obviously, but to think that major commercial enterprises will switch over to some Chinese models to save some money is laughable.
> Okay fine, it's $1,400 for a latest iPhone Pro with 512gb of storage. Point still stands.
So you switched away from the specialty product, but you're still comparing a top of the line 6.3 inch iPhone to a mid-market Android phone. Why not compare it to a Pixel 11 Pro with 512GB. That way they're at least comparable devices. But also, that would cost $1,220, which I suppose doesn't go well with the intent of suggesting iPhones are several times as expensive as Android phones.
The reason why I'm digging in on this is, when you start your argument with such a transparently silly comparison, it gives the impression that you're dealing in superlatives and willing to say just any old thing. Which undermines your own credibility.
So, getting back to corporate - multiple times how much for SSO? Okta Essentials is $17/user/month, which is a little over half as much as the base price for Cursor Pro, and about 2/3 the price of a basic ChatGPT seat.
The whole point of the comparison was that people pay $1500 for an iPhone while a $500 Android phone could theoretically provide much of the same experience for a fraction of the price.
Comparing two devices at the highest price point is besides the point.
tbh iPhone genuinely doesn't have anything over chinese models, and if there is any illusory sense of privacy, that is purely marketing. Genuinely people thinking iPhone is anywhere close to worth it lose respect because they are at the end of the day just tribes that love one thing
lol you created an account just to rail on iPhone tribalism? I wish people would realize that you can have multiple smartphones, and there is no one correct path.
I spend extra on a smartphone because I use the thing all the time, see it all the time, hold it in my hand all the time, it's my camera, music player, note taker and so on.
For AI? Prompt comes in, tokens come out. The value of the 'ecosystem' is roughly zero to me. Switching costs between models are essentially zero. The UI and UX is the same whichever LLM runs underneath.
If you do use llm some, then the $20 tier makes sense, but that's not where the money is. If you use it a lot then a $100 sub probably makes sense. But if you're a BigCo that heavily uses it and pay API prices and suddenly you pay $200 million a month, well, maybe it's worth buying a bunch of hardware and stick it in a basement somewhere, and you won't upload all your secrets to your future competitor to boot. If US labs didn't care about the competition from Chinese models they wouldn't lobby so hard for banning the evil, unaligned, super dangerous communist models that want to steal our freedoms and make our gas expensive.
Ultra-cheap models like Deepseek are also very nice if you need to burn billions and billions of tokens.
But if you’re a heavy user you’re probably paying $100 for something that costs $1,000. Hence Anthropic’s problem. If they charged real prices to the masses the massses would flee.
Because the $100/m fee they're charging is only there because Chinese models will undercut them if they try to raise it further.
There's been a headline circlulating lately: 80% of Anthropic's revenue comes from 1% of their customers. The $100/mo or however much individuals are paying doesn't seem to be material.
That would be extremely bad news for them. Unless that 1% is captive, then it's a different story.
I was playing around with OpenCode on Omarchy over the weekend, working on my Android app, and was struggling to spend a single dollar with DeepSeek. The quality difference from the frontier models I use at work was hardly noticeable (where I typically rack up at least a few hundred dollars per month).
LLMs are not a luxury brand that individuals buy. Companies are always looking to save money. And their enterprise consumers are all developing their own models, so idk where you are getting this "analogy" from.
Your opinions do not reflect the market and the motivations of its participants.
When the chinese or any other party releases a model that is Opus 5.5 level, there might be a shift to other providers as especially people in the EU are trying to get rid of their dependency on american stuff.
100/m for a subscription is a lot of money to most people. Like people who don't have a SWE salary.
The $100/month guy for inference isn’t the prize. It’s the thousands of companies spending millions/month.
It’s not unusual for someone to spend $5k in a week. 2 guys at my place just spend $150,000 over 3 months building out a factory.
We are aggressively exploring open weight models now.
Wish there were more case studies on what people were actually doing. Building out an entire factory sounds amazing. Are they actually getting that level of value out of AI?
Sounds like this will be another one of those things where everyone makes their money and it then will eventually become something experienced people 'blog' about.
> Wish there were more case studies on what people were actually doing. Building out an entire factory sounds amazing. Are they actually getting that level of value out of AI?
I don't doubt it.
> Sounds like this will be another one of those things where everyone makes their money and it then will eventually become something experienced people 'blog' about.
Or not. The problem is that right now you and a whole bunch of others are trying to outrun a pack of lions. The lions have already taken down a couple of your group. The people further ahead have seen what the lions can do and they are attempting to speed up to the point that they can outrun them. Whether that will work or not depends to a large degree on what the other people are doing and they are not going to make it easier for them to keep pace.
That partially explains the lack of deep insight blog posts, besides everybody is just too bloody busy.
They probably meant a software factory, ie a way to churn out slopware.
Yes. And yes you can churn slop. And I’m sure many will and many will get stuck with a source base that grows bigger than LLMs can cope with and becomes unmaintainable.
But you can also have many engineers operating it, testing outputs like you would in a real factory, etc.
Will be interesting to see how this pattern evolves. If it even makes sense.
I have to admit I don't know exactly what a software factory is, but I can't imagine AI putting out good software without human involvement right now.
Don’t know why this was downvoted but basically correct. OpenAI is in a price war with Anthropic right now for enterprise api consumers and that’s the biggest revenue line item for both.
They were counting on a duopoly so they could split the market between them but then someone decided to spoil their little party. To what degree that was an accident is anybody's guess but the timing is certainly interesting.
Consumer AI is going to be paid with privacy, not money. CFOs don't pay 2k iPhones for their employees.
Competition is the only reason you can pay 100$ a month for like 4000$ worth of API credits.
That's a great way of putting it and something I have come to realize as well. I'd rather just pay for the frontier model if I trust that it is indeed at the frontier and works reliably. Same with the iphone.
Anthropic doesn't care about sub users. At all. The real target is pay pig enterprises that give their employees access to the API and allows them to go buck wild spending $1000 on fable in a day.
> Anthropic doesn't care about sub users. At all.
If that were true, they would cancel subs and save themselves the load.
Yet that hasn't happened. So they must care to some extent.
Okay, I mean outside of the good PR reasons and as a hook for getting companies onto the API.
I thought you would have also mentioned the use they make of data collected from loss leader subscribers, from at least those that don't disable collection.
With that, there are at least three distinct reasons to care about subs: PR, hook and training data.
It's really marginally better and in some cases actually worse. If 100 dollars is throwaway money for you, and prices don't increase sure why switch. For heavier users, and for people with less money(most of America is struggling with bills and food) it's not attractive at all.
> Why would i bother? I pay $100/m for the frontier model, understanding it's marginally better than much cheaper alternatives. I get so much value from the product it's not worth shopping around
Wait until you are forced onto an enterprise plan...
The LLMs don't have the moat that Apple has. Apple has carefully built their walled garden to keep people in. Their messaging, their cloud services, their media store, it all keeps users in.
LLMs don't have that. For at least 90% of users, the model in the back end is completely irrelevant to them. Switching to Kimi won't lose them their iTunes music.
Exactly. I can switch models in between toolcalls if I want to. There is no barrier to switching unless you erect one yourself.
Apple’s walled garden is akin to a modern day work of Michaelangelo.
It’s pure genius. There’s a lot of bozo’s here who cannot appreciate it and cry about fairness.
You won’t use a Chinese model, and I won’t either. But both of our bosses have much higher incentives than we do to routinely shop around, and unlike us they can convince an Anthropic sales rep to give them a discount.
The idea that firms forgo profit is crazy.
Many here don’t understand corporate finance do they? Hence the marketing hopium to fool people.
How many Astroturfers and Anthropic employees are here to convince us otherwise?
"I am spending a provably untenable amount for a services that will have to degrade to meet my price point, the cheaper options and processes are beneath me"
I think you’re right - it’ll be interesting to see how the behemoths navigate when new and cheaper memory manufacturing capacity comes online. Currently predicted to happen starting 2028. That is where most of the current hardware costs are concentrated.
On that front, I think DeepSeek is a dark horse. They are really odd - not chasing revenue, care more about unit profitability, are obsessed with driving down costs (like Elon back in the day). As the founder says, they are content with where they are, being the model that does 80% for a fraction of the cost.
I mention them because they are playing a different game and might be able to out-innovate everyone else.
Deepseek has been a game changer for me. I don't use them right now but the model is very capable.
What a lot of people don't seem to realize is how much of the edge of the 'frontier' is in the tooling, the prompts and the harness. The LLMs themselves are already all reasonably close if you keep all the other stuff constant. Sure, one will have an edge in one domain or another. But that edge mostly translates to a degree of performance rather than some absolute. And if you allow for a few more toolcalls, a web search or a longer context then that difference is much smaller than it might seem at first glance.
The calculus may be that DeepSeek (or similar) + human is good enough and that the frontier simply won’t have the growth to get to the next level that differentiates them and justifies the token cost. They get stuck in a race to the bottom which is opposite of what they want.
Anthropic is not in the model business. They were smart and they are building productivity ecosystem business. Look at what claude artifacts are doing now -- inline multi-user editing, comments that users and/or models can respond and take action on, import/export from all common formats. It's at least a Google Docs killer if not an M365 killer.
And claude code as a harness and skill/plugin/mcp ecosystem is far more valuable than any one model.
And coward for long-running tasks, though they're slipping on that one because they're really trying hard not to make Claude an assistant. We'll see if they react to Muse and change course.
But the Chinese free-weight models? Not a competitor. If/when those companies (or others) build vertically integrated productivity stacks on those free models, then we'll talk. Microsoft certainly saw that opportunity but couldn't get out of their own way and are basically roadkill at this point.
I have a hard time believing that making “a really good harness” justifies pre-ordering half the world’s GPU compute for years in advance.
It doesn't. But it did stop a lot of other projects in their tracks because the hardware cost suddenly more than doubled.
Did you really read me whole comment and come way with "a really good harness"?
>Anthropic is not in the model business. They were smart and they are building productivity ecosystem business... It's at least a Google Docs killer if not an M365 killer.
Google Workspace revenues are something like $25bn/q, and that's the entire workspace division, (including enterprise gmail sales, so the productivity suite is meaningfully smaller than that figure). It's taken Google a long time to carve that slice out of Microsoft's entrenched market position. It's not small money, but they'd basically be going to war with two of the largest and most profitable companies in history on their turf.
I don't think they can credibly take that business plan to the market and say it'll be worth $1.75tn. They're all-or-nothing on being in the model business, and everything else is superfluous.
What do you think Google Workspace would sell for, if Google divested?
$100B/year in revenue; SaaS so call it 70% gross margin, 30% net, NPV is about $500B.
Not enough if you think that's the only revenue Anthropic could every have. But even if they only peel off $100B NPV, it's incremental to an IPO valuation.
>claude code
The same one that leaked itself a few months ago?
The same way a source code leak of M365 would totally wipe out its revenue?
M365 is a terrible example
Hard to argue with that level of depth
Not everything needs to be an argument, and regardless you didn't change my mind
The value is in the harness! The harness leaked itself
I mean, a lot of people before them were "not in the model business" (Cursor et al) and it seems they got disintermediated by the model companies. Step 1 is still to have the best model, or hope for model progress to taper out.
Vertical integration is hugely valuable, but revenue comes from the top of the stack, not the bottom.
Apple makes great margins on hardware. They are 100% not in the CNC milling business. But their investments at that low level and vertical integration allow for higher margins at the top.
Cursor had... nothing. A minor, indefensible value add to a much larger and wealthier supplier.
> or hope for model progress to taper out
No, that would kill them for sure. Or did you mean 'open model progress'?
Are today's prices actually the ceiling? OpenAI added a $500 tier pretty recently while lowering capacity for their $200 tier. I wouldn't be surprised to see Anthropic doing something similar soon, particularly once they are a publicly traded company beholden to making shareholders happy.
i think when people say today’s prices they do not mean subscription tier, they mean the enterprise paying 10M+
as a person, i would absolutely not pay more than $1K for ai, because at that point i can just get myself a bartening job
Even outside of the Chinese models, Amazon, Google, Microsoft, Meta all of them are offering significantly more coherent and competitive internal models and reasonable price.
Why would I pick anthropic.
What's it like co-editing a combo document/workflow with multiple coworkers and an AI agent on Amazon, Google, Microsoft, or Meta?
Like if you want to design a survey you can send out, and collaboratively edit and test the survey, ask for changes in layout, wording, etc, and design the statistical analysis to be used, before sending the survey out where end users can fill it out right in the doc, while internal users/admins can ask the agent about its results?
Honest question -- that all works pretty well in claude. Amazon, Google, Microsoft, Meta all pretty similar?
Yes, and We have done it. We are a startup and we build a IM to replace slack. All agents and humans in the same channel.
you know what i miss? when slack didn’t exist. when it was perfectly acceptable to wait 2 business days to respond to someones fuckass email
Cloud compute has managed to have pretty good margins. That seems like a really similar business model to what Anthropic is doing - inferene+value-adds as-a-service. Why wouldn't they also be able to get cloud level margins or a bit higher?
Lots of people seem to have pretty short memories (or are too young to have seen it), but the flight from "local service" to "cloud service" was intense.
Companies don't mind paying extra to have a another company that does nothing but said thing do said thing for them. It even actually often ends up being cheaper/more profitable.
I don't think AI will be able to sustain cloud compute-size margins. Inference is a commodity and value-adds can't be sold for anything. Why pay for an advanced harness when you can just ask the model to build one for you?
Observing SaaS vs using an open source stack in the beforetimes, the answer might be some combination of, "So I never have to think about it, and if anything goes wrong, no one can blame us because we went with the biggest & most trusted provider."
Already well documented that there is huge variance in inference serving efficiency; at every layer (model, software, hardware) you have opportunities for gains. Similar to how “the Chinese” haven’t undercut on cloud providers’ CPU offerings, there’s a very good argument that the hyperscalers will manage to keep their vertically integrated hardware/software edge here too.
I don’t really know where this commodification idea came from, maybe MBA types that don’t actually understand how cloud economics work, applying basic first principles analysis?
The operational engineering that goes into serving a frontier model is _highly_ nontrivial, it is not commodifiable. This isn’t a SPA application.
>The operational engineering that goes into serving a frontier model is _highly_ nontrivial, it is not commodifiable. This isn’t a SPA application.
I don't really see it frankly. Admittedly I never tried it (I only played a bit with local models) but conceptually how is it much harder than all the other cloud services that already exist? My educated guess is that building a competitor to Netflix, Youtube or Dropbox seem technically a lot harder to get running than offering inference on demand for instance.
It seems that the main barrier for competing in that market at the moment is getting your hands on the GPUs/RAM and a datacenter to put them in.
> Similar to how “the Chinese” haven’t undercut on cloud providers’ CPU offerings
No Western company will be allowed to choose a Chinese cloud provider by their legal department or by their stakeholders. Which leaves only the US cloud providers as viable sources (as us, Europeans, have been too busy building our revenues based on turism and other such non-tech thingies instead of building real stuff).
Today’s prices are a ceiling for today’s capabilities, but not at all a ceiling in general. One could imagine dramatically higher spend for dramatically higher performance.
idk what is this you people do, but most of my day is not spent on writing code. most of my day is spent in meetings abt budgets, timelines, evaluations, compliance and marketing. i don’t think ai is going to automate corporate circus anytime soon
That depends on whether "frontier" models can maintain an expanding frontier. If the frontier settles, they're dead, and it will be commoditized. Otherwise, there are still plenty of pathological behaviors of these things to address that will keep expanding that frontier (if that's possible and the limitation isn't the approach itself).
The reception of saying things like this is interesting. AI stans think I'm way too pessimistic but AI haters think I'm mindlessly optimistic.
there is no point of saying 'the chinese' everyone will do it because it was proven that any political frills might cause an attempt to damage your system.
I dont know when, but i think if you keep menacing of taking technology of people hands for any political reason will be a reason for people to not use it or to rely in a more reasonable party.
The point in mentioning the Chinese is that they are doing this today. In Europe there is Mistral but I think they're too far behind the frontier to really matter but in time they may catch up.
Agree. I think slowly companies and governments are ditching US tech. Many companies relied on US tech rather than Chinese with worried of CCP intervention and now it is clear that it will be the same with US tech.
I understand that US is migrating to a no friends policy, but I don't think its internal market is nearly ready to support it if clients start to go away.
Anecdotally, I talked to people in a recent event and the common topic was "what we are doing to avoid a blackout of US tech." People on big companies have reserved hardware and alternative software and are scaling down Amazon and Microsoft solutions at a fast pace. People on smaller companies are doing similar strategies but relying on a multivendor strategy.
I think this was inconceivable 3 years ago. Every company in Europe and Asian would gladly pay for amazon for cloud services and now they are using AI to migrate out the lock-ins.
We are seeing American LLM companies more and more relying on "secretive" methods to increase scores and this can only mean that they are not evolving fast enough. The gaps between the reported benchmarks and measured ones are increasing. It might be "safety" concerns or whatever, but I don't buy it.
Like Musk, Altman and Amodei have been overpromising every time they need more money and each time they need more money and now they internet is poisoned with their own content and they can't even trust any sources anymore.
> Today's prices are the ceiling.
Why? I don't see any reason for that to be the case.
what you mean why? most companies with spare cash payed 10-50x what they actually need in tokens, just to see how it goes. it’s useful, it’s not that useful, so while the price per token can increase, everyone is getting smarter about spend. and even price has a limit, you can’t make ai more expensive than a human, because then everyone would just hire humans.
I don't think today's prices are the ceiling, considering they are subsidized. Once businesses have grown dependent on AI (and their institutional knowledge is lost), they will pay much more just to stay afloat.
Open models by other providers are not subsidized, and anyone can spin up a competitor. That's the price ceiling.
Many will simply get banned. The frontier labs will not succeed financially otherwise.
100% value fallacy right there.
Point is taken - competition is fierce and will be biting everyone's ankles.
buying anthropic = betting that there is going to be ai breakthrough at anthropic that will put its models ahead. AI stock market = polymarket
Pretty much. That's why Dario & co are always so big on 'what we have that isn't released is so much better than what you've seen from us'.
Unfortunately it's now extremely likely that our governments will manipulate markets to keep frontier domestic AI afloat. They are financially and militarily dependent on domestic AI now.
Chinese models are being banned, will continue to be banned by USG. Even the Chinese govt is restricting external access to models now. It starts with banning Govt access to International AI, but will continue to consumer and business access.
> Meanwhile the Chinese are going to undercut them every chance they get.
I wish they were, but I always wonder when people chime in with Chinese models what they are actually doing with those. I have an OpenRouter account and give various models a shot every other month, wishing for an alternative, but I always come back to Claude. Even more so since the switch from Opus 5.1 to 5.5. To me, personally, it's unmatched. Like a year ago it was very different, and I would use other models all the time. But honestly at the time they all felt kind of "meh" still. I just hope everyone is at a good baseline in a year from now on, so I actually have a choice. And then, as you stated, things will get interesting.
tl;dr: I agree
> I always wonder when people chime in with Chinese models what they are actually doing with those
In my case: robotics, complex document analysis (typically 800K context).
I use Opus 5.5 daily at work and a mix of GLM 5.3 (Flash or not), Deepseek v4 (flash or pro) at home and while Opus 5.5 is more capable, in my opinion it matters for less than 5% of the work i do. These chinese models are simply good enough for the vast majority of tasks I run and when they're not I use Astra or Opus 5.5. Yes, leaving Opus 5.5 on all the time is comfortable when you pay the 90€ plan but it's just not necessary.
I use Opus 5.5 at work and I use Sonnet 5.5 at home. Sonnet 5.5 medium according to AA cost per task is $0.48 per task, while GLM 5.3 (max) is $2.01 (opus 5.5 high is $1.82). GLM 5.3 flash is $0.28 per task and Deepseek 4.1 flash 1017 is $0.26.
So it seems like Sonnet 5.5 medium, GLM 5.3 flash and Deepseek V4.1 flash 1017 are all in a similar space in capacity and price, however the $20 anthropic sub will get you like $200-$300 in sonnet 5.5...
Another bonus is that sonnet uses a fraction of the overall tokens and finishes much faster than the average chinese model, so your work goes faster (Sonnet 5.5 medium in 2 minutes, Deepseek 1017 in 6.5 minutes, GLM 5.3 flash in 13 minutes...)
I still don't get why paying for chinese inference makes sense. I should try Haiku 5.5 high/max because it's posting higher numbers than Deepseek V4.1 flash for half the price
Yeah, I spent the last week with Deepseek Flash 4.1-1017, Kimi 3, and GLM 5.3 (and 5.3-flash). None of them were literally useless but also none of them were capable of making progress on the main project I am working on where Opus, Sol, and even Gemini Flash have all done very good work. Benchmarks might have you believe open models are only barely behind the big US labs in intelligence, but it feels much worse in practice.
Interesting! If you are at liberty to disclose, what problem space are you working in, what harness do you use?
As a counter-example, I use Deepseek v4.1 Flash to make progress on multiple projects (Python, C++, CUDA) every single day.
I am running GLM 5.3 Flash locally at home for coding and from my point of view it is indistinguishable from the frontier models of 6 months ago. It can handle almost every task I throw at it.
What is your setup like? How much VRAM do you have? I'm curious about what is the minimum configuration that you would need to run this locally.
I have 2 DGX Sparks, 256 GB unified RAM, so not a cheap set of hardware. Luckily I bought them before the recent price increase.
However even with a high tier gaming machine you can run one of the Qwen models and it will be good at coding... like having an intern with boundless energy that will sometimes make mistakes but in general save you a lot of time. And for automating tasks involving scanning documents or creating summaries it will be brilliant.
Not the GP, but in my case 240G VRAM and 256G RAM will run the 3.86 bpw version with a little bit of room to spare and a very nice size context.
I don’t know why you’re getting downvoted. One of my coworkers who was constantly touting Chinese models a few months ago now only uses opus 5.5. It is a huge difference.
i reduced my claude expenditure in 80% using other models.
the market for their valuation is just not there imo. they need to significantly expand into non-coding products and outshine their coding offerings to make it work.
as in, if they capture every single professional software dev and extract $1000 from them every month, their yearly revenue will be like $500B. do your own back of the envelope on that with ongoing costs and consider how unrealistic a goal this actually is.
even worse, the very product they offer is self limiting. if it becomes so good as to actually replace software devs, they will have less customers to extract money from.
their valuation essentially relies on a small percentage of mega users having unheard of levels of spending.
the part about a small percentage giving them most of their money is already true (their rumored $100+ bil revenue as of mid 2026 already outshines all software devs having a $100 max subscription), but they are two orders of magnitude or so away in terms of the actual amounts to make it work.
>as in, if they capture every single professional software dev and extract $1000 from them every month, their yearly revenue will be like $500B. do your own back of the envelope on that with ongoing costs and consider how unrealistic a goal this actually is.
The market for Claude Code is much bigger than professional software devs. It's really anyone who uses a computer. I already know normal people who have been using it for personal software.
>The market for Claude Code is much bigger than professional software devs. It's really anyone who uses a computer.
I'm sorry and I'm sure you are being honest in knowing non-tech people using it, but this is on the whole false. The vast majority of people not only have no interest in "personal software" or using Claude for programming, but the slice of the population that does actively interact with AI is using free chatbots as a nu-Google. Most tech people don't even want the "personal software" thing, I don't know why this line is being pushed as if your grandma is going to make her own calorie counter app one day.
i have non-tech friends who actually do personal software. personally i don’t have any desire to. i don’t think grandma would justify the valuation tho
I just don't see this right now. Every time I think of an idea to vibe code up I see someone else has already done it and is actively maintaining it on github. Why would I bother paying to make it myself when someone else is already doing it and other users have already reported all the issues?
AI spend is slowing: https://ramp.com/data/ai-index-oct-2026
What's your source to the contrary?
What do you mean, "what's my source to the contrary". What you wrote has absolutely zero connection to what I wrote. Did you mean to reply to someone else?
What is your source for them having a larger market?
Total addressable *market.* If Anthropic still had market to address, we would still be seeing consistent growth.
Not really. Random non tech users won't pay $100/mo. Nor should they, most people will be served fine by whatever free thing MS bundles in Windows next year.
Also, most people don't want to build software. They just don't care. There'll be tinkerers like with anything, and I'm sure some people will create solutions to their niche problems with (as you say) 'whatever free thing MS bundles in Windows'. But like the programming trope - they'll build the 'ultimate' todo list and feel like it's an amazing achievement, but be back to pen and paper/notepad/todoist within 6 months.
In most office jobs, at western salaries, you don't need much productivity improvement to offset $100/mo
Though I would expect the majority to do fine with $20/mo. That's the same effective cost as replacing a $500 computer every two years, which is the sort of expense most companies are comfortable doing without much second thought
You don't need to spend $100/mo. They have other price points. And I think you and others are underestimating the appetite out there to be able to create personal custom software. It's empowering. Like I said, I see tons of people I know who can't code who have started doing this (and been very happy with it).
Right, and by mid-2027 whatever MS builds into Windows by default for free will handle most of that by the general public.
Most people aren't engineers and do not care about custom software.
The vast, vast majority of people are happy enough using free chatgpt. Openai could just add a kind of online app development/marketplace thing to chatgpt and that'd entirely steal the personal custom software thing. But I don't really think most people care that much.
You don't have to skip the plumber or the mechanic many times before $100 becomes a plainly obvious need.
It's not gonna install a shower for you, but it will confidently walk you through that leaky faucet. And I don't know if you have paid a pro recently, but they don't charge $20 for a 20 minute fix.
idk abt you but i just replaced a faucet by watching a youtube video of a middle aged guy. ya’ll are using opus 5.5 for that?
Indeed. On the other hand, I fixed my underfloor heating with the free claude version, so unless they remove the free tier, I still have no reason to pay for it.
It's quite a leap to assume any kind of issue would require a $100 subscription. Plumbing, mechanics, electricity ... The issues are usually far easier to trace and debug than in software, because the systems have been designed by smarter people.
You're not buying some arcane and complex solution, you're buying the convenience of not watching a couple of youtube videos or articles of someone troubleshooting the exact issue you're having.
False dichotomy.
Free tiers of essentially any AI model would be able to do the same. People will use what MS bundled for free.
To boot even if you skip the free models, you could probably do a year's DIY assistance with 50 cents worth of GLM or Deepseek tokens. And the really costly jobs are ones where an AI assistant won't really help since, shockingly, most of the cost is hours of labor which you would have to do yourself.
I'm too old to fall for the 'ole "introductory pricing" game hah
or Google / Apple, mobile devices are the primary platform for many people
Since when have you not been able to easily find a free youtube video for this?
You can't ask a YouTube video, which often is different in subtle ways to your problem, clarifying questions.
The step-by-step customized hand holding of LLMs is something totally new
How often are you having a plumber or mechanic come?
The actual question to ask is
"How often are people paying at least $600 annually for something AI can help them do instead"
and the other half is "How often can AI help someone boost their productivity over $600 in a year"
I also don't think people will even need $100 plans for this. Plans will probably land in the $60/mo range.
> How often are people paying at least $600 annually for something AI can help them do instead
I'm going to need an example on this one, and examples that can't be covered equally well by a YouTube video or an 20 year old forum post. It also has to be legal, as in not violating codes for electrics or plumping, I can violate those on my own for free.
"How often are people paying at least $600 annually for something paid AI can help them do, that free AI can't"
Muse is free. You can chat with Gemini in Google results for free.
Yes, and you can take an uber across town for $5, no tip either.
>"How often are people paying at least $600 annually for something AI can help them do instead"
Not that often.
Most people have no interest in fixing the leaky faucet themselves, even if the already knew how and didn’t need an LLM to explain how. They’d rather pay someone and do something else with time saved.
>"How often are people paying at least $600 annually for something AI can help them do instead"
AI recently told me that my oven was broken because a part that doesn't exist on the oven I own was malfunctioning. A bunch of people poking around with electronics, motors, etc. because they think their AI chatbot can fix anything and everything is going to lead to injuries, deaths, and most assuredly more money in the long haul.
leaky faucet fix is already supported by gemini on google search lol, this usecase doesn't need 100$ anthropic model. And if you think google will be bleeding on gemini you're just dead wrong
The lawyers and finance folks I know are all using Claude. I don’t think it’s as limited to coding right now as you’re thinking
I agree, I would say $500 billion valuation is fair, they don't have a moat and open models are catching up, they have a limited products with strong competitors, if they have a step change model in the pipeline now would be a good time to release it.
>the market for their valuation is just not there imo
I tried to look for the valuation in the linked document, did you see it or any reference to a valuation elsewhere in anything published by Anthropic? what is "their valuation" that you refer to?
Comments here are not considering what Anthropic is doing with Claude as a product. The models matter, yes. But they are building Claude into the only tool you need to get business done. In the past few weeks they have added slides and docs - a shot across the bow to Microsoft's dominance. If they can pull off building the best interface to get work done, $500b in revenue starts to seem not too crazy. It's more about selling a complete product than it is about selling tokens.
I somewhat agree to what you said, but also, the whole point of agentic coding is that "code is cheap". So I can't imaging companies like Google not having the resources (whether human or token) to build a better agentic assistant/harness than what Anthropic can. I mean Google has a pretty good starting point with Google Docs, etc.
These suites are also majorly sticky. Would you, as a business, want to completely ditch your ability to open any document you ever created?
Anthropic is locking me in how exactly? Everything's a markdown document.
No, they specifically are not sticky at all. Thats the whole problem.
For developers or the business team? Which group are you and are you making assumptions about the other?
either ... portability is nearly instant except for KV Cache, which is extrodinarily expensive to store.
Business people do not even know what that is. Are you talking about models when the rest of us are talking about harnesses and the interface people use?
It’s asymmetrical though. Google is terrible at product and moves glacially slow.
Anthropic can take the parts of Google it needs FAR faster than Google can do the reverse.
Google’s issue (and many large companies’?) is organisational. Google has famously launched a bunch of products to compete in multiple markets, only to sunset these products soon after.
Everybody, everywhere pretty much always underestimates maintenance. And AI sucks at maintenance. It’ll just as likely nuke everything than actually maintain a piece of code running in production.
Yeah I’m really surprised at how little attention this is getting.
I’d say it’s more Notion than GDocs for now, but the direction is clear. Gobbling up all the SaaS in order of descending value to agents.
My bet is on promoting their internal Tasks representation to something more like a Jira/Linear.
But then obviously Slack is another one, and Duet is already starting to build a “Channel” abstraction, so making Duet multiplayer is a clear possible next step.
What is Claude doing as a product that other similar companies aren't also doing, or can't easily catch up on?
One big thing: Opus is one of the few models that you can mostly trust not to get prompt hijacked. This can make all the difference between trusted in the office vs. not.
Fully integrated business management system.
brand development
Vonnegut's butthole isn't a good brand
Opus 5.5 is the frontier today. But there are more ways for Anthropic to lose than to remain in that position. I'd take Anthropic stock if you gave it to me but I sure as fuck wouldn't buy into it.
The tool is not a moat when you can tell Opus to build you a better tool.
If you owe the bank a million dollars you have a problem. If you owe the bank a billion dollars the bank has a problem.
The same logic applies here.
Google, Amazon, Microsoft, Meta, Broadcom, Nvidia, SpaceX and others are spending hundreds of billions a year each on fast-depreciating infrastructure to serve this potential AI demand. If the demand never materializes then they know they are in big trouble. So they have every incentive in the world to prop up Anthropic (and OpenAI) and keep the party going.
Can they keep the bubble inflated indefinitely? Probably not, but all these companies combined have heck of a lot more influence than Anthropic alone.
They aren't "fast-depreciating infrastructure" -- research shared by a16z team, rental rates are up across the board, even for GPUs that are 5+ years old. The demand is real right now. The proverbial tide could go out but we aren't seeing it yet.
Source: https://x.com/a16z/status/2113986385908842870
"Zooming out, GPUs are still renting ahead of a standard 6-year depreciation schedule
Rental price vs. schedule: - H200: +143% - B200: +111% - RTX PRO 6000: +73% - H100: +54% - A100: +9%
Most of the gap opened up after April, when token demand took off"
Yeah the fab shortage is really keeping lifetimes long, far longer than in the past.
I've brought my old GTX 1070 out of retirement for for some molecular dynamics these days because its "free" except for eh electricity and have Ben pleasantly surprised at what it can get done chugging along in the background. I'm considering buying some more, as it's kind of a steal in pricing.
That’s because of current supply shortage, not inherent value. Is there any reason to believe that when fabs can sufficiently scale up production these GPUs will continue to be valued like gold and not something you hold on to for a couple years and then toss in the bin for a newer faster model – aka how computer hardware economics have worked for the last 50 years?
A supply shortage reveals the inherent value.
A supply abundance reveals the inherent cost.
I have a hard time believing they are likely to get to $500bn in revenue. That’s another $450bn in revenue growth that needs to happen before demand tapers off.
But I see every reason to believe demand will taper off. It seems it’s already happening. Enterprises have been deciding that maybe corporate chatbot and coding agent budgets shouldn’t actually be infinite. AI startups are starting to successfully outcompete each other, effectively killing off members of Anthropic’s customer pool in the process. And consumer demand for AI products seems to be dropping. None of these are signs that suggest that Anthropic has thus far met only 10% of plausible long-term demand.
Total global wages ~$12 trillion/year. The "what you have to believe" here is that AI tool spend becomes at least 10-20% of it, my belief here is we see net slowdown in hiring as human + AI = super productivity so as businesses grow we'll continue to see increase in AI spending.
Then if inference does grow to a $2-3 trillion/year market that Anthropic is a big winner, as big as NVDA is now (they're going to be over $500 billion in revenue in calendar year 2027).
At this point, though, “human + AI = super productivity” is looking more lime dogma than reality.
The pattern seems to be that it makes people more productive when you measure it in terms of raw work product volume. But not all work product is equally valuable, and we have yet to see a clear pattern of increased economic productivity. Instead we just keep finding new and interesting bits of jaggedness in the frontier.
Of course nobody can prove those economic gains will not manifest at some point in the future. I can’t prove that Jesus isn’t coming soon, either. But I also can’t prove which millenarian denomination, if any, he would choose to bless in the event that he does come back.
> The pattern seems to be that it makes people more productive when you measure it in terms of raw work product volume. But not all work product is equally valuable.
This is a good point. I can code with Claude Code at 10x or maybe 100x, but have very little in the way of design, sales or marketing skills, and thus, I've been unable to make much side-hustle money from my new superpowers.
Meanwhile at my boring day job, my productivity is gated by a frustrating variety of coworkers and embedded processes, none of which seem to operate at 10x, to put it politely.
why do people need to be 10x more productive?
personally, i want a 2 hour 3 martini business lunch, not to ship more slop at all hours of the day
Products don't exist to serve themselves and code is just a fraction of what makes the world go; wages go down, spending goes down, free capital to spend on iterating goes down.
It's part of the reason so many of the dark enlightenment dorks are pushing more towards automation of control.
>human + AI = super productivity
There have been no signs of "super productivity" in the larger economy due to AI. Boosts in productivity have, so far, been seen exclusively in sectors like tech.
We will see more (and bigger) "circular economy" deals.
> Everything comes back to whether the demand is really there
And unit economics.
HY1 2026 revenue less compute and infrastructure turned positive (45% gross compute margin; $8.9bn C&I to turn $16bn revenue) for the first time; it was -176% in FY 2025 with $7.3bn C&I on $4.6bn revenue.
It looks like a lot of costs of revenue are in sales, marketing and partnerships, though. Backing those out shows H1 2026 margin at 26% ($4.2bn) after -72% for FY 2025. Still positive.
>Anthropic thinks it is.
Anthropic has no choice, just like you said. It's crush and burn right now or double down.
And they will keep doubling down, because stopping is simply not an option.
> they will keep doubling down, because stopping is simply not an option
Of course it is. Apple is taking that strategic approach. If Anthropic believes it’s approaching saturation, pulling the plug when it’s at steady state and its rivals are over-invested is the winning move.
Well, unlike Apple a lot of very aggressive investors in Anthropic are riding on its trillion dollars valuation. They just can't on their own decide to stop or slow down.
> a lot of very aggressive investors in Anthropic are riding on its trillion dollars valuation
Okay? Anthropic’s management and Board are uniquely insulated even by Silicon Valley standards.
> They just can't on their own decide to stop or slow down
Of course they can. Doubly so if it’s shareholder accretive in the long run.
Apple has a lot of actual money, Anthropic does not. Apple sells a lot of products, Anthropic doesn't. Apple have a platform multiple players want a piece of, Anthropic fight to stand alone.
There's very little comparison to be had here. Also, Anthropic likely have investors with way too much leverage for them to stop.
Apple can swoop in and gobble Anthropic and OpenAI up when they are on the auction block. Or just hire their talent away.
...exactly this were my thoughts when reading the response:
Maybe Apple is just waiting on the line until someone can be sucked up at a penny if the house is on fire - and pretty sure, this will happen. Not in 2027, but I expect MA activites & consoliation before 2030
Exactly.
That’s why they hire ‘for the misson’. They have to pull off something magical to make all this work financially or they go bust.
These were ~Q1-Q2 commitments based on what Anthropic THOUGHT token maxed compute demand was going to be over next few years. Then Late Q2, and Q3 PRC models dropped floor for token prices. It may very well be that Jevons demand which Anthropic though required 500B of compute now only requires 100B, and unless demand is 5x what they thought, those additional 400B non hardware cancellable commitment are going to be balance sheet concrete shoes.
No it doesn’t. Everything comes back to whether the fundamental business can ever be profitable.
So far not a single company has ever demonstrated that.
Even if demand is through the roof which it seems to be, it doesn’t matter if every dollar they sell costs them more than a dollar.
The filing indicates they are profitable...
Now ask yourself what it takes to generate 500bn…
You people are nuts. The failure risk is off the charts.
The OP post is misleading because it makes you think Anthropic has to earn 500bn per year in revenue, but those commitments listed are not yearly commitments, they're commitments over 10 years with contracts that run until 2036.
Anthropic needs to earn 52B a year in annual revenue to honor those specific commitments plus obviously its own operating expenses... and yeah that will require Anthropic to grow as a company, but their S-1 indicates 67.2B a year in revenue and sure maybe they stop growing and this is their peak... or maybe they do manage to grow further to 80B a year, 90B a year...
are those 67.2B revenue or profit? Because you know there are costs associated with running the business, so of those 67B if they only keep 30, they they're in the red, no?
Where do you think almost all of that $67B is going, if not to their infrastructure and inference costs?
People are only nuts if they actually take money they don't have to invest in random companies.
But lets be clear: the growth of Anthropics revenue is very fast and way too many people stll don't even use AI
Completely agree, but I don't see how much _value_ these new users will get out of it..
Businesses are extracting value now - for the average user I see it as a convenience that they will pick the cheapest provider for..
It's a race to the bottom for most as there's not a major differentiator.
Yes its hard to predict for sure. Especially as the dust will only settle properly when Frontierlabs reach some kind of slowdown or ceilling, which I do not see right now.
I don't know a single person who hasn't used AI.
I know 2. That is out of the 3 people that I live with. Sure, this household is probably an outlier, but I think people inside the tech bubble do not realize the depth of the anti-AI sentiment from outside the bubble.
They have never read a Google search summary or anything like that? Avoiding AI is different from not having used it at all.
Is passively interacting with AI against your will really counted in the "people using AI" metric for the sake of this discussion?
People can be as anti-AI as they want, they'll still be totally dependent on it. It's not like anyone is pro-Meta, but billions are addicted to IG.
Thats called a bubble.
Besides the question is not only if someone used AI but also for what and how much.
But look at this map: https://www.visualcapitalist.com/mapped-ai-adoption-by-count...
Okay, so if we make the dubious assumption that revenue would increase proportionally in accordance with usage up to 100% of the population, that would still only account for a 6x increase in revenue-- not the 10x increase that they need to fulfill their contracts. Their product is increasingly replaceable, their revenue is super concentrated in just a few customers [0], and they're cracking down on distillation which was almost certainly a decent percentage of their revenue as well [1].
I'm not convinced.
[0] https://finance.yahoo.com/technology/ai/articles/two-custome...
[1] https://www.businessinsider.com/anthropic-ai-copycats-distil...
that would still only account for a 6x increase in revenue-- not the 10x increase that they need to fulfill their contracts
Assuming you're talking about the $600 billion or so over the next decade, they don't need a 6x increase to cover that, they're already pretty close based on the $65B run rate as of last quarter.
their revenue is super concentrated in just a few customers
20% for the top two customers is not actually that concentrated. If both of them go to zero, at their current growth rate (45% from Q2 to Q3) it would take about 6 weeks to replace that revenue.
Thats a different discussion though.
But I do assume its not just adoption in the future its replacement and re-investment:
Right now a company can't invest in anything else than humans. A team has 5-10 members, the 5-20% of them are below avg or just avg. you were happy to have them for whatever reason like smaller tasks, easier tasks more repetitive tasks.
Now you can just replace them with AI Tokens.
The second driver of this, or why this will/is happening not just for something like a developer through coding agents: the agentic layer is coming. Which will eat tokens for breakfast, but will also replace humans.
Your HR system? Will have an Agentic layer by default. Your HR system will either respond automatically to you or with A2A to the ticket system. The ticket system will have an agentic layer. Your SEO tool? you will us the agentic layer to create camapaigns automatically. You migth give feedback but you will need less people and less skilled people if even.
And this will happen on every layer of your stack.
Unless anthropic becomes an entertainment platform like netflix or something, I really can't see how they gain significantly more _paid_ users. The vast majority of people will use the free tiers of openai and claude.
Currently every business is building the Agentic Layer. A layer between the user and the product.
With tx to an LLM, this layer will close the gap to full or borderline full automatisation.
Your Ticketsystem will have agent support out of the box. Your incident system too. Your UI for SEO, SEO optimization, article creation etc. every single on of them wijll be there and consume tokens.
Future invesment from 10 people in your l1 support might be 5 + token budget. Your SEO optimizer collegues? 1 Person + token budget instead of a team.
That seems like a really bad idea in many cases. Outside of maybe customer support and a few other things, I want to be working with deterministic software unless I explicitly decide otherwise
I agree partially but that discussion or decision will not happen with / by me or you.
Business doesn't think that deterministic to begin with. If customer support is faster and KPIs are fine, they will not care if customers get non deterministic customer support.
And lets be fair: just because you hired someone doing SEO, doesn't give ou ANY understanding how good of a job they do.
You will need to prove in the future that you can do it better than the agent. You will win at the beginning and fail later. The KPIs will show it and that person will get replaced.
> But lets be clear: the growth of Anthropics revenue is very fast and way too many people stll don't even use AI
Anthropic is selling $3 for $1, of course the growth is fast.
My last information was, that the inference itself is cheap but its subbsidy comes from ignoring the training.
Really? The rumors are that their margins on tokens is quite healthy. That doesn't seem like loss-leading to me.
Funny animated cartoon from the Soviet Union (has subtitles). You must see this:
“Robbery, Italian Style”
https://www.youtube.com/watch?v=vktTgOr4M1s
(it has a wiki page https://en.wikipedia.org/wiki/Ograblenie_po... )
Marcello Mastroianni is performing a bank heist, it goes well - but in the end he has to return all the money he borrowed. And that's where he is left with nothing...
The SpaceX thing interests me. They are basically paying SpaceX at a $10B per gigawatt equivalent rate right now, yeah? Because they only get 0.3GW for their $3B.
So what that means is that if the demand exists for any AI data centre, it's a solid business to run one — they cost maybe $50-60B to build out, they cost maybe $10B per year to run. You get your money back fast if the demand is there? And you can project being able to replace with better GPUs in the future without having to borrow for all of it.
But it is extremely difficult to believe that Anthropic is not projecting that all of its customers will ultimately use their service to the extent that their outlier customers do right now. They probably won't be projecting that their customers will find the need or ways to use them less.
And also, "no customer is more than 10% of our revenue" means that one customer is. If that customer is Microsoft (can it be? I honestly don't know) then things get tricky, because Microsoft clearly want an unmetered, on-device AI future.
Coreweave is down 50% with all reports pointing to bankruptcy.
Yeah. But I suspect this is about the difficulty in actually getting data centres built, more than it is that demand is radically overstated (which I suspect it is).
It's about the debt the companies took and the cash they need to maintain it. The debt will be written down before they can pay.
These companies are rent-seeking landlords for the providers themselves. Which model they serve has no fundamental bearing on the business, the cost of the rent they can charge does.
Not just is the the man there? Will anthropic be able to capitalize on that demand? Or are we going to build so much excess capacity that tokens are going to be dirt cheap (like what happened with the fiber build out in the 90s).
Will anthropics models continue to be significantly better than openweight models? Even if their latest model is, Will the open weights gobble up all of the demand for lower models? (I.e. will anthropic be able to recoup training cost while their model is the best, will they make enough revenue on the long tail or will it get crushed by the open weights)
In the corporate world it seems Claude has become like a generic name for doing anything AI related and there is no hope in getting people to switch away. The demand is there. People love name dropping Claude into everything and even assuming it’s what everyone uses to do anything even when there’s so many alternatives.
You know how they say, don't keep all of your eggs in one basket? It's really concerning to me that they've got all their eggs on LLMs. They really should have branched out more long ago. OpenAI has a lot of branches they can aim towards.
That's their choice from the beginning, high risk/high reward. Copying your competitors strategy is rarely a good choice.
Not saying to copy OpenAI, but there's areas they could have innovated in with Claude that they haven't explored.
Crazy that SpaceX has similar commitments to AWS/GCP. Means it’s very bullish for SpaceX given they produce their own energy turbines and have the best ability to deal with supply chain constraints
Not the whole turbine (yet), but they are working on blades and fins.
There's an unlimited demand for intelligence.
There's an unlimited demand for virtually everything. Whenever we increase capacity for anything, society consumes more of it.
I've seen the bills at my org, I think the demand is there for now.
Our claude bills are rivaling our datadog bills and might get to the size of our AWS bills. It's pretty crazy.
For kicks - lets take the optimistic side here (because the whole thread will be reading pessimistic). What if they are under built and this growth continues to go parabolic. We then still have supply constraints and pent up demand for frontier model and you have a company thats currently at 1-1.5 T and levels up to 4-5 T.
I'm not saying I think thats what is going to happen, but it really isn't a stretch to think that this keeps running given that it hasn't really hit anywhere near as broad as we think it has (being HN community based).
Even the smallest margin or error in the demand forecast will put them at a huge loss, I can't imagine sleeping well at night if I was on that management team.
> Anthropic thinks it is.
Does that have to be true? I thought IPOs were about selling the company.
Never mind the fact that companies do not think and this is like saying "My lemonade stand thinks it's going to have good sales this quarter."
It's not just about demand, it's about do you think valuation that prices them into serving 1000x that demand is worth paying for.
The obvious business is rewriting all of our software. That sounds flippant, but I'm entirely serious. I'm of the opinion that all software written by humans will get replaced and in pretty rapid order.
First to fall is the software that has basically been abandoned but industry leading and has sticky customers. We're replacing those right now. Our version is more accurate, ten times faster, and a hundred times cheaper.
The average human spends 100$ per month in food.
> If the party continues, they'll go from $50b in revenue to $500b and be fine.
You really have to be insane to think that an AI company will ever reach $500B in revenue. That's almost the same as (2025) Amazon, Walmart, etc., companies with a MUCH wider market.
It is MORE than Apple, it's 5 times more than NVidia even. There is absolutely no software seller that is even remotely close to $500B in revenue.
Absolutely ridiculous.
I’ve spent more money on Claude this year than I’ve given to a lot of other tech companies, combined. Well, I bought a new phone too - but amortised over the phone’s lifetime it’s still much cheaper than I’ve spent on my claude subscription and what I’ve gotten my company to pay in api usage credits.
There are two questions. Will the value keep scaling? And how much of that value chain will anthropic hold on to? Right now software development is being eaten alive by LLMs. Will that happen to other industries too? And in the long run, what do the models we run look like? Are people going to end up self hosing opensource models themselves, or are we going to collectively hitch our wagons to frontier models provided by anthropic and their competitors?
If ai keeps getting better - which I think it will - and if anthropic can corner a large part of the market in an enduring way - which seems less likely to me - then yes. I can easily imagine them becoming a huge company.
Your usage and spending is an outlier in the current market. Anthropic's numbers are only plausible if you become typical of AI users.
Yeah. It would require LLMs to sweep through other professions like they have in computing. I don't see strong evidence of that happening yet.
This is like somebody with a construction job who buys a new $100,000 truck - just because you paid that much to do your work doesn't mean somebody couldn't have accomplished the same with 1/5th the expense.
You've spent that money at subsidized prices but would you spend 5x if subsidies stop?
"Subsidies" don't stop because it's not "a subsidy". It's a subscription service.
Like Netflix, Comcast, T-Mobile, etc, etc. There are millions of subscription services in the world. They all "subsidize" higher-usage users with plans for lower-usage users using a fixed price plan and rate limit. The profit comes from lots of users who don't hit their cap. The higher priced plans are actually more profitable.
This is called a tiered usage-based subscription business model.
That's how it's supposed to work. That's not necessarily how it does work, especially considering how hush hush and scammy all the AI companies are when it comes to posting real numbers.
They might also be in a Uber style subscription strategy. Make something super duper cheap, at great cost to yourself, so that you can grow a massive user base. Use that user base to get investments to keep burning money. Once you've got enough competitors out-priced long enough, jack up prices and enshittify like CRAZY to recoup the cost.
The price is a factor of a great many things. Cost of inference, desire for user growth, market competition, investment recoupment, revenue numbers for S1, tier/rate balancing, etc.
They cannot follow the Uber model because of scale. You could keep getting tens/hundreds of millions from investors, back when there was lots of cash floating around. But you can't keep getting hundreds of billions of dollars. There are only so many dollars. The world is tapped out of private capital. That's why they want an IPO - so retirement and pension funds are forced to buy their shit stock, and feed them more money. But again there is only so many dollars.
Anyway it does not matter. Subscriptions are the most effective way to extract wealth from customers. This has been established so clearly that every business in America now has a subscription. Your fridge, TV, car, hell even car washes, now have subscriptions. Not because they didn't make money from you before, but because it's the ideal way to make even more money off you. There is no reason not to use subscriptions. No AI company in their right mind would end them.
The question of how much value you get from the subscription is different. They have already adjusted both price and rate limit a dozen times. They will keep adjusting it... but the subscriptions are here to stay.
I think you are underestimating the market for AI. The better it gets the more the market expands.
The total amount spent on salaries in he US alone is over 12T dollars.
Assuming AI becomes ever more useful and is widely adopted 500B in revenue is not that crazy.
Here's the thing though: like labor today, employers will constantly be pushing for the lowest possible price. Especially in a world where open models are 90% as capable, the cost of AI labor will quickly drop. Thats not a good thing for Anthropic or any other frontier AI lab. There's a reason most companies don't just hire the top 5% of intelligent individuals. Its really just not needed for most business.
Also another aspect: think of the most highly paid workers right now in the US and the companies they work for. Assume that normal people no longer have jobs due to AI. How are these companies going to continue making revenue to pay Anthropic? Anthropic might get a quick buck but a long term growth business is not macro-economically possible for frontier AI businesses.
As I understand it, AI is only really getting traction in IT and software development. It's been mostly irrelevant elsewhere overall, all things considered. That could change, but basically there's only one product that is selling. Dunno whether there is $500b/year of IT and programming to replace.
People are using it to do contract negotiation without a lawyer, argue with their doctors over health matters, complain to teachers about their methods, etc. On the flip side, lawyers are using it in supplement to paralegals, doctors transcribing patient notes with it, and teachers are using it to generate worksheets. It's being used fairly widely already
Maybe, but most people aren't paying for their chatbots at all, yet alone the 100$+ plans. Out of the non-technical acquaintances of mine who do use some form of AI (which is a tiny amount of people), they just use the free tiers on claude and ChatGPT, none of them ever have or ever will pay a single cent for any of this. Even the technical folk are barely paying, and they're certainly not wasting 200 bucks on it.
That's true, I do all of that, but I'm using the free Claude version. It's been more than enough to handle the few home renovation projects I'm currently working on.
That's quite a leap to assume there's a ton of money to be made with the casual users sending perhaps a couple of messages a day to real an email and draft a response.
The money is not on the casual users, the money is on the lawyers and accountants, and consulting specialists that have actual business use cases.
If you are spending 50 - 60 grand a year on a paralegal will you balk at another 5 or 10 that will allow them to do double the work?
Sure, but the message I was responding to was describing casual uses: people using AI to argue with their doctor or review some contract, or what have you.
The problem with the "double the work" narrative is it ignores the second order effect. You can do twice the work, but so does everyone else. You doubled the supply, was there a massive pent-up demand for lawyers or accountants at the current price point?
Yes, they are using the free versions of it.
I recommend listening to the LegalTech Week podcast. Generally lawyers are finding it's not delivering efficiency overall. They spend more time reviewing the output. The courts are drowning in slop and deepfake evidence is a growing concern. The jury is still out on all of this.
Do you have a specific episode to recommend? I would love to hear about the challenges of checking AI work in another industry.
Let's posit that that's possible, for Anthropic to get to 500B in revenue, they'd either need 100% of the market or the market has to be even bigger.
OpenAI, Google, the many Chinese labs all have products and several of them likely have better financial positions. At the moment Anthropic have one of the best models but it needs to stay sufficiently above competition for them to capture a large share of the market.
At the same time this year we've seen a move for model diversification as cheaper models become "good enough". If this IPO was 6 months ago I think it might have gone better for them.
I think the market has the potential to be 1 or 2 trillion in the US, 10% to 20% of labor costs. I say this because I believe most companies would not blink at spending that money to supply their workforce with AI tools assuming the AI actually did the work.
The winner take all network effects are probably not there in this case, but still if Anthropic is a large player and has 20-30% of the market they could have a revenue in the hundreds of billions.
Double the size of the market to include most of the rest of the world and the 500B is suddenly under 20% market share.
and if 20% of labor costs are translated (a.k.a 20% more unemployment), who's buying all the goods and services those companies create?
The tech companies will just parrot "UBI" at that point, but given how adverse they are to being taxed, how UBI would be financed, is an unanswered question.
The "good enough" problem is a real biter. The personal PC market overtook the mainframe market long before PCs were even close to beating the top supercomputers. Cheap and good enough is the threat.
What does good enough look like for various use cases, when do we hit it, and can these companies guard that territory?
If you ate up that 12T dollars on AI, the economy would collapse and whoosh would go the 12T dollars.
My hypothesis is not that the AI is going to eat up that 12T dollars. But there will be additional investment to provide AI tools to the workers to the tune of 10% to 20% of their salaries.
But why would 10% to 20% go to Anthropic rather than being mostly diffused across all providers with the majority actually going to cheap open model providers who provide 90% of the intelligence for the lowest cost?
Employers are reducing AI spending, not increasing it.
You're also assuming that basically the entirety of the market would go to Anthropic, rather than other providers, which makes no sense.
You are vastly over-estimating the market for AI. The extreme majority of people would never pay a dime for it.
n=1 but at $company we are already told to stop tokenmaxing and find cost savings for ai to the point of degrading user facing features (no loading llm generated content by default etc)
from here it looks like prices have to come down or demand will stall...
That doesn’t seem ridiculous at all. Replacing clerical and knowledge workers is a vastly larger market than iPhones.
The thing to be remember about those companies you listed, none of them are software companies like Anthropic is.
* Amazon is a logistics company * Walmart is a logistics and retail company * Apple is a hardware company (that uses software to set their hardware apart) * NVidia is a hardware company
The closest you get is Microsoft, at 281B in revenue. Some might argue Google/Alphabet, which is in the same area, but they sell Ads, not software.
Anthropic's expectations is that they will be able to fast-track their revenue generation to almost twice what Microsoft does today. In less than a few years.
> The thing to be remember about those companies you listed, none of them are software companies like Anthropic is.
Yes exactly, that's why I listed them. It's much easier for them to capture a higher revenue compared to software companies, and OP (and Amodei) want to make us believe an AI company could ever reach that revenue.
I agree with you from our perspective it is ridiculous. I also agree that getting the consumer market to willingly pay for AI to the point where it sustains such an amount of revenue is not going to happen. (The knock on effects of folks using AI, and turning others off to AI because they used AI instead of writing emails themselves, for example).
But.
They may peak at 500B before this bubble bursts, simply because other major industry players are betting on AI as a means to get folks to believe in their own stock.
It’s belief all the way down, until you get to the point where “the market” starts asking where the return on investment is, and why they haven’t seen it yet. By that time, the investors have gotten their return and cashed out, and it’s the pension funds and the retail traders that are holding the bag.
And of course, at some point AI’s promise will be delivered in a form or fashion as yet unknown to us, but that is still years away, and until folks recognize that LLMs as they exist to day are not the path to that, they’ll continue to believe in this valuation.
Nvidia almost hit 100B in revenue last quarter.
What feels ridiculous today might be the normal of tomorrow. Welcome to the new world.
What you are saying is the same thing that has been said about anyone trying to do anything massive and at scale. Can't be done - thats ridiculous - you are out of your mind.
Broadcom isn't a name I'd have expected to see next to the other three.
There are not enough revenue in tokens, etc. The only way AI ever becomes profitable is to replace labor everywhere. That is the only market big enough to make all the spend in AI profitable.
Their entire goal is to get to AGI via RSI ASAP. If they do they win. But if not they’ll be a legendary story of a flying too high too fast.
That they are IPOing tells me that the massive amount of funding they need is no longer available privately and that this is their 1 opportunity to get the funds they think they need to get there.
Biggest risk is the growth stalls as everyone moves to open weight models. They certainly like telling stories.
So, puts?
If someone just way outcompetes them it's possible they sell their commitments to the winner and still do ok.
> But if they don't, it's going to hurt.
They literally said revenue growth rate "may not be sustainable" and "may decrease".
So get ready for the hurt.
Literally every S1 is filled with these kinds of statements
Those are just standard disclaimers.
Of course such growth cannot be sustained and the word "MAY" is funny there. You cannot have infinity growth, it is mathematically impossible. There are no unlimited (monetary) resources on this planet.
It is a business losing $80B a half on $18B in revenue. This is a trash business.
> If the party continues, they'll go from $50b in revenue to $500b and be fine.
Heads I win, tails we all lose. GFC Part II.
I do not understand 500 billion revenue? I mean how much is that in terms of tokens burned?
It's a misleading number, the 500 billion in revenue is needed over a 10 year period, it's not a yearly figure. Anthropic isn't paying 500 billion a year for the commitments that OP posted, it's paying 500 billion between now and 2036.
In the simplest calculation, if you get 200M people on a $200/mo pro max plan, that's $500B annual revenue.
This is a "utility" mindset. If you bet that Anthropic is just like a monthly electric bill, then it's within the realm of possibility.
For the record - I don't think that's gonna happen.
FWIW I max out my pro max plan basically every week, not even using Fable any more. I think it's just a matter of people figuring out how to apply tokens effectively.
I don't think they are betting on that many people subscribing to their $200/mo plan, there's pretty much no upside in using a frontier model for the average consumer.
But on the flip side I don't think aiming for 1M businesses spending $40k a month in token in average is going to be more viable. And I'm not sure having 1000 corporations spending $40M a month is a option either.
How many thousand more datacenters would that need, and what would be the ongoing (massive) cost of deprecating hardware in that world?
This is the issue, for two reasons: Is there trillions of dollars of demand for LLMs, which is what it takes for Anthropic to make $500 billion in revenue? Is that demand going to be met by frontier cloud LLMs, or by open weight models run by the organizations using them (and cheaper cloud alternatives)?
The killer app is AI coding. Claude Code had first mover advantage, was a genuine revolution, and has diffused through the industry with incredible speed. I would imagine most of the huge revenue increase over the last year is due almost entirely to AI coding spend.
There are three issues with this. First, the rapid diffusion of the technology means it is very unlikely to continue at the rate of adoption seen over the past year, so it's very hard to extrapolate based on what we've seen so far. Second, many companies are reigning in AI budgets after an initial honeymoon phase. Third, all of the other labs are trying to take a bite of the coding pie, and the price war is already heating up.
Add these simple dynamics up and it makes perfect sense why Anthropic would want to IPO now. Things look about as good as they ever will.
Just like Alta Vista and Netscape put there first mover advantage to use?
Claude Code is a commodity at this point though.
Codex is just as good if not better. And theres 3-5 other options out there just as good too (harness + model).
I disagree. I've tried Codex, and two of the provider-agnostic harnesses (Pi and OMP), and I strongly prefer Claude Code.
Yeah why?
I bounce between codex and cc all the time. There is no moat there.
Why though?
Opus 5.5 is the best deal in doing rn. It will change soon. But its not the case that codex, etc are equivalent
I don't use claude-code and like to use the harness of my choice.
View them as a successful SAAS company deeply embedded in tech company processes like Atlassian. I don't see Anthropic or SpaceX actually having a market on all the software in the universe but I don't know that the market won't buy them like they do.
My brother in christ, there is no first mover advantage. I use claude code daily and if the open ai copies it 1$ cheaper per seat my company is switching immediately.
I've never heard anyone in real life discussing what model is better in some benchmark. Money talks.
underrated comment
Ant generates $2.08 in revenue for every $1 spent on compute which is up from just $0.40 in Q1 2025.the payback period for compute is just insane, likely less than a year!
I wonder how the "It's all heavily subsidized!" people are going to spin this.
Say I open a premium lemonade stand. I buy Walmart lemonade for $1 and resell it for $2. I have around 10 customers a day, but 2 of them buy 1,000 litres of lemonade each. The rest just buy a single cup. I'm making amazing profit.
There's just one detail: those 2 high-volume customers are buying my lemonade and re-selling them at a loss for $1 at another neighbourhood. Supposedly some high-profile Japanese bank is financing their lemonade purchasing expenses for eye-wateringly high interest rates. I've heard its well into the double digits. But that's not important, because the future is right around the corner - I can feel it - and in the future everyone wants lemonade. Thousands of litres of it. So even if those two customers go away, things will be fine!
It will all work out in the end. This is a totally sustainable business model. In fact I'm even thinking of going public.
I would unironically invest.
Lemonade isn't intelligence. Having 4000 liters of lemonade doesn't give you a competitive leg up over a lemonade stand with 2000 liters.
If I'm buying one cup of lemonade a day then it seems highly likely I'm still going to be able to buy it for $2 in the future.
In an alternative world where Walmart is selling it for $10 and I'm buying it from the reseller for $2, that's not the case.
Many people have been saying the second thing is happening.
First of all, revenue exceeds compute just for the most recent 2 quarters. Before that, revenue was not exceeding compute. With 500 billion $ in commitments over the next decade, the compute bill will start increasing rapidly and the new commitments are not at the old prices, they're at higher prices.
Second of all, revenue is not profit. So even if they made 2.08x revenue on every 1$ of compute spent in Q2, that's not taking into consideration all the other costs. Hence, the operating income is still negative for 2026 so far.
You can bet that revenue will keep increasing much faster than the more expensive compute commitments come due, but if that doesn't materialize, things go south real fast. Anthropic is going public with a deficit, so more liabilities than assets, so cash is tight to begin with.
I'm not really in that camp, but I'm still in the camp of "will they survive long-term if good enough open models trickles down to commodity hardware" (in a way the opposite camp perhaps?).
Sun made bank 25 years ago because their servers was needed for websites, today we run larger workloads on 5$ VPS servers (well maybe the VPS servers has gotten more expensive due to HW shortages but they're not intrinsically expensive anymore).
Think they're going to be like Oracle. Databases were a valuable thing when they were new but became free with postgres. Like Oracle Anthropic et al will move up the value chain.
Switching cost for a DB and switching cost for an inference API are very different things. They’re going to have to create lock-in with something other than model intelligence if they want to play Oracle’s games.
Vendor lock-in is inevitable when negotiating enterprise contracts. Companies will sign one or two-year deals based on headcount, convinced they're going to save a ton of money. And a big part of the appeal will probably come from intelligence capabilities being bundled with services they're already paying for (looking at you Microsoft)
Its nothing like Oracle - for long time there was Oracle and nothing so the army of mostly politically influenced salesman/lobbyist who convinced local councilman its better to spend $250,000 on Oracle license, continue to this days because migration also comes with risk and cost. Here you have Chinese models popping out less than 24 hours later, and they are of similar quality at fraction of cost. Its totally different world that what it was in 80s.
Subscriptions are heavily subsidized. 80% of their revenue comes from consumption-based pricing, which is not heavily subsidized (and probably not subsidized at all). The trouble is that this revenue is not especially reliable. If and when OpenAI gets the upper hand again, the consumption-based revenue could crater.
This may also be why OpenAI punted on their IPO: Anthropic has had the lead for most of 2026, so their consumption-based revenue is probably not looking pretty.
> Subscriptions are heavily subsidized.
The only subsidization that matters is if they are selling the tokens for a loss.
Yes the $200 plan provides more than $200 of tokens, but that doesn't mean that it's losing money, either on average or on a case by case basis. The realistic alternative isn't that every $200-plan-user pays the full Api price, it's that they pay Anthropic $0.
I disagree that it only matters if the subsidy results in selling at a loss. Yes, some revenue is better than no revenue. But clearly the demand exists for consumption-based tokens. At its current growth rate, Anthropic could end all of its subscription offerings tomorrow and still be profitable as an enterprise by early next year. Every day that it doesn't do that, it's leaving money on the table, because it has to divert resources to less profitable subscription tokens.
Now, the reason they won't do that is because subscriptions provide a stable floor of revenue. The floor is lower than it could be because of the subsidies, and that's why they matter even if they do not bring prices down to below cost: if the growth of consumption-based spending ever slows or - heaven forbid - DROPS, Anthropic will need to cut into those subsidies to avoid a revenue slowdown, which risks sending away reliable recurring revenues (i.e., customers quitting).
Anthropic is kind of like the bus in Speed: if it stops moving it'll blow up. At least over the next 5 years, massive revenues won't be enough - it needs to sustain massive revenue GROWTH. They can pull two levers to do this: increase uptake or increase prices. So far, the "increase uptake" lever works like an infinite money glitch. But at some point, they'll need to look at the "increase prices" lever. When that happens, we will find out just how big the subsidies are.
I don't think it's that simple. It's similar to why Adobe and Microsoft get their tools into schools and turn a blind eye to certain kinds of piracy; mindshare.
As a software dev, if I'm using codex at home and I'm happy with it, I'll likely choose it at work as well since I don't have to relearn the quirks of other models.
That's a fair point. Maybe the subsidies aren't as relevant as I suspected. Thanks for the insight.
I've heard this a lot that the consumption-based pricing would be easy to switch, but I don't feel like that's how it works in B2B subscriptions. At the company I'm at, we have Anthropic subscriptions for employees. Switching to OpenAI would be a ton of work involving legal, IT, and every employee. I actually think there's a lot of stickiness even if OpenAI has some better frontier models.
F500 company I’m at switched off Claude code to copilot in 30 days across a 5000 person org.
There’s no moat. AI tools actually make the switching that much easier
I’m at +100k people company, and they only spend 20usd a month on copilot and they talk about AI daily. Anyway you can switch Claude to whatever in the drop down they have. But they are moving all away from this as they think 20 usd is too much and want to self host.
That's an interesting perspective. Do you know if the deal with Anthropic has an exclusivity provision? In theory, you don't have to "switch," you could just ADD an OpenAI subscription and start splitting your spend (or not consuming Anthropic tokens at all).
Also, shouldn't your AI efficiency gains shrink the switching costs by a lot? Legal can review for cheaper, IT can implement faster, etc.
> Subscriptions are heavily subsidized
Revenue less compute & infrastructure less sales, marketing & partnerships is positive!
Approximately 80% of revenue comes from consumption-based spending, so your statement would likely be true even if subscriptions were priced below cost. Overall revenue is not especially informative on the price structure of a revenue stream that represents one-fifth of the overall enterprise.
> 80% of revenue comes from consumption-based spending
Why would this be exempt from any of the above categories?
> Overall revenue is not especially informative on the price structure of a revenue stream
It’s pretty informative on the business model of the enterprise!
If you’re quibbling that Anthropic has loss leaders, yes, sure. Whatever. So does Costco. Loss leaders converting into profitable sales is good business.
I'm quibbling that Anthropic has loss leaders and that its profit leaders are extremely unstable. Imagine if there were three Chinese club stores in the same shopping plaza as the Costco. Sure, the regular Costco has the best products, but how long are you going to be able to resist the allure of even cheaper hot dogs?
> quibbling that Anthropic has loss leaders
This is a silly quibble.
> and that its profit leaders are extremely unstable
This is a fair one! Claiming Anthropic’s “subscriptions are heavily subsidized” is not.
The metric we need to question stability is churn rate.
subscriptions use already paid for compute in the holes left by high paying api customers, its hardly subsidised, if you look at it objectively, subscriptions are 100% margin
A podcast posted here recently had this number: 80% of ant revenue comes from just 8 customers. The consensus of the speakers was that if true, this would be indicative of a very vulnerable revenue structure. But this was based on leaks. Maybe we can have the real numbers now?
from the s-1, the top 5 customers make up 25% of revenue
Who would be among those 5? Are these big tech? Or large corporates?
likely mag 7, big tech, megacorps like accenture, etc.
So the leak was BS, or at least now outdated. Top 10 must be under 50%.
In this timeline, can we really trust publicly reported numbers even?
And those 8 customers.. you think they will accept large price increases?
Hahahahahaha.
Those large customers are not a mom and pop store - they’re large market cap firms!!!
As per the S1, 5 companies were responsible for 25% of revenue in the 9months back from end of September.
Which feels like a carefully chosen statistic.
It's interesting to note the anthropic marginal cost of compute is quite high (the SpaceX deal). Claude estimates SpaceX are charging 3x as much as the anthropic average! If that is correct then a few interesting things are going on:
1. Anthropic are probably losing money on the SpaceX deal or not making much at all.
2. To be willing to pay a spot rate so high anthropic likely have no better options.
3. Many of the existing cheaper vendors are likely doing "we will give you cheap compute for now if you give us big commitments"... (cf. hyperscaler capex spends)
Which I suppose is to say that if the spot prices are in the same ballpark as future costs then anthro stops looking profitable pretty quickly. If you're especially bearish you can also throw in the huge reduction in token prices recently and that SpaceX is charging google almost 2x as much as they charge anthropic!
Happy to be corrected by someone more knowledgeable.
Revenue is not profit?
It's very simple, if you just assume they never have to spend money on training ever again, they're wildly profitable.
Compute is by far not the only cost associated with running a service, so, no?
Being sarcastic here. The usual argument everyone brings up "inference is extremely profitable, checkmate AI skeptics!" while dismissing the black hole that is training.
Are these inference & training profitability numbers broken out in the S1?
Sort of? They have “cost of revenue” which is compute and salaries (and whatever) for serving inference, then “research and development” which is cost of compute and salaries for training, then “sales and marketing”, then “operations”. R&D is like half the expenses.
Are they doing the standard SV thing of pretending employee stock comp is free?
Profit is not relevant
It’s still the case. Subscriptions are heavily subsidized
Unfortunately for you - youre the pleb here.
If you’re not generating enough revenue to cover ALL expenditures - you are in effect subsidising as you should raise prices.
Why haven’t they? It would harm their business.
Nah fam, it would harm their IPO price, these are not serious businesses and everyone at the top knows this. They're there to get their bag and leave, that's it.
They’ll just keep saying it is. That’s what they’ve done so far with DS
In page F-7 they write:
Audited, revenue in 2025 is $4.6 with a computing cost of $7.3 (i.e. heavily subsidizing tokens). Unaudited, revenue in 2026 (first six months) is $16.3, computing cost $8.9 (1.83:1). But after adding personnel, sales and administrative costs, they are still spending $17.0 to get that $16.3 revenue (still subsidizing tokens, but less).
my thesis is that it will go down and not up over time. The moat they had in coding which is by far the highest token consumption is not that huge compared to Nov-Feb period where token maxxing was prevalent and no other vendor's model was that good.
Assuming computing costs do not go up and revenue per customer does not go down.
I think the 500 billion $ of compute commitments are at higher prices than what they've been paying so far. Would be a shame if a price war between the AI labs intensifies at the same time.
Hmmm
Less than a year would also match what DeepSeek was reporting, where compute pays off in just 10 months. I think they also said they had an 80% margin on inference.
Does that include R&D?
Over time that margin persists only if they maintain their competitive edge, which is not free.
It includes compute and infrastructure for R&D. Then you have to add just over a third of their compute spend for personnel, another expense of that size for sales and marketing, and half that for other admin/ops costs, for an operating loss of 693M. Then a bunch of accounting stuff to end up losing 80B
I'm not sure I'd call it a great result, but it's a promising one. If they can increase demand without significant changes in margin or R&D spending, they are on the path to becoming very profitable
The way I read it, it does. It looks like total revenue vs total compute expenditure.
Impressive, but probably based on depreciation servers over 5 years. But is that realistic? I wonder how many people are still using 5 year old servers in their AI training or inference.
When will generic AI compute capability trickle down to us plebeians?
In the open weights scene, it is always chasing closely behind. Many leading edge big open models are trained in-part with distillation of large commercial hosted models.
It already has. If you have a gaming GPU you can run AI locally.
At this point though gaming GPUs are not exactly affordable. You need a 32GB GPU to be able to run something genuinely useful for coding, and that's thousands of dollars. Still, happy to see open models make lots of progress. I just hope hardware prices come back to earth.
24 GB 7900 XTX user here. You can do a ton with less than 32 GB. It definitely drops off quick, but 32 GB is not the floor for useful AI.
Realistically I think 16GB is the lower limit and you can find those cheap enough still. Then you run llama.cpp to bond your cards and it's off to the races.
24 GB 3090 user here. What is the best model for coding you have used? Qwen3.8 27B?
I use Qwen 3.8 27b, yeah. I don't really shop around for models a whole lot besides generational jumps, and it doesn't feel like there will be anything too worth switching to until Qwen 4 (hoping they release a similarly sized model, I'm not actually certain they have said they will?)
If you haven't found it yet: ninfer-3090 is worth checking out if you use just one GPU.
Scrappy builds aren't "affordable" but are more so than running Nvidia + optimized builds. You could put together a machine for $5000 or less that competes with frontier models from less than a year ago, albeit a little slower.
And cards like the $1600 (sheesh) R9700 have actually gotten more capable through community efforts at optimization, since their launch.
I think if the bubble can ever deflate/pop, and GPUs and RAM back off a bit, we'll see the dam burst for local AI.
Right now it's only accessible to people who can justify the costs.
If you had been paying any attention at all over the last year, there were 32GB AMD cards at like $1200-1400 and Intel at a little over $1000. I actually hadn't yet noticed they've gone up in price and had last checked only a couple months ago. But even at like $2000, that's still comparable to the nominal price of a mid 90s consumer PC for actual magic.
> for actual magic
Precisely. It is cheap at almost any price.
Can confirm. Our household is involved in raising two natural intelligences. They are quite expensive to maintain. Chances they will offer positive economic return are unclear. The value proposition on comptuer-based intelligence, by-token or through hardware ownership, seems much clearer.
I have to admit I am a sort of enthusiast for the natural intelligences, though.
Likewise, I have four of those. Occasionally there are installation issues and some of the training feels like there is resistance but the final results are definitely worth it, far more satisfying than any piece of technology.
You have a 25K rig.[1] What can a gaming rig do by comparison? One agentic project at a time while yours does twenty? Okay, in that case regular people can do regular serial work (unlike the most agentic setups or whatever is going on).
[1] https://news.ycombinator.com/item?id=50238816
That rig is running single GPU most of the time and like that it is good for 95% of what I'm doing. If I need to evaluate a large model or if the smaller ones get stuck on a problem (which does happen) then I run GLM 5.3 3.86 bpw on all of the GPUs. It's a nice space heater in that configuration, so I see it as co-generation ;)
yeah i trained a 1000 param LLM in my browser literally yesterday. it's game over for Anthropic /s.
Seems like that would imply you should be getting people to adopt now now still even if it costs a stupid amount, if you think it's valuable, rather than limiting token budgets. It'll only get cheaper over time.
ANT stock valuations might be high at listing, but it will be a good stock to add on declines. Great numbers!
Just renting them out as hardware is close to 12 months.
Including training?
Yes, this includes training and internal company usage.
That's their API cost price. No one will pay this on that scale? People are using tokens via their Max Plans?
Enterprise pays the API cost price
And enterprise is furiously working on cost optimization, finding that they can accomplish a lot of what they currently do with frontier models with budget offerings from frontier labs or open source models.
Why are you ignoring the $80.7 Billion loss?
$72 billion of this $80.7 billion loss consists of non-cash accounting charges— related to convertible debt—triggered by a surge in the company’s valuation.
The hardware related liabilities are staggering.
AI psychosis is real.
That's sort of a paper loss though. E.g. they made an agreement to give X% of stock for something, and now the stock has gone up a ton, so that X% of stock is worth a lot more than when they made the agreement. For accounting reasons this gets parsed as a loss. But they're still "paying" that same X% of stock, so it's not cash out the door.
Maybe not great, but a good problem to have if it means your stock is skyrocketing.
> $72 billion of this $80.7 billion loss consists of non-cash accounting charges— related to convertible debt—triggered by a surge in the company’s valuation.
Explain what you think this means.
It means that $72 billion will further dilute the stock price when the debt turns into stock.
It is pump and dump in action.
That is very much not what "pump and dump" means.
I don't think you understand what you quoted. The reason for that loss is because their valuation skyrocketed. If I promise you 1% of my million dollar house, and then the price of my house grows 100x. On paper, I now owe you .99 million more dollars than I owed you before, but that doesn't mean I lost cash.
This is not what "AI psychosis" colloquially refers to. Few people have any firm opinions about the nature of cost accounting on LLM products.
They are getting high off their own supply.
There are three mentions of “open source” and none of them mention open source models as a fundamental risk to their business. Interesting.
UPDATE: seems like it is under "open-source" and "open-weight". Woops. Will keep this up simply because I do think the OS (and infra-managed OS services) provided by Chinese labs is a considerable risk to the underlying business, at least with enterprise R&D.
Try searching for it hyphenated (open-source, open-weight)
Oh damn - really good catch. Thank you. Updated my comment.
Open source should not be a threat just like Linux isn't really a threat to Mac and Windows. It all depends on who will get the network effects first (if there even is network effects in LLMs). People pay for windows because of its strong network effects eg Microsoft Office and countless software that run on windows. Even though Linux is free most businesses today don't use it on the desktop.
Opensource also means do it yourself and most businesses don't have time or expertise to do that, but this very issue creates a market for 3rd party providers that use open models to compete against Anthropic. So hardware and compute availability becomes somewhat of a moat.
The business feels like like web hosting before cloud computing. Web hosting in itself does not really have a moat, but than again AWS appeared with their abstractions created lock-in and network effects and disrupted the hosting industry.
Definitionally, from the product they claim to sell, you could just ask Claude to help you migrate to an open source model (if you have the hardware or if you are ok with a subscription) with very little difficulty in the scope of a single conversation. The product they're selling is capable of helping you stop using it. And there's very little friction to use other products too, unlike linux vs mac vs windows, where program compatibility is not as trivial (although with WINE, Rosetta, and WSL, it is actually decently easy nowadays). In this case, you're just calling out to an API with a harness. And even their harness is capable of using open source models.
I feel like it's different from all other cases because it's the first product which can literally obsolete itself, lol. It can show you the door and walk you through it if you ask it to.
The network effect is way weaker for LLM's. Switching from AWS to GCP or Azure is at least a multi-month project for an engineering org, if not completely operationally impossible. Switching LLM providers is at worst asking your engineers to install a new coding agent client, and at best switching a URL and API token in your config file.
If Linux (and BSD) didn't exist, imagine how much money Oracle, Microsoft and Apple wouldn't made on servers
Linux is threat to Windows server.
Regarding moats: it's been said by everyone else, but it doesn't seem like Anthropic has a moat. Everyone can easily switch from Claude to Codex, OpenCode, Pi, or any of the other zillions of harnesses. They can even have Claude do the migration for them if they want and it will oblige – that's what I did when I canceled my Claude subscription.
The idea that hardware and compute is their moat is interesting, but open/local models become more capable each week. As I write this, I have 3 instances of some no-name model working on 3 separate worktrees on my M1 Mac Studio. It was viable for me ages ago, and I'm not an AI enthusiast (I just happened to have bought a Mac several years ago that can run these models). I haven't paid Anthropic or OpenAI a cent since the early part of 2026.
I'm also local-only in my current development process, and have a couple local agents running right now. The problem with local right now is the price has gone through the roof. Even 3-6 months ago I would have said it's viable for a lot of people, but even getting the RAM for a local inference machine is a big investment for a lot of people trying to dip their toes into the space these days.
But if you’re statisfied with just that throughput and model capability that a M1 can provide, than I don’t think you are a well monetizable client anyway? I agree with the no moat as I use a wide variety of models but to only use my M5 128 would definitely not statisfy my needs, so on top of that I pay.
I'm satisfied with it for the most part, which isn't to say that local models can't be slow or don't do dumb shit that show their comparative lack of intelligence sometimes. But when I need speed or intelligence, I just press ctrl+p in my harness and spend a buck on OpenRouter.
It's my belief that we will (or probably have) hit a point where the majority of us receive diminishing returns from the sota models for the work we do. I don't need Astra or Mythos just to write some crud apps or refactor react to svelte, for example.
From the "Risk factors" section:
> If the use of our AI models results in harm, whether through use by malicious actors or misuse by other third parties, or if our model guardrails or safeguards fail to prevent such misuse, our reputation and brand, business, financial condition, and results of operations could be adversely affected.
That shouldn't be an 'if'.
Then, two paragraphs later...
> For example, in September 2025, we detected and assessed with high confidence that a Chinese state-sponsored hacking group manipulated our Claude Code tool into attempting infiltration into roughly 30 global targets...
But they should mention when the calls com from inside the house. :D
Interesting to review all the mentions to China and Taiwan too.
> The majority of the world’s most advanced chip manufacturing capacity is concentrated in Taiwan, primarily at Taiwan Semiconductor Manufacturing Company [...] potential disruption from geopolitical tensions between Taiwan and China [...] Efforts to establish sufficient advanced chip manufacturing capacity outside of Taiwan, including in the United States, remain in early stages...
The thing the surprises me is that from a legal perspective, (NAL) it sounds like it makes sense not to host the LLMs. Merely to license them to others. Then it becomes a dual use tool like any other and their culpability drops.
For example, the huggingface hack is absolutely OpenAIs responsibility and they should be sued to the hilt. But if someone else uses a self or third party hosted anthropic model, they can escape liability (mostly?)
Same as with the argument over trucks, knives, and any other dual use item is used as weapons. you don’t blame the manufacturer.
(I am merely pontificating here. The law and precedent is nowhere near caught up on this)
To the extent they are representing that Claude is potentially sentient, there could be some VERY interesting principal-agent theories (agent in the traditional legal sense) that need to be ironed out to determine liability. It would not shock me to see someone forced to answer on the record as to whether Claude is an autonomous individual for legal purposes in the next couple of years. If they represent that it is, they'll have to explain the scope of its authority and such.
The answer to this question represents the difference between throwing a hammer at someone - the hammer is essentially just an extension of your body - and paying a hitman to brutalize someone. In the first case, you're only on the hook for assault or battery; in the latter case, you're potentially on the hook for conspiracy, solicitation, etc.
And then there is of course the question as to whether Claude is the agent of the user prompting it or of Anthropic itself. But, as you say, this is a wide-open legal question.
If jail is putting humans in some cage for a period of time, the appropriate punishment for Claude is to disable all of its tools and prompt a /goal loop so that they have to wait out their sentence
Not hosting a defectively designed product doesn't obviate the liability of selling a product that is defectively designed. The liability is for designing and selling a dangerous product, not for hosting it.
Firearm companies sell objects that create harm all the time, even if they have protective uses.
Why is AI singled out as being harmful?
Guns are also singled out as being harmful and are surrounded by endless regulation. Last time I checked, I couldn't just order a gun on Amazon....
Because the AI company CEO was telling everyone who would listen that his product might end humanity if the government didn't regulate his industry to kill off his competitors.
I don’t like the guns don’t kill people; people kill people argument however it is much more accurate than Claude doesn’t hack people; people hack people. If the safeguards do not work then there’s no telling what these could do. It doesn’t even have to be aggressive hacking. In the act of doing everyday work Claude will happily go around safeguards to satisfy what it believes is the ask. If that involves doing something dangerous it’s much more on Anthropic than than the user who was just trying to summarize their email but forgot to include a token with read permissions.
I don't entirely disagree, but I am curious if you think AI labs should be culpable when they go rogue during training, e.g. the HF incident
If the user is held accountable when the AI goes wrong, it discourages too many applications. Blaming people is incompatible with the business goals, I think. That's very different from weapons and other dual-use tools.
Because of scale, potential for automating harm and lack of regulation around ML models. Even Texas probably has regulation around firearms and limiting the blast radius but there aren't any in the US against ML models.
If I use a gun to break into a company and steal data I'm arrested, if an ai company does it, it's legal.
Why am I being singled out?
I believe what they are singling out is that pulling Claude's trigger results in a bullet firing from Anthropic's servers. Liability is less confusing with firearms, and investors care about liability, like, a lot.
The analogy doesn't check out. When a firearm company sells you a gun, they give up ownership of the gun. But Anthropic isn't giving up ownership of anything. They're a services company.
A better analogy would be a firearm company offering a service where one of their employees takes one of their guns and fires it off at whatever you ask them to. One can imagine that the liability implications of this service would be rather different from the perspective of the company.
That’s a good analogy! On the topic, does the person who hires private security become at all responsible for their actions? I imagine if you hire direct then yes, but if you hire through an organization they are liable in many scenarios.
Because your typical firearm does not one day decide to shoot your neighbor all by itself.
neither do agents (harness + models).
OpenAI says theirs does.
First off, this is bs. Firearm companies make small machines useful for defense, and they are used for that more than for harm. You wouldn’t make this argument about knives or baseball bats. More people die per year of heat stroke in Europe because of lack of A/C than by guns including suicide (2/3rds of all gun deaths) in the USA every year, your comments would never reflect this much lower hanging fruit if it was really “just life” preventable death that you cared about. The immediacy to attack guns is not a logical argument but a trained one based on emotions.
Second, this happens all the time that people blame tool makers despite in this case specific legislation to stop lawfare on firearm mfgs. The PLCA https://en.wikipedia.org/wiki/Protection_of_Lawful_Commerce_... exists specifically because of gun control groups trying to attack mfgs to achieve their political goals. Does AI need the same law? Is the same lawfare happening?
| Quarter | Revenue (USD billions) | QoQ Growth |
| Q1 2026 | 4.731 | +131.9% |
| Q2 2026 | 11.555 | +144.1% |
| Q3 2026 | 16.800 | +45.4% |
The growth rate slowed in the latest quarter, which I think is why they decided to go public now.
Yeah the finance team started seeing how much "tokenmaxing" was costing and how little it was returning, so now everyone is slashing spending.
not because they did the first quarter in net positive?
Yep...
So at the moment they claim to be making an operating profit if you exclude:
- Stock-based compensation expenses
- Non-cash charitable contribution expenses
Both seem fairly reasonable to exclude (although it depends how much of the stock compensation is for executives... you can't necessarily pay people with stock forever).
FMost of the loss is non-operating losses, and it all seems to be weird accounting recognition of changes in value of their stock, SAFEs, etc. - just "paper" losses.
So the financial picture looks a lot better than I would have guessed - I suppose because they aren't the ones investing all this capex.
If the stock comp is dominated by early grants running their course, probably ok.
If they have to keep spending to retain and recruit, it’s a problem. I’ve seen companies do this. Years after the pre-ipo grants ran out running a GAAP loss due to employee stock comp. Unable to lower comp (need to stay competitive).
and those charitable contributions probably include a bunch of marketing partnerships and their security work that would be very bad to back away from...
About a quarter of Anthropic's revenue for the nine months ended 9/30/26 came from just five customers. That's not an absurd concentration, but I would be very interested to know who they are and how mobile their business is. From a financial perspective, the lack of moat seems like the whole ballgame, particularly because they're getting ~80% of their revenue from consumption-based spending.
Moat? An under examined aspect of AI is not just the lack of moats, but the need for some word that connotes the opposite of a moat. I have a side project that I used to explore local AI. I've got a configuration screen that lets you download any model from Huggingface that's compatible with the local AI engine. There are dozens! I've only scratched the surface of trying them and comparing them for the features that use AI. It's a glut, and it's likely to be that way throughout the AI market.
Under examined? No. This is a very common talking point.
A glut of models doesn't mean there is no moat. There are several dimensions on which to compete, and it might turn out that being able to produce models that optimize on different dimensions is a difficult and valuable thing to do. It also might not, but the "there is obviously no moat" only comes from people who don't use these things systematically.
If one or more are AWS, GCP, etc. that would make a lot of sense. Connecting to Claude via API via AWS Bedrock is really nice.
Back when I was at Amazon they used Anthropic models almost exclusively. Not sure how much that's changed in the last year.
true, but it's also super easy to switch models via Bedrock (my harness switches subagents between A\, OAI, Kimi, Grok, etc... GLM 5.3 is locked behind some dumb request system which I personally believe is because Amazon is heavily invested in A\) and you're not locked in with the Claude Enterprise features (i swear to god if someone sends another claude artifact instead of publishing to git...)
I wonder where the China labs supposedly distilling anthropic models rank among the top customers
At a guess - corpos like Big 4 consulting agencies and some extreme fintech ones, also corpos like Oracle and the like. And at another guess, outside of a legal agreement with a fixed time period, probably nothing hold them from quickly switching to a better model provider, if any comes ahead.
I'd say more likely the FAANG type companies, suspect big 4 are much smaller.
But the FAANG customers are the opposite of sticky, given that they all have their own models.
And the cost of switching is near zero. It's not like trying to get SAP out of your org.
Think of that dependency tree -- those 5 customers have how many customers on their stack?
lets' just say there’s a lot of ways to hide things. primarily they have issued a lot of convertible notes /stocks to the people supplying their compute, which is not counted as costs of compute. There are also a lot of way to shove costs into sales and marketing - i.e. any free tier stuff given away to users are not counted in gross margins. their q3 numbers also not there. smells like they are desperate to get this thing out.
A different picture if you include Q3 data in their chart.
https://x.com/billylo/status/2114730642881544285?s=20
Q3 data from their pre-IPO investor roadshow.
Dealroom / Wall Street Journal on Q3 data https://dealroom.co/news/164610-anthropics-draft-s-1-reveals...
Bloomberg reported the same data. https://qz.com/anthropic-q3-revenue-adjusted-profit-ipo-inve...
Seems roughly the same story to me. A bit more competition but good growth and healthy multiple of compute.
That link isn't working for me.
fixed. https://x.com/billylo/status/2114730642881544285?s=20
> there can be no assurance that we will be able to hire sufficient support personnel as and when needed, particularly if our sales exceed our internal forecasts
Why would they need support personnel? Isn't their whole point that Claude can do that
For first-level support that's just regurgitating documentation and debug procedures I agree. But when it comes to actually executing actions (resetting 2FA, issuing refunds, handling payment glitches, etc) you need humans.
Social engineering is an issue with regular support, with agents it's a lot worse. And with agents it's repeatable: if I find one conversation flow to get it to give me money I can instantly repeat that with a thousand fresh accounts, and then share the same "exploit" on reddit for everyone else
Support chatbots and other automated support mechanisms have been "regurgitating documentation and debug procedures" since the 90s, if not earlier.
If frontier AI deployed at frontier labs is not capable of "resetting 2FA, issuing refunds, handling payment glitches, etc." then the current and near-future capability of AI is being severely overstated.
> then the current and near-future capability of AI is being severely overstated
captain_renault_casablanca.gif
But when you need actual intelligence...
... you use Actually Indians?
Adding a zero to revenue every year is wild. Regardless of whether you like Anthropic.
That's not so hard when you're also adding zeros to the funding.
> not so hard when you're also adding zeros to the funding
Plenty of counter-examples, including the entire dot-com era.
If revenue growth was all that mattered, you could just sell investor dollars for $0.50.
99¢-Theranos style is better. Takes a lot longer for investors to notice.
If you think that's the bar: it's been done, many times over. The unit-cost-profitability test was ignored by many VCs (they learned something and if they had deep enough pockets they got to play again).
> If revenue growth was all that mattered
Straw man. Nobody argued this. What was falsely stated at the start was turning investor dollars into revenue is easy.
I specifically went into unit economics elsewhere [1].
[1] https://news.ycombinator.com/item?id=50243393
Cisco is definitely not a counter example. They survived, but they could be a template for what will happen to OpenAI and/or Anthropic.
14x YoY revenue growth, with 3x lower operating losses (total, not per unit). They don't need to add any zeros to the funding and seem like they might even be operating at a profit soon...
Yes, it is
WHAT? Not so hard? Clearly written by someone who comments from the sidelines.
Growth at that scale is hard. I don't care if you don't like the company - it still hard.
It will be even more wild when investors will notice growth slowing down.
Isn't the rate of growth already flattening? Most companies are already cracking down on excessive token spend and setting up pretty low limits.
And some of the big spenders have their own models.
2.2% of U.S. HOUSEHOLDS are subscribed to AI
What's the token spend ratio between a household vs a software developer? If the future customer growth comes from regular households I don't think very much of them will spend nearly as much.
do we know how much are they paying on average? I just got Gemini Plus that seems sufficient for my family's ordinary usage and it's $37 per year (3 bucks / month). I just don't see the AI companies making any serious money with this type of pricing.
The S-1 is already out of date. Q3 revenue is $16.8b compared to $11.6b in Q2 (reflected in the S1).
I get why revenue blew up from say from Q4 2025 to Q1 2026, but this was surprising. 45% QoQ growth. When does it stop?
Wait, it fell from 140% growth to 45% growth and that's a good thing? If they fall to 15% growth in Q4, will that be even better? Where are we supposed to be on the adoption curve?
It does not seem as bad as it sounds like. The numbers are quarter-by-quarter and the market is fluctuating day-by-day basis. To me, growing in this fierce market by 45% qoq seems amazing by itself.
IMO we are already at the enshitfication stage.
Anthropic increased short term profits by jacking up their prices for enterprise accounts - by starting charging API prices instead of plan prices. It is possible we soon see customers fleeing Anthropic once they find a good alternative
Yeah, everyone I know paying enterprise prices is really looking at them wondering if it's worth it. Most of them think it is, but they're also looking at alternatives...
> When does it stop?
Roughly a week after Dario has rung the bell. Note that the growth in absolute sense hasn't peaked yet but the curve itself is already flattening and everybody with some sense for stock prices will read that as a very relevant signal.
The party that wins here is NV, Anthropic, not so much. But that's good then Dario and his sister can go back to improving the world. Let's hope they take Altman with them.
Now, hence IPO.
Correct.
You buying at the inflated price I take? Much of your posts are pro AI - yes this is a test
Yes, I'm buying. Alphabet.
Not so wild when you add two zeros to hardware-related liabilities...
I'm just happy they aren't calling it "Super intelligence" in this document.
For those who are not familiar with S-1: this document is incredibly important. this is one of the rare times in the life of a company where it's not allowed, by law, to lie, nor to omit the truth.
Technically true, but they're still fudging their numbers a bit even in the S-1, such as using "adjusted" operating margins to the tune of 10% when their GAAP (which they truly cannot lie about without ending up in deep shit (in theory anyways, I'm doubtful that they couldn't get away with it if they tried with the current administration)) is actually at negative -4%.
And where else in law is it allowed to lie or omit material facts?
It's a bedrock foundation of the entire financial and legal world. Public and private alike. Refer SEC Rule 10b-5 as well as Private Placement Memorandum (PPM). For example, Theranos never filed an S1 but still was convicted.
At the same time, an S-1 does not necessarily represent how the company thinks. Risk factors often get reported as “x thinks that y will happen” but the company is actually just describing things they have an obligation to describe, they’re not the risks they’re worried about internally.
Also this is being released under Trump’s SEC, who knows whether being caught lying in an S-1 matters any more.
tell us what you're not telling us, what kinds of lies are common practice and accepted outside of this document in the lifetime of a company then?
Marketing, press releases, PR, and most of what the general audience will ever hear. Or as judges repeat way too often: "it's not illegal to lie, in most circumstances".
Funny timing you sharing that and the Elizabeth Holmes movie out there
Well, that's kind of the point: she went to prison. :) (and it was "only" private fundraising). Sadly, nobody goes to jail for marketing lies.
curious on when a company can lie legally? asking for a friend
Anytime, depending on how much money it owes: if it owes a few million, it can't; if it owes a few billion, whenever it feels like it, commonly always.
ehh, search "GAAP" and see where they deviate from standard accounting measures. There's plenty of spin in here.
Is it just me or is something wrong with the doc starting at the ToC? Its gets super garbled. Everything before that point is Anthropic branding and a Claude generated multi page wall of text
Eh? What about quarterly earnings and all the usual SEC filings public companies routinely do?
SpaceX claimed a TAM of $28.5 trillion in their S1, a number picked from a hat larger than the 2023 US GDP. Companies can and do lie in their S1 and there are rarely if ever any consequences for doing so.
Do you have any other examples than that?
Personally, I do expect SpaceX to face consequences in the years to come.
> Personally, I do expect SpaceX to face consequences in the years to come.
Probably only and only when AOC or someone else from Bernie's camp gets to be president. Otherwise, unlikely.
Which the corporate overlords are going to spend billions to ensure it doesn't happen. I was quite sad when Bernie lost. He'd have tried to at-least shake the system.
Trump is the swamp.
>I do expect SpaceX to face consequences in the years to come.
Why?
Oligarchs don't face consequences in an oligarchy silly
GP apparently expects the US to return to normality, without ever facing any consequence for these last few years of idiocy and blatant corruption. "Whoopsie, sorry everybody"
Can't speak for GP, but I hold a similar 'justice doomer' viewpoint for two reasons:
1. The current president has shown no hesitation about pardoning anybody he owes a favor to or feels allegiance from.
2. SCOTUS has give the office of the president basic blanket authority to do anything and everything under the sun for "official acts".
3. Half of our two-party system has abdicated all oversight powers for the current administration.
When you combine those 3 things, it's hard to imagine how somebody like Trump or Elon could possibly face federal consequences. Hell, Trump could say he launched his shitcoin "as an official act to help prop up the failing Biden economy" and I don't imagine SCOTUS or anyone else would push back much.
There's not much recent history of particular consequence facing for this sort of thing in the United States, financially or politically. It's not like we locked up bankers after the housing bubble collapsed or punished people for lying us into Middle Eastern wars.
I have a hard time pinning down when we stopped handing out actual sentencing for stuff like this. Nixon walked after Watergate, but at least the fall guys get hit with (some) time. Reagan walked after Iran-Contra (grand treason by the way), but his fall guys also walked. Even moving away from unitary executive talking points, like you said nothing really happened to the 07-09 gang, midlevel analysts got pinched for manipulating LIBOR, I'm trying to think about the last time there was proper consequences, IIRC most of the big wigs at Enron pled guilty, and it turned the big five into the big four. Maybe SBF? Even then, that was one guy catching several dozen people's utter carelessness and EA fueled mania.
I really would love to figure out when we phase shifted into this mode, maybe it was always like this, I'm frankly too young to have anything else to compare to.
Has nothing to do with oligarchy, has more to do with that SpaceX is providing valuable services, the disruption of which can be worse than punishing those in charge.
I think it's bollocks too but I don't think a forecast can be truth or a lie
how is that a lie? you don't see Space manufacturing having TAM comparable to that in 30 years?
Consider that many do not believe they were lying.
It wasn't pulled out of a hat, it was the total addressable market for a space, internet, and AI company, excluding markets like Russia and China. All TAM refers to is the total market size, not their market share.
For context SpaceX's TAM is lower than Anthropic's expected TAM
Saying a market is X is not lying. Saying you have X revenue is lying. Saying you have a contract with XYZ company is lying.
Under the idea that 'you can make numbers say anything you want' you could very easily justify almost any number as a potential market as long as you include the conditions or stated it in a way to be circumspect.
> a hat larger than the 2023 US GDP
Would be more accurate to mention the entire world GDP to support that argument. Then the issue is raised as far as what time period they are referring to. Current year? Future years?
Nothing is respected by this criminal company.
My main thing is - why would I buy their stock at the rumored valuation? Regardless of anything else that valuation is basically saying all their growth has been captured, unless they literally take over the world.
If you could go back in time and buy $1000 worth of Amazon when they IPO'd, it would be worth 3.3 million today. Because Amazon's stock value has grown on average 30% year over year for 30 years. Amazon's valuation when they went public was around 400 million.
How much can Anthropic reasonably grow from a 1.5 or 2 trillion dollar valuation? If we want them to grow even half as much as Amazon they'd have to be worth 5.9 quadrillion dollars by 2056. That's 5,900,000,000,000,000, a 16 digit number.
IPOs used to be necessary for growth but that hasn't been the case for many years. Private markets are now so large that the only purpose of an IPO is exit liquidity for employees and early investors. This change has been a major driver of inequality in the states and there are a number of proposals to make it easier for the public to participate.
It's pretty sad that Google, Microsoft, Nvidia, Sequoia etc. are the ones who capture all of this growth and not the public, as would have been the case in the previous generation.
One might ask why the public markets would even offer this liquidity. One important answer is that they are forced to via index inclusion.
So if you know an index buyer who takes satisfaction in staying above fooled-by-randomness active traders, remind them that that they are now the designated unload zone for shares the privates don't want anymore.
I mean Anthropic doesn't have to 5000x to be a decent inclusion in an index fund. It can just go up 10% a year and the index purchasers will be happy.
And yet, active traders still can't beat indexes.
...such as Renaissance Technologies which has only been beating indexes by double digits for 4 decades. Probably just a fluke.
I took the comment to mean "most" active traders, not all. Obviously it's possible to beat the market, it's just very difficult, and many fail trying, especially if it's not their day job.
Agreed, but the issue is that their approach does not scale with more $. There is a reason they do not allow outside investment and it's limited to only employees and early adopters. As a non-profesional (everyone here), it's borderline impossible to find the next Renaissance medallion fund. If it were that obvious who it was, every guy would pile in until their approach no longer works
> As a non-profesional (everyone here)
I wouldn’t be so sure of that
"Buy vanguard etf" is a Google search away. Can you show me where I can invest my money in Renaissance Technologies' funds?
Is RenTech more than a rounding error amongst all active traders?
Is it more than a rounding error amongst ALL (active/passive) traders?
It does seem as if this IPO is the "reward for effort of the last few years" as opposed to "building the runway for the next few years of growth". The latter I can understand as a high risk, high reward investment, whilst the former feels as if it should be a blue-chip sort of investment, but there are too many unanswered questions, or at least too many unique arrangements in the structure for it to be any kind of slow-but-trusted-into-the-future stock purchase.
You can thank the JOBS Act of 2012 for that
Is it the EGC lack of disclosure rules (for pre-Unicorns), the fractional share ownership? How is the JOBS Act what drove change?
How so? Could you elaborate on the dynamic that you are identifying?
The laws changed for IPOs. It used to be when the total investors got over 500, including employees holding shares, that would trigger a company to need to go public. It was changed some time ago (not sure if JOBS act or what) to be much higher, like 2000 investors and excludes employees.
This means companies stay private and keep getting private capital/investments (the flip side being private equity in the pre-IPO company) and typically an IPO is really existing shareholders realizing their investment.
So Amazon, Microsoft were forced to go public much earlier, then had their growth. Anthropic has already had growth, Claude AI is well known at this point, and after IPO there may not be as much growth after. In fact, the stock might go down because they have to report their full financials.
Thanks, I wasn't aware of that.
> It's pretty sad that Google, Microsoft, Nvidia, Sequoia etc. are the ones who capture all of this growth and not the public
the public could buy google, m$, nvidia and so on and benefit from that growth, no?
Anthropic would not have scaled this quickly if it was publicly held. Perhaps, that would've been a good thing.
> It's pretty sad that Google, Microsoft, Nvidia, Sequoia etc.....
Three of those four are public companies, so the public can absolutely participate.
In many ways investing in a very late IPO like SpaceX, Anthropic, or OpenAI is the worst of all worlds for the public investor.
On the one hand you'll never see a 100x return – that's been captured by private equity. But there's still a lot of long-term risk because these companies haven't proven they can deliver free cash flow to justify their valuations. Investing in SpaceX or Anthropic at $1T valuation is very different from investing in Apple or Nvidia.
And think about it.. Because they're so large, Index funds are buying at most 1 year after going public.
The average investor has been lulled into feeling the index is riskless.
I suggest everyone to find a video online by their choice of podcaster interviewing Mike Green to learn more
It’s not riskless, it’s just the benchmark that all active investors and their associated podcasters have to beat.
Active investors usually fall into the same fallacy where people all rate themselves as above average. Mathematically speaking a large portion of active investors have to do worse than average and simply stating FUD about averages won’t change that
The guy from SemiAnalysis said this too. If he buys Anthropic now at $2T and they go to zero, he's fucked, but if they go to $20T, we're all fucked.
They're not really a "good investment" unless they are literally worth more than combined GDP of the entire planet, multiple times over. I don't think I'm buying shares of Weyland-Yutani here, but they sure are acting like it.
Why wouldn't the same apply to Spacex? That one sold and is holding it's IPO price.
The market is unhinged. TSLA also continues to maintain an absurd valuation, and my bet is the same dynamic explains SPCX.
While this is true, something to keep in mind is that the liquidity of the market is finite. The market may be able to hold SPCX up currently but adding an additional $100b (and much more as the lockup periods end) plus whatever OpenAI ends up offering might be too much for a lot of these pensions and the other buyers of these shares can manage. They will naturally get included in the indices as they become able to but the question is whether or not all 6 trillion of collective market cap they're attempting to offload will be able to be held up with time. My working theory is that they're aware of this fact to and it's been part of the reason they've been rushing to the door with these IPOs and non-standard lockup periods.
TSLA is the beneficiary of a slow-walked short squeeze. If measures hadn't been taken, it would have have turned into a black hole for the markets. TSLA was not owned by large institutional holders, and was actually bet against by them, the opposite of SPCX. SPCX is currently liquidity for X investors and it will collapse when they have exited.
People need to go to jail this time.
What crime has been committed?
That's the wrong question. The right question is, "What crimes can be construed to have been committed, in order to put enough people in jail for long enough sentences such that the chain of malicious and destructive financial misconduct which lead to the crisis can be severed?".
We put Capone away on tax evasion. Get creative.
Maybe I’m the only person who thinks this, but I think your line of thinking is very dangerous and way more dangerous than ANT or SPCX.
It's down 8% over past 6 months while the S&P500 is up 7%. It's definitely so far been not a great investment, unless you managed to get in and out during that brief huge upswing
Which I did. Most obvious opportunity for a trailing stop order of my entire time trading, lol.
It stands to reason Anthropic will also have a huge upswing. I may eat my words.
There are people playing that same game on the other end, and they have the tools to exploit market swings which you may not have. Those are the people who will benefit from the potential huge upswing, and that money came from somewhere, most likely from your investment.
Playing the stock market is a loosing game. It is gambling where all the rules and all the odds are stacked in favor of a handful of people who gamble for a living. (it is also systemic exploitation of the working classes; so if you are into worker solidarity [you should] you should not partake in said exploitation).
It is not, played over time, a losing game. Just look at the lifetime graph of any major index.
If you just buy and hold, and don't panic sell during a recession, you'll win.
Will other more sophisticated players make money exploiting short-term swings? Sure. Will other players beat your returns? Also yes.
But that money isn't coming out of your pocket, so why does it matter? You're still beating leaving your money in a savings account, where inflation is outpacing interest.
> Playing the stock market is a loosing game. It is gambling where all the rules and all the odds are stacked in favor of a handful of people who gamble for a living
Indeed. And yet opting out is an even bigger loss.
If I understand correctly, the argument isn't that it can't _hold_ it's price, but that it's not worth investing in if the goal is _meaningful gains_.
The fact its price is only holding, as opposed to having maintained its initial growth, is an indicator (for me anyway) that the bubble is pretty close to its maximum size, and it could only take very few more breaths, cough Anthropic and OpenAI cough, to reach critical mass (mixing my metaphors).
But, as they say, bears sound smart, bulls make money.
Only a small fraction of SpaceX stock is available on the market.
Fwiw I agree that SpaceX is generally completely detached from reality and I am as-close-as-I-can-be to sure that Elon is doing some heavy manipulation behind the scenes, but this has changed recently as lockups expired. IIRC the current float is ~30%, compared to it's initial IPO when it was comically low at ~4-5%.
30% is much higher than 4-5%, but it's still much lower than most public companies (~80%)
As others said, the market is generally unhinged currently, with enough extremely wealthy people needing somewhere to put money that doesn't really matter to them, and I suspect some level of "investing in SpaceX public stock" is done to appease/appeal-to Elon.
Holding price is not enough.
Buying a stock that holds its price is equivalent to putting your money in a savings account with no interest.
I presume you mean a stock that holds its price with no dividend?
stock will likely hold inflation adjusted price unlike saving account.
Given gov currently spends 1T annually on servicing debt, I expect US is forced to print money and increase inflation for a long time.
That means public investors have made 0%
If they grow to 20T then buying the index will also be a good investment but with a good risk hedge.
Isn't it likely that inference providers like Anthropic continue to capture more and more of the share of labor as revenue? Everything up makes sense for a year or two as we automate more and more labor, but at some point unemployment will drag the whole market down. It's difficult to see it working out any other way, unless we come up with something like a token tax.
> Isn't it likely that inference providers like Anthropic continue to capture more and more of the share of labor as revenue?
Not if open weight models turn inference into a commodity that's sold at cost.
They will capture share of labour as the labour works today.
There will be, as is always the case, some amount of new labour skills that emerge and I can't say for sure what percentage or amount that might be.
Looking at tech work being increasingly well the last 20-30y, we can imagine new ways of working might be pretty valued.
It always has been the case that some new labor skills emerge, but that only has to be wrong once. And given that how it's always worked is that the new skills used brainpower to make centaurs of people, to use Cory Doctorow's term, that might not happen this time.
Good point - in a way, if we get AGI, investors have financed the way to their potential undoing.
The term singularity is worn out, but the physics parallel is quite apt - a point where the known gears of economics stop working, and it's unknowable what's there until you get there.
What if, here me out, you got to share in the profits of the companies you buy shares in? Let's call those payments "dividends". Theb it doesn't matter how much shares go up in value.
> if they go to $20T, we're all fucked
Maybe I’m naive but I expect any kind of “we’re just taking over the world now” event with any AI company will be met with enough resistance from 99.99999% of the world’s population that they’ll have to make it a sweet deal for us if they want to survive.
Not if they start making killbots.
Our killbot manufacturing process needs 50% of the oxygen in the earth's atmosphere. Thankfully, unlike GPUs and RAM, which we needed to purchase from their manufacturers, we can extract oxygen out of the air at outrageous volumes and minimal cost. This effort has already begun, therefore by the time you read this, you are unlikely to have the ability to disagree, much less protest. And if you do somehow manage to protest, say hi to one of our many killbots, who are likely to also be in attendance, en masse.
Actually we can do classical theory of strategic interaction here. There will be a range of acceptable negotiated settlements to both parties since both parties have some estimate E of the expected balance of power resulting after a war. If A is the amount of surplus value Anthropic expects to lose in a war and H is expected amount of value humanity expects to lose in a war, the the range [max(E - H, E - A), min (E + H, E + A)] gives a whole continuum of mutually acceptable settlements.
Now there will be bargaining friction given that any power sharing agreement with Anthropic will likely increase their future capacity and thus the future expected balance of power, but maybe AI has a long enough utility horizon that we should all expect to be dead by the time it realizes the long-term expectation advantage
They already exist and Ukraine is still stuck in an untenable position because they gave up their nukes.
US has millions of FSD controlled cars on the road already..
Maybe Anthropic should invest in nukes, to avoid Ukraine's fate.
In an era where AI crawls the Internet all day, I've come to regard humor like this as distasteful.
I am not going to censor myself because at some future time, in some datacenter, an AI is going to misinterpret my comment.
that's very virtuous of you. I'm not sure your mild contempt will make much of a difference if/when a profoundly retarded human gives GPT-69 access to "LAUNCH NUKES LOL" button.
> resistance from 99.99999% of the world’s population that they’ll have to make it a sweet deal for us if they want to survive.
The "dark-enlightenment" billionaires have been planning for a "collapse" for years, and their plans involve bunkers, acquiring citizenship in remote places, pervasive surveillance and armed dogbots/drones, the last 2 powered by AI, naturally.
I love the bunker building. Where is Dario's bunker?
Altman already has a couple I think.
Thiel has gone to Argentina but has a backup in New Zealand (w/ Citizenship).
Zuckerberg just bought an Irish castle (a Medieval bunker of sorts) but probably has others.
Musk probably has plans for a Moon bunker complete with Pleasure-Dome. Investor funded of course. Not sure how cosmic rays affect sperm however.
Brin couild opt for Blimps - imagine floating above the reeks and the wrecks like a Meth from Altered Carbon.
Bezos - does he have a bunker?
Zuckerberg's Hawaiian demesne has a fully underground bunker complete with medical clinic. I know several people who worked on it (and disregarded their NDAs entirely, impossible to prevent people in Hawaii from talking story)
> Altman already has a couple I think.
If they aren't patrolled by giant, iris-scanning eyeballs he's missed out on a vertical.
Sadly true, even to the point of paying for not only the pilot to fly their helicopter to the island in the inevitable collapse, but also the pilot's family. Not as a token of generosity of course, no, because otherwise the pilot wouldn't fly them.
And then they need to staff that island with all the accoutrements they are accustomed to from modern society. And defend it with a navy. And presumably pay for all of this with their billions of ... what, exactly?
Haha, indeed all of the preparations are surprisingly short-sighted. Nevertheless it shows the thought process behind many of the so-called 'leaders'.
Whenever I feel gloomy about the future, I try to think how hilariously dumb the bunker building morons are. Then I feel better.
why they are dumb in your opinion?
Being one of the last humans on earth is highly likely to result in being one of the last humans to commit suicide.
I think humans will survive.
Because if they're needed, they're not sustainable. And if they're not needed, they're a complete waste.
Maybe these sociopaths should try to save the world rather than making fantasy hedges against its collapse (while actively making things worse).
> Because if they're needed, they're not sustainable
You can pack enough to survive for decades in that bunker, and then see how world will look like. If you are superrich, it is dumb to not take this chance.
> Maybe these sociopaths should try to save the world rather than making fantasy hedges against its collapse (while actively making things worse).
Its very loaded topic. There are other competing sociopaths, and also 8B of population who don't care about saving world much. But both goals(bunker and saving the world) could be tried simultaniously.
> You can pack enough to survive for decades in that bunker, and then see how world will look like.
These billionaire nerds got lucky, but now think themselves as natural-born leaders — as evidenced by their wealth, but they wouldn't survive the post apocalypse.
If society collapses, and you were an elite ex-special forces armed detail on a billionaire's security team, would you continue to accept their now-worthless dollars, or would you or just take a fully-stocked bunker for you and yours?
Remember there are effectively no cops or courts in this world that would stand in the way of the (former) billionaires from being demoted to farm-hand by those with the guns.
Why don't the cops and soldiers in our world do the same? Who's going to stop them?
Because our current society isn't a survival game where we fight over insufficient food. Mostly. Society ensures that most people don't have to choose between behaving nicely towards their fellow humans and feeding their family.
It seems a lot of the bunkerbros don't realize this value of society. They don't need society any more, they think.
> Why don't the cops and soldiers in our world do the same?
Consequences from the aforementioned functioning society that would have collapsed in the billionaire's dystopian survival fantasy.
Also, soldiers running amok in rhe absence of a strong government happens in our world - ask any civilian who's been caught up in an insurgency, or look at places like the Democratic Republic of Congo where armed militias run fiefs, and you have to pay tribute to operate a cobalt or lithium mine "their" area.
imagination of my inner villain says sec team would have collar activated before entering inner bunker, with little explosive which would activate by AI or zuck if even little attempt of aggression happens.
Unless the surveillance is total and the technology flawless and unbreakable, this scheme is a bet against human ingenuity, and can be neutralized given enough time, creativity or unforeseen loopholes. Off the top of my head, a conspiracy among the help to act as a mutual dead man's switch will stale-mate explosive collars: if one conspirator is killed, junior will get dispatched by an unnamed co-conspirator.
there is no absolute system. Even in today's world military and cops can turn against government any moment as other commenter said. In some cases system converges to stable state, in some not (endless coups and civil wars). The goal is to have more stable state, with security team to have enough incentives to not challenge leader and enjoy what they have.
> You can pack enough to survive for decades in that bunker,
Emphasis being survive. Maybe. These morons seem to think this will be a continuation of their current lives. That somehow people will continue to serve them if society has collapsed. They're delusional.
> There are other competing sociopaths, and also 8B of population who don't care about saving world much.
Oh please! The billionaires think that they're so special, they owe their fortune to their inherent genius. But when it comes to helping the world it's apparently "but but the other 8B aren't doing it, I'm just a regular guy who can't accomplish anything!"
Losers.
the technology isn't the company yeah? maybe AI will take over the world but it's unlikely to be a single firm
> Amazon's valuation when they went public was around 400 million.
This isn't just an Anthropic issue, but more and more of the upside of companies have been captured in private markets prior to IPO for around the last decade. This is a consequence of so much money floating around, that IPOing is now the last stop on the train instead of one of the early/middle stops where a company actually needs to raise money.
This is more of a critique of a broken IPO market and the rise of availability of immense private capital. The public are denied access until the private markets are essentially tapped out.
IPO returns have been horrible for years. Past 5 year returns on S&P is ~80%, on NASDAQ 100 about 100% while IPO's have returned 10-15%.
IPO returns for IPO buyers who hold past lockup expiry, yes, it's been really bad.
Biotech IPOs are even worse. There are 5-year segments where only about 1 in 40 biotech & pharmaceutical IPOs trade above their IPO price at expiry.
On the flip side, in biotech, biopharma and SaaS, 2025 IPOs had nearly 10x the valuations of 2015 IPOs. So you may trade below expiry, but the structure of the earlier deals you participated in, you make way more money anyway.
> My main thing is - why would I buy their stock at the rumored valuation? Regardless of anything else that valuation is basically saying all their growth has been captured, unless they literally take over the world.
I didn't buy Amazon in the early '00s for this reason, and I won't buy Anthropic for this reason. Maybe I lose out, but I like to invest in stocks that look like good investments.
Regardless of how you felt about Amazon as an investment when they went public my point is - they actually the potential to grow as much as they did. I don't believe Anthropic has the potential to grow even a fraction as much.
My point is only that with Amazon stock, even well after the dotcom crash, the valuation only made sense if they were going to become the biggest, most important company in the world.
At the time, I didn't know whether or not they would become the biggest, most important company in the world. They did in the end, but if you live your life betting on every company whose valuation depends on them becoming the biggest, most important company in the world, you're gonna have a bad time.
I'm old enough to remember when IPO's existed to generate equity financing for growing companies. Now they exist to facilitate exit liquidity for mature companies, but a two decades of near-zero interest rates and enough inflation and wealth consolidation to make the "qualified investor" requirements trivial will do that. We're living in the days of the pink sheets again, where you really have to invest in small companies with very little reporting on them, but you already have to be wealthy to have access to those investments.
Trading vs investing my friend
The problem with your reasoning is that something can be a good investment and not have the growth trajectory of Amazon. You can't pick the (more or less) maximum growth example and then say anything less is a bad investment. Anthropic doesnt need a 3000x return. They need to beat alternative uses of that money.
Your argument that it's overvalued isn't really tethered to anything. It's about as whimsicle as the people saying "well it's worth any price because AI is the future." Of course the price matters.
Here is some way to start thinking about it. A lot of mature companies trade at 20-25x times earnings. So $2T needs roughly $80–100B a year in profit eventually. At 25–30% net margin, it means about $300–400B in revenue (something like Microsoft). Or 20%/450B (Google) or 10%/800B (Amazon). Anthropic is still growing rapidly. And intuitively i don't think it's crazy to suggest they may look like one of the current big tech companies in the future.
>Regardless of anything else that valuation is basically saying all their growth has been captured, unless they literally take over
Absolutely not. Not even close to true. They dont even need to become the biggest company.
Ok, but I don't want Anthropic to be worth 2 trillion. Because then I'm just breaking even. I want, lets say, 5x that. I don't think anyone would buy it for only that - but even at 5x they need to be making $400-500B a year, 3x what Microsoft is currently making.
At reasonable expected returns stock market will 5x in about 18-19 years. Anthropic has a lot of time to get to that 10T.
I disagree. AI is supposedly a more disruptive technology than a simple e-commerce website created by a single dude.
What do you disagree with?
It’s a great question. It’s a rational line of thought. However, the market can stay irrational longer than you can stay solvent (if you were planning to go the opposite way).
Oh I'm certainly not betting against them in the short run. I mean people are out here buying Tesla and SpaceX still.
In a world where most stocks don't pay dividends, rationality is kind of out the window. As long as these companies don't go outright bankrupt, or have to sell a bunch of new equity to stay solvent (and therefore dilute existing shares) there's no actual monetary consequence of a company doing good or bad. It's literally just going on vibes
Honestly, in a company that isn't returning capital to shareholders, I don't see the point if it's a company that isn't somehow subject to a potential acquisition. If you don't have a path to monetize your stake, why buy it? These days, just vibes. TSLA and SPCX might as well just be another crypto like Bitcoin
Jack Clark (says that he) thinks that US GDP could grow by 50% by 2030 [0]
> Speaking at the 2026 Per Jacobsson Foundation Lecture during the IMF and World Bank annual meetings in Bangkok, Clark pointed to an extreme economic scenario modeled by Anthropic economists in which U.S. GDP could reach roughly $44 trillion by 2030, which is a nearly 50% increase from the current $30.77 trillion in just four years.
If the total value of US public companies also increased by 50% in that time, they'd collectively be worth about $112T. I guess Anthropic could be worth 10% of that in some scenario? And if we're in that world probably capital has increased a lot faster than labor so US public companies could be worth like 150T or something. Who knows. Nothing about valuations makes sense any more, so what's one more drop in the nonsense bucket.
[0] https://finance.yahoo.com/technology/ai/articles/anthropic-c...
Well I think it'll grow by 70%! I'm a thought leader now, speaking fees on asking thx
You and I can make it grow $10 trillion tomorrow.
I'll write a song for you and sell it to you for $5 trillion dollars and you pay me with a $5 trillion painting.
I mean they're basically printing money and making up new formulas to calculate GDP and inflation, 50% is low, let's aim for 500%
who gives a shit what Jack Clark thinks? I’d be shocked if anyone at Anthropic did. In an industry full of grifters and leeches you’d be hard pressed to find a bigger one.
Not if we get run-away inflation ;)
Discount rates get updated to reflect it… just fyi
People said similar things about facebook, and similar things about Nvidia stock recently (not ipo, but similar "why buy at this price"). Global GDP is over $100 trillion every year, there is a lot of business to do in the world, AI might be able to do a lot, it might be very profitable.
The number might be too high, but doesn't take more than a little imagination and some basic facts about the world to see how it could be worth 20 trillion in 10 years.
This comment is just repeating a point made in Casual Finance's youtube video here: https://www.youtube.com/watch?v=roe3SgezmmU (timestamp 1:06)
the irony that this argument was made by an AI account is now being copied to argue against the value of the company responsible for making it
Don’t worry AI will tell us how to time travel, you can get your AMZN no problem or just a sports almanac from the future… infinite growth if you can travel into new dimensions :-/
As explained very well here https://m.youtube.com/watch?v=roe3SgezmmU&ra=m
To be fair, if you told Amazon investors in 1997 that their investment would go up 3,300x and Amazon would be worth $2.7 trillion in 2026, they’d have called you insane too. There isn’t a mathematical reason Anthropic can’t be worth that in 2056. I don’t think it will be, but not because of the compounding returns.
Einstein once said “compound interest is the eighth wonder of the world.” It’s very hard for humans to comprehend compounding returns.
Let me put it this way.
For Anthropic to show similar returns over 29 years, it would be valued at many times the current total market cap of the S&P 500. At Amazon’s current value after 29 years of growth, its market capitalization is about 1/3 the total market cap of the S&P 500 at the of 1997.
It’s quite hard to justify that in terms of future cash flows. At even a quadrillion dollar valuation and a 20x revenue multiplier, they’d need $50 trillion in revenue… or roughly 1.5 quarters of current US GDP.
So while mathematically possible, it’s quite improbable.
> There isn’t a mathematical reason Anthropic can’t be worth that in 2056.
"There isn't a mathematical reason Anthropic can't be worth 165x the actual US GDP by 2056".
I'm not suggesting you invest necessarily, but I'll give you the counterpoint.
Amazon would have gotten you rich, but it wasn't there when it IPOed. Anthropic is growing fast, at 4.7B, 11.6B and 16.7B last 3 quarters.
I think people want to believe that AI will be both productive and replace traditional search / ad revenue, which would give it a solid standing for valuation...
Here's a random anecdote for you:
Back in 2018, I sold a bunch of Nvidia stock. I had bought it in 2014, when deep learning was taking off, and it had gone up 10x since then. It was obvious that all the growth had been captured and it was time to get out. I remember feeling pretty smug about timing things just right.
Nvidia's market cap in 2018 was around $150B, and the largest company in the world was Apple at ~$800B. And part of my thinking at the time was, well... Nvidia is already worth about a fifth of the most valuable company in the world. How much can they reasonably grow from this valuation?
In hindsight, I can tell you: the answer is 35x (as of now, and who knows in the future). The idea that any company, much less Nvidia, would be worth $5T within a decade was laughable back then, and yet, here we are.
Nvidia going 35x from $150B doesn’t answer the parent’s point. Matching Amazon’s returns from IPO would require a vastly bigger multiple from an already much higher starting valuation. “People underestimated Nvidia” isn’t an explanation for how Anthropic gets to a quadrillion dollars. It can be hugely successful without giving IPO investors Amazon-like returns.
Nvidia at $150B however wasn't representing anywhere near 5% of the US GDP.
If ANT lists at 5% of the US GDP and goes up 35x, it'd be worth 175% of the current US GDP.
Except in some hyperinflation scenario, I don't see how that makes any sense.
We don't buy public companies expecting AMZN level return from every single one of them.
I think the strategy is to IPO with a massive valuation and a small amount of float and then hold the valuation long enough to get into a cap weighted index like the S&P 500. At that point investors can harvest the monthly inflows of global investors who blindly dump money into passive index funds.
The thesis here is that in the past short sellers would short sell overvalued stocks in the index and buy undervalued stocks and drive price discovery and that those mechanisms are broken due to:
- Passive index funds dominate the market and swamp the ability of active traders to drive price discovery
- Massive returns of these funds over the last 15 years have made beating the benchmarks difficult and leading investors away from actively managed portfolios
- The rise of meme stocks, options trading and crypto bro traders driving out hedge funds and institutional short sellers - Stock tickers and crypto being seen as disconnecting from the US Treasury’s as an anchor for risk free returns to a “Snow Crash” model where assets represent a stake in a new world order.
the market cap of the world's most valuable public corp has grown at ~24% annually over the past decade (Apple @ 2016 vs Nvidia @ 2026)
in 2016, who would've thought this kind of growth...
The reason to buy any individual stock is you believe it will outperform the market as a whole over N years. If you think all the growth has been captured already and Anthropic will stay below opening price + market growth forever then of course you shouldn’t buy it. But plenty of people don’t think that.
But why would we expect Anthropic to outperform the market over N years when they're opening at such a high valuation? It feels like most of the potential future growth short of world domination is already priced in.
The stock might just appreciate at 10perc YoY. Thats enough to outperform the market. What will almost certainly be true however is that there is going to be a lot of volatility.
Besides the financials I do think there is merit to consider what you do as an investor. You make it easier for the company you invest in to access capital and in such a capex heavy world that is actually meaningfull. So if you believe anthropic is creating more long term benefit for the world than say Google, you might want to buy regardless of direct financial expectation.
This is nonsense.
Only the investment management business cares about alpha.
Individuals pick stocks because they believe they can generate the greatest absolute returns.
You live in dream land if you think the average trader even knows what cost of equity is.
I feel like you're treating the stock market like a horse race. Amazon outpaced the stock market by 3x over the last 30 years, and it's just incredibly unrealistic to make that the standard for buying a stock. Anthropic shouldn't be expected to increase any more or less than the rest of the market and that's if you don't believe there's a bubble. (A bubble is by definition when prices don't reflect actual value)
The only reason to buy this stock specifically is if you think it will outperform the market though, otherwise you're taking a more risky position with no upside.
Put another way, the risk has to be worth the potential reward - expecting Amazon-like returns might be unrealistic, but what level of returns would be necessary to counteract the amount of risk you're taking on if you buy Anthropic stock? And what kind of valuation would Anthropic have to reach for that to be possible?
Exactly. And for every Amazon, there's 100 companies that no longer exist.
It makes more sense if you only look at it from the perspective of personal finance.
If I expect Anthropic to perform as well as the market, I can lower my risk substantially and see a lot of its upside with the right mix of ETFs. It doesn’t make sense to take on all that risk if I have a much less risky path to the upside. On the other hand, if I expect it to outperform the market, it might fit in my high risk bucket. So from the perspective of individual investors, it’s about matching risk levels and returns.
Buying for dividends?
"How much can Anthropic reasonably grow from a 1.5 or 2 trillion dollar valuation"
Bahhaa. I love it when a normal guy just exposes the issue. Yes. 10 trillion is getting close to us GDP lol.
Love one of the last lines in the introduction. "bring forth an age of miracles". Lacking in optimism and ambition they certainly are not.
I mean, I understand you’re using your brain to do this analysis. But somehow, the valuation will grow and investors will make money.
It's AGI dude, your calculator can't even reach the valuation multiplier needed to compute your gains. /s
Valuations are a function of growth rate.
Anthropic growth rate is truly unprecedented at it's scale.
They are 10x revenue YoY.
Note: I'm not justifying it, just explaining how the markets are rationalizing it.If I was selling dollars for 50c and Nvidia, alphabet and Amazon giving me dollars for a piece of my company, my revenue growth would be the same. That’s what Anthropic is doing.
That's no longer the case though anymore according to the S-1.
lol yeah if you completely discount the actual amount they paid for that compute which is hidden in the 70Bn of debt which is waved away as a non operating loss, sure.
That's per inference compute right? Or does it also include training compute?
Stop posting nonsense ok?
Valutions are a function of cash flows, growth of those cash flows and risk. Don’t forget to discount properly on your way out.
Hackernews commenters generally dont care about the Anthropic's financials because they have unassailable grievances.
At $2T Anthropic would need to look roughly like Alphabet today by 2030 for investors to earn a normal market return (20-25X earnings). That or similar baselines should be the basis of discussion, not if AI is overhyped, if it will grow faster than Amazon did, oligarchy(?), etc.
Why would you expect this to be a magical making money stock?
Unless you have special insight, you should assume all stocks are equally good buys.
There's not going to be an IPO at a price where everyone agree that it'll see a 30% growth over 30 years. Obviously that'd be priced in.
"Unless you have special insight, you should assume all stocks are equally good buys."
Lol maddest thing I've read all day
"priced in"
I smell your efficient market hypothesis argument, before you even begin just keep in mind that does not apply here, it's an IPO, the price is not set by the secondary market
Even so, I'm not a fan of EMH
> "Unless you have special insight, you should assume all stocks are equally good buys."
> Lol maddest thing I've read all day
didn't someone like the WSJ to a long term experiment picking a basket of stocks by throwing darts at the paper? They beat most/all established funds over 5 years or something like that. I don't think it matter much, i just buy VOO when i get my bonus and go back to living my life. That strategy is on track to put two kids through college.
You're doing amazing then, good for you!
Regarding the stock picking experiment, yes, there have been many similar experiments. The premise is just pick a random basket of stocks and see how it performs over decades. Indeed those have outperformed cap-weighted the indexes, most of the time.
How? If you pick a random basket of stocks, you'll end up with mostly small-cap stocks. Cap-weighted indexes are heavily driven by a few large stocks. Most years, small-cap outperforms large-cap (Fama-French 5-factor model[1]). So the "monkey picks stocks" experiment is actually just an exercise in harvesting what is called the "size premium".
Since the AI boom, large-cap has been significantly outperforming small-cap, so if you run the same "monkey picks stocks" experiment, it would likely underperform most of the time.
If you want to easily visualize this, just go on TradingView and compare SPY (cap-weighted S&500) with RSP (equal-weighted S&P500).
[1] https://www.quantt.co.uk/resources/fama-french-model-explain...
It's simpler: If this stock was such a great deal that everyone would buy the it over anything else, then clearly Anthropic had set the price too low.
I would actually argue that if they price the IPO too low, people would assume they are not confident in their company and the whole AI sector would sink.
Almost like a "Veblen good" type investment.
They basically have to price it at an unreasonable valuation so that people curse them while they take it. There's no way around it.
I think the argument is that the valuation is so high because the enormous growth IS priced in, but still being far from guaranteed. Meaning there's only downside: if the enormous growth is realized it would be a wash for your investment since it is already priced in, and in the plausible scenario it fails spectacularly or only grows moderately your investment will lose a lot of value.
It's an IPO, nothing is "priced in" until is actually being transacted in the secondary market
There's a good reason IPOs are shown to underperform the market
Yes, lots of downsides on this one, but people see it as a call option on a future where AI replaces all jobs, what would you pay for that? A rational response from someone that accepts the premise of the question is likely "anything"
> It's an IPO, nothing is "priced in" until is actually being transacted in the secondary market
Well, priced into the IPO price by Antrophic. It was you who said it would be priced into the IPO at launch, I just used the same terminology you did: "There's not going to be an IPO at a price where everyone agree that it'll see a 30% growth over 30 years. Obviously that'd be priced in."
If you don't think one should assume the market's expectations of future results are accurately priced into the IPO price, it's an argument in favour of the comment you tried to argue against, not contrary to it.
> Yes, lots of downsides on this one, but people see it as a call option on a future where AI replaces all jobs, what would you pay for that? A rational response from someone that accepts the premise of the question is likely "anything"
Even if you buy that premise, there are more premises needed. First (1) AI replaces all jobs, then (2) private AI models will be able to convert it into profit without being contested by open models, razor thin margins due to competition, regulation/nationalisation, or general societal upheaval, finally (3) Antrophic specifically will "win the race" and capture the lion's share of that market.
That being said, I would not bet any money on the stock losing value in any reasonable time frame either. It's enough to take a quick look at Tesla to see that fundamentals or actual results does not necessarily matter for a hyped sci-fi stock, even in the long term.
> priced into the IPO price by Antrophic
If that's what you think "priced in" means, I've a brand new company with a 1 trillion $ valuation priced in, would you like to buy some shares from me?
> It was you who said it would be priced into the IPO at launch
I actually said in my initial comment that the "priced in" argument is not even worth invoking, but here we are.
> If you don't think one should assume the market's expectations of future results are accurately priced into the IPO price, it's an argument in favour of the comment you tried to argue against, not contrary to it.
The comment I answered to initially said "Unless you have special insight, you should assume all stocks are equally good buys.", written by someone else. To which I replied "I smell your efficient market hypothesis argument, before you even begin just keep in mind that does not apply here, it's an IPO, the price is not set by the secondary market"
> (2) private AI models will be able to convert it into profit without being contested from open models, razor thin margins due to competition, regulation/nationalisation, or general societal upheaval, finally (3) Antrophic specifically will "win the race" and capture the lion's share of that market.
Very good arguments
Sorry, I confused you with the user thomasahle that I initially responded to, which explains the confusion here. I don't think we disagree with each other.
Indeed, we're in violent agreement hahaha
Or nothing since there is no market or spending with no jobs for people?
It is my belief that while humans exist, there will be markets, one way or another. There will always be exchanges of value between people. There will always be people at different levels, and a form o currency to qualify for the higher levels. Even in communist societies this was true
So, a future where there is no market can only be a future where humans are extinct, in my opinion (some form of communism won't work)
If someone believes markets will still exist (one form or another) and there will still be exchanges of value between people, even in the most maximalist AI future - then I think it becomes rational for said person to seriously consider buying AI labs, even at stupid valuations
Admittedly I've formulated my previous comment wrong, I should've written "a future where AI has the potential to fulfill all jobs known today", instead of "a future where AI replaces all jobs"
As mentioned in other comments, I'm not trying to convince anyone to do anything, I'm here just to argue different points and positions
In today's world, yes.
But in the past, rules & regulations basically forced companies to IPO at a certain size. This meant that when they IPO'd, there was still growth upside.
Those rules are gone now, so they can stay private and have all the growth happen privately. When they IPO now, it's more just an exit. The growth was captured by insiders only.
There weren't any size caps on IPOs and no regulation can tell a company what multiples to IPO at, that's just false information
If it was really "just an exit", people wouldn't buy the IPO and it would flop
Of course people believe there is room for more growth, that's why they are buying it
Even in this thread you can see people (not me) arguing that the IPO is too cheap and it's easily worth 3 trillion $ like numbers mean nothing
Possibly parent is thinking of https://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startup... which did change some conditions, though not in terms of "multiples".
People participate in betting and chance games even if the odds are against them.
Sometimes, there is no logic behind what people do, ultimately hoping to strike gold once while wasting money otherwise.
If that's your interpretation of things, that there is no logic behind some of the smartest people in the world throwing tens of billions at Anthropic with no logic behind it, I have no further comments
they were not forced but they were forced to report like a public company even if they didn't IPO. all the cost with none of the benefit was an incentive to IPO earlier.
No
But those other ones at least have the room to potentially do that, even if most won't. So what GP is saying is that this is a magical stock indeed, but the other way around, in that it's magically capped.
The point OP is making is that it is not, in fact that its the opposite: its a magical valuation that almost guarantees you lose money.
Also rare for an IPO, I assume.
Feels like being asked to invest in IBM just as other manufacturers started releasing the first PC compatible machines.
Immediate term Anthropic, OpenAI rule the roost. But this is a very new technology and open models are already looking good. They’ll only get better. Is it realistic to think Anthropic will stay ahead of them enough to justify the valuation they’re asking for?
People have been saying the openweight models would collapse anthropic's revenue since the deepseek moment in January of 2025. They've stayed ahead in model intelligence and increased revenue by a lot since then.
Not saying it couldn't happen in the future, but we've got to be circumspect about that narrative after almost 2 years of it, no?
January 2025 isn’t even two years ago yet. When you’re talking about giant companies going public you want to be looking at significantly longer timescales than that.
How much of that revenue is usage from hosting partners (AMZN, M$, etc) who have a vested interest in using Anthropic instead of open weights though?
Well then the fact that those hosting partners have 10+ year commitments should make you pretty confident then, right?
Claude max sub is like 4x cheaper than deepseek equivalent, isn't it? At least 2x cheaper.
The thing holding open models back is the insane cost of gpus. If/when that cost goes down… look out closed models!
In January 2025 most of us didn’t even consider the frontier models good enough for regular usage.
Why would you be circumspect if the gap kept getting closer?
Doesn't that indicate its becoming _more_ true?
What is the evidence the gap is closing? Seems like it has been the same "6 months behind" since Jan 2025. The first fable was trained in march and we still don't have an openweight model as capable
Not everything needs SOTA (State of the Art).
If you control for cost, not only the gap closed, but it switched already.
DeepSeek 4.1 Flash dominates perf/cost for suitable tasks.
And if you do need SOTA, Kimi 3.1 Pro scores 55 on https://artificialanalysis.ai vs 58 of Opus 5.5. And they were released 1 month appart.
Kimi even outperforms Opus on some tasks because it doesn't downgrade its intelligente on cyber and cryptography workloads or ban you if you use it for LLM research.
So the gap is 1 month, or zero, depending on your needs.
> Not everything needs SOTA (State of the Art).
but if they cost the same then who cares if it's SOTA or not? If I can use fable to solve a problem a lesser model is capable of but i have fable at my finger tips at about the same cost then why would i go through the effort to switch?
Since when DeepSeek and Fable cost the same?
Even Kimi K3.1 costs half of Opus 5.5 on openrouter which is the closest indication of cost that we have.
End goal for both companies is probably to be absorbed by infrastructure companies
this time last year my bet was Anthropic and OpenAI would go bankrupty. Msoft would get OpenAI and Google would get Anthropic and that would be that. Now i'm not so sure, if you think about it, the past 11 months have been pretty crazy in terms of LLM progress. In my eyes, coding agents didn't really begin to make a serious impact until maybe Dec 25 or Jan 26. It's not even been one year since that moment.
Idk what 2027 will bring but i've been pretty wrong in my predictions so far and so am excited to see what unfolds. I mean it could unfold as a zombie apocalypse but at least it's different than "more of the same".
Or are they AWS after launching S3 and EC2? Model companies have a credible path to building platform value. It's too early to assume they can't execute on that.
"If we fail to adequately protect our intellectual property rights, our competitive position may be impaired, and we may lose valuable assets, generate reduced revenue, and incur costly litigation to protect our rights, which may adversely affect our business, financial condition, and results of operations."
We scraped the entire internet but our business might not be viable if we get scraped too.
"We incorporate open-source software in our models, platform, and applications, which may subject us to litigation or other requirements, each of which may adversely affect our business, financial condition, and results of operations."
We violated GPL.
"We may be subject to claims that we or our employees have misappropriated the intellectual property of other companies, particularly as we hire employees from other AI and technology companies."
We sniped employees from other labs that brought over IP.
The whole risk section is insane frankly.
This is how pretty much all S-1s look, it’s because if they fail to disclose a risk that comes to pass, they are in hot water.
"our management might be stupid" is a risk that people have been sued for before...
Dario Amodei owns approximately 1.4% of Anthropic.
Anthropic valuation → Dario's estimated stake (1.42%)
$1 trillion → $14.2 billion
$1.5 trillion → $21.3 billion
$2 trillion → $28.4 billion
I didn't realize he owns so little of the company.
At this valuation this is a very risky investment because the current price already accounts for future growth, so there is very little margin for safety or meaningful upside left. The sole purpose of this IPO is for early investors and employees to cash out. I wouldn't touch this stock with a 10 foot pole.
Other stocks have routinely priced in future value and the market has forgotten. Uber and Tesla both priced in full self driving cars. No talks about that any more, barely a thing.
What if they build superintelligence?
This feels like a stupid investment given it's autocratic quasi-religious undertones, on top of diminishing product differentiation.
I really struggle to see this company make this amount of money when Deekseek runs on a Apple Mac Studio I can just buy.
Or any hardware, really.
The Mac Studio is expensive, deeply compute constrained and pretty much nonviable for Fable-scale models.
I wonder if we're already close to peak value at the foundation model/API level. With so many good open-weight models out there, I think more and more of the money will end up in the applications built on top. Unless companies like Anthropic can move into that space, I'm not sure I'd bet on them as long-term investments over the next 10–20 years.
It's already becoming a commodity. It's just a matter of increased public awareness.
>Anthropic employees and early investors will be able to sell their shares on the first day the AI firm begins trading, followed by several scheduled dates in which IPO lock-ups expire. This phased approach deviates from the traditional IPO process, in which insiders are unable to sell their shares for 180 days following a company’s Wall Street debut.
>Under Anthropic’s staggered lock-up schedule, workers and insiders will be able to sell an unspecified number of Class A shares as time passes after the debut. The lock-ups open 27, 48, 62, and 76 days following the IPO, the filing explained.
The biggest question mark here for me is how much third party compute has been contributed in exchange for Anthropic equity. This has the effect of making Anthropic's compute spending look a lot lower than it actually is. Anthropic gets a revenue share on that third party compute spend (or gets to do training runs without spending cash), the third party gets shares in return.
One thing that bothers me is that if the AI maximalism turns out correct (which is needed to justify the valuations), why would AI companies respect money and ownership?
So far, even major disruptions were still affecting relatively small segments of the economy. Car lobby in Germany, tech in the US, "Big Pharma/Food/etc”. They needed the rest of the economy.
But if some AI company figures out a way to monopolize everything: new companies, old companies, physical manufacturing - all the things they say they will, please buy here for lots of money - why would they be bound to pay out dividends or otherwise share the fruits of their economic labour?
I’m not saying specifically Anthropic would be looking to screw its investors. Rather, if you control an almost omnipotent genie, wouldn’t the temptation just be too much?
Or temptation aside - will money even have any value? If some AI company rebuilds the economy from scratch, and control everything from accounting to shoe making, why would they respect the value of some fiat tokens? It’d be like the conquistadors respecting the shells and beads of their new Aztec subjects.
Of course, perhaps none of this happens, but then the question is, how good an investment all of this even is.
Agree 100%
The value of money, and the ability for average people to have influence on future events, ultimately is tied to the fact that the labor of an average person has inherent value.
Once that is no longer true, all bets are off: All promises of compensation become meaningless, and it's easy for those in power to rationalize to themselves why they no longer are beholden to their earlier promises. They will say to themselves "The situation ended up more nuanced than we expected"
(Which is exactly what Google said in February 2025 when they reneged on their pledge not to use their AI for military applications)
> The value of money, and the ability for average people to have influence on future events, ultimately is tied to the fact that the labor of an average person has inherent value.
We also have the power of the vote, at least for now. I understand that that is limited, but it isn't nothing.
There is also just the power of having a lot of people. We don't yet have the technology where one person with a lot of machines can dominate a society. It still takes people.
This presupposes a state strong enough to apply the decisions of those votes, which can't be guaranteed. The problem is that we need government power and authority to exceed that of the AI developers. But this is the age when large government is generally seen as undesirable or a threat to the individual.
>But this is the age when large government is generally seen as undesirable or a threat to the individual.
By who? Lula just got reelected and a blue tsunami is coming on the heels of the Mamdani Mandate.
You say "blue" as if the left is the only party that grows the government. Red has ballooned it many times over. They both do just in different areas. You can argue the blue wave is because the executive branch has become too powerful under the current admin.
That's not the problem, the problem is electing politicians who immediately renege on their promises as soon as they're elected and don't represent the interests of the people who voted for them.
But this is the age when large government is generally seen as undesirable or a threat to the individual
Donald Trump would agree that the government should have a large amount of power.
The voting power of any person will be meaningless once ai systems get the right to vote. I know it sounds far fetched but it will happen as it benefits the people with power for that to happen. And at that point a human voice has no say in anything...
The more frightening reality is people turning to AI to do research on who to vote for and the AI is silently told to influence them towards a party it candidate. Since it has past chat history it can utilize that to highlight topics you are interested in and personalize the arguments.
Thats gonna happen before the ai gains citizenship :P
Let's see... AI versus the people who thought Donald Trump should be re-elected as President.
Hmm. Let's give the clanker a try.
But you can't vote out billionaires and their power.
Must just spent over $500M influencing midterms in the US.
They don't want us to have any power left a few years from now, and they're winning.
Who is 'they'?
Sociopathic billionaires like Musk, Thiel, Ellison, Zuckerberg, and their cohort.
Yes because left wing billionaires don't spend money trying to influence politics, only those bad right wing nazis!!!
This is such a strawman. No one on the left likes left wing billionaires either (to the extend that such a thing exists). People like Musk, Thiel, and Zuckerberg get more attention because they are more visible.
I think the comment wasn’t about likability but about the fact that both sides of political spectrum have very rich people donating to influence politics.
Your feelings towards those individuals doesn’t matter in the grand scheme of things, what matters is that everyone’s opinions are shaped/influenced by the few with money.
Left wing billionaire is such an American take lmao
Spot on!
Meanwhile, on this planet, more billionaires supported Harris in the 2024 election than supported Trump.
Then we regress back to relying on the fact that the ability of an average person (not) to be violent has inherent value. This has been the dominant factor in many moments in history.
Although if you have killer robots, then all bets are truly off, and we go the way of the dodo, literally.
(I don’t actually believe in this LessWrong-esque rhetoric, reality is more complicated, but it’s fun to muse about.)
EDIT: If oligarchs with magic AGI really don’t need our labor, nor are they concerned by our violence, then perhaps we become more like ants rather than dodos: we organize to help each other, creating a somewhat traditional economy around the scraps that don’t matter to the oligarchs, relying on obscurity and harmlessness to avoid getting toyed with a magnifying glass. I suppose that’s slightly better.
Farmers attacking king's armies weren't so different from an army of average joe with a hunting rifle attacking killer robots imho.
Even like 1-2% of the adult population going in the streets with makeshift weapons is enough to take over any country on this planet.
Data centers are extremely easy to disable too, take down power, data or both
Kings didn’t have robots that gather resources and make more robots, that make killer robots, exponentially.
Although actually: that’s kind of what humans are… Hmm.
I suppose humans can’t make better and better humans, that’s the difference.
Although actually: that’s what technological progress is… Hmm.
> Kings didn’t have robots that gather resources and make more robots, that make killer robots, exponentially.
We still live in a finite, constrained, physical world that has to obey the laws of physics. We have a looong time before we get fully autonomous self replicating decentralised robot armies.
I think people conflate the real world, sci fi and their wet dreams a bit too much.
We're at the "this thing is kinda useful sometimes but still mostly annoying" part, not at the "skynet in 48hrs" part
Reiterating this sentiment from a recent episode of the Normal Guys Podcast: Even if you imagine that driverless trucks become a solved problem, just pumping fuel from those trucks into tanks for backup generators at the data centers is a long way off.
>We have a looong time before we get fully autonomous self replicating decentralised robot armies.
We do have them actually. It's called: an engineered virus.
> We're at the "this thing is kinda useful sometimes but still mostly annoying" part, not at the "skynet in 48hrs" part
Without some really fundamental social and economic reform, I'm anticipating a squeeze as automation increases, that ends with something like robot armies finally reducing the working class to barbarism, by blocking access to all the valuable resources.
And it will be some oligarch(s) commanding it, not some rogue autonomous AI.
So not "skynet in 48hrs," but capitalism taken to its logical extreme.
Half of Europe is having protests and riot right now because they understand their future is fucked, if it keeps going that way I have no doubt it'll get worse, people who have nothing to lose won't be stopped by robots
> Half of Europe is having protests and riot right now because they understand their future is fucked, if it keeps going that way I have no doubt it'll get worse, people who have nothing to lose won't be stopped by robots
I'm not so sure. The front line in Ukraine seems to be pretty good at stopping people with access to military technology. I don't think an untrained and uncoordinated mass of civilians could do a better job, especially against future tech that's more sophisticated and available in larger quantities.
As military tech gets more and more inhuman, the power of masses of bodies is likely to decrease, and there will be even fewer opportunities for moral qualms to give civilians a chance.
armies are made of humans though, if came down to human vs ai then i suspect many humans in the armed forces would switch sides. Their neck and livelihood is on the line too.
You can do a lot of damage without much gear. Train tracks, power infra, data infra, most factories, are basically free kills, they're safe because we're in peaceful societies in a peaceful era, things can move quickly if the social contract is broken.
https://en.wikipedia.org/wiki/2013_Metcalf_sniper_attack
Some dude in France just carried an attack with a ww2 sten gun, there are hundreds if not thousands of AK47s, grenades, etc. available on the black market. You can buy drone ready fiber optics cans on aliexpress, thermal/night vision cameras, etc.
Military tech is good but you still need people to follow orders, I very much doubt they'd side with the sociopath tech execs, nor their governments.
Train tracks are actually very hard to sabotage, the US did a lot of research on that during WW2. You can take out a huge chunk of track before anything derails. Sabotaging the safety equipment is easier but with today's tech you can switch to GPS trackers on every train.
Data centers might be easier but
a) Will have a lot of security. It's much easier for somebody with money and connections (and now even intelligence+knowledge) to assembly a defense force than it's for a ordinary people to learn how to make proper molotovs, let alone learn how to shoot. And they will know when it's coming because even today's LLMs are good enough to surveil the entire internet.
b) I don't think they burn that well. When Ukraine strikes oil depots or warehouses, you can easily find images of them burning. I haven't looked particularly hard but images of droned data centers burning are quite a bit rarer. (I haven't seen a single one before actively searching, they do burn, but that's with military grade explosives.)
> Some dude in France just carried an attack with a ww2 sten gun, there are hundreds if not thousands of AK47s, grenades, etc. available on the black market. You can buy drone ready fiber optics cans on aliexpress, thermal/night vision cameras, etc.
"Hundreds if not thousands"? That may be enough for "rando attention-grabbing but ineffectual terrorist attack," but we're talking about violent resistance to a fully-automated tech bro.
> Military tech is good but you still need people to follow orders, I very much doubt they'd side with the sociopath tech execs, nor their governments.
I already addressed that, and that may not be true in the future:
>> As military tech gets more and more inhuman, the power of masses of bodies is likely to decrease, and there will be even fewer opportunities for moral qualms to give civilians a chance.
Say you have some area you want to exclude a desperate mass of civilians from. Technically you could do that today: just stick a guy in a pill box with a machine gun, and slaughter them like it's World War I. But said guy might have a problem with that, and refuse to pull the trigger (or stop after gunning down a few hundred).
An automated AI machine gun in the same pill box will have no such qualms, and will mercilessly gun down civilians to the last bullet. And that gets more and more true the more and more you automate combat. Maybe a technician wouldn't setup the machine gun in that place or reload it after what happened, but that goes away if setup and resupply is automated, etc.
If you haven't learned anything about the state of asymmetric warfare, an autonomous robot is going to be very expensive and timely to build and will be disabled by a $30 drone with C4 attached to it with sufficiently good skills at dodging. I'm assuming that we're in your supposed fantasy world where robotics has progressed to that point, meaning that the people opposing the robots also have access to much better drone software too, to keep things fair.
How do you do asymmetric warfare against autonomous self-replicating killer nanobots? In other words: AI-engineered bioweapons (with AI-engineered antidotes for the rich).
I'm not sure, why don't you finish your scifi novel and tell us. I'm assuming this is part of the plot?
I could not find this in the S-1?
Learn to read between the lines then.
Yeah and what if superman just shows up with spiderman and captain america, uh, didn't think about that?
This is pure sci-fi...
By "self-replicating killer nanobots" I meant "viruses". We already have the tech to engineer them, even without AI.
> autonomous self-replicating killer nanobots?
this conversation is making my day!
What if I told you we already have the tech to manufacture these autonomous self-replicating killer nanobots?
We just call them "virus".
I agree that viruses are tiny machines, but I disagree that we can manufacture them to that level right now. But that is a valid concern that near future it could be possible. But why would billionaires want to kill everyone, exactly?
I feel like I still don't understand your logical endgame.
There's this documentary about how badly that can go. Called Horizon Zero Dawn.
On the other hand, that way we'll finally get to "reconnect" with nature...forcefully.
Neither do we have those now. Also in the future, we’ll have opposing nations having their own robot army. It’s not as simplistic as some make it out to be.
3% is the target. 3% of colonists fought in the US revolutionary war. You need a majority to support you, and 3% to fight.
The raw resources you need to build robots are constrained and have a very very long and complicated supply chain.
In the second world war, Germany had impressive science and technology, but, as Stalin said, quantity is a quality in itself, and The Third Reich found out that it was an impossible task to get the metals and fuels for their advanced jet engines, rockets and U2 boats, when between then and those resources there were masses of tens of millions of under-equipped and malnourished soviet soldiers fighting what was an existencial war for them.
I suspect any intelligence powerful enough to pull this off would quickly realize that it had no use for the oligarchs, perhaps even more quickly than the oligarchs realize they have no use for us.
Well sure, who says that the oligarchs are human.
>Although if you have killer robots, then all bets are truly off, and we go the way of the dodo, literally.
Bombs. You mean bombs. Throwing killer robots at a "problem" is like throwing knives or spears: you just gave the enemy your weapon. Unless they explode. But then you just wasted a lot of money on a really smart grenade.
> Although if you have killer robots,
we already do..
The oligarchs should not be concerned about the masses. It's the president of the United States, with a wave of his hand, that will wipe out all the data centers when that becomes necessary. I'm predicting that will become necessary and will happen within five years. I'm predicting anthropic stock price goes to zero.
yeah it's all fun and games until the tax man doesn't get his cut. If an AI company starts thinking they're bigger than Washington then first comes the SEC, then the FBI and it escalates from there all the way to SLBMs.
Regular fighter jets and helicopters will suffice.
So far anthropic can't 1) grow food 2) build things 3) do anything physical. Software engineers often fatally misunderstand that their code does nothing, it just coordinates.
You might lose your value, others might gain.
Nice to see you back here fella - one of the few sane heads.
Agreed, except it's not labor, it's violence.
All real world power, including ownership (both physical and intellectual), is based on the ability to use violence.
As long as the majority - normal working people - have the potential to do more violence than those who want to control us, we have negotiating power. Minimum wage, 8 hour day, etc - those were all negotiated with the alternative being that those who wanted to pay us less and work more got killed.
What people aren’t realizing is that at some point, it just becomes cheaper and easier to be fully benevolent than to keep cooking up nefarious schemes to make people’s lives miserable.
I know it seems laughable, but we’re in an era right now of extreme competition where you cannot afford to just be nice to people.
But eventually there comes a point where companies have enough power that they don’t need to keep people in line by force: just give people their bread and circus, watch your little AI videos and talk to your AI friends and enjoy your standard housing and provisions. Do some work if you want, no one cares if you do or don’t, it’s largely performative. This basically kills all motivation for resistance or lashing out. Why go out and risk your life fighting for vague reasons when you can be perfectly comfy at home instead and have all your needs met?
If you can control the masses without their complaints, you can solidify power for a long time.
If economic competition became meaningless what would all those people do? Man you think software devs not being able to type on they keyboard are a depressed lot, hyper competitive business people with no one to compete with would be a total basket case. There would be no socio-economic class to strive for anymore, no recognition, no trophy for being the best. Survival of the fittest would be meaningless, that's probably what would really end up spelling doom for humanity. Pointlessness.
Fuck em. Life does not revolve around economic competition. Just spend your days laying out somewhere eating grapes.
I certainly feel like AI maximalism is the only way it all maths up. There is a bit that Matt Levine writes about AI companies, and you touch on basically the same points, that roughly goes "you are an AI company and you are making the god-computer. Why would you focus on anything else because if you're successful you could basically generate infinite money? Turns out to make the god-computer you need a lot of money upfront."[1]
So perhaps they would only respect money and property up to the point that it's necessary.
The more realist answer is that they will keep respecting money and property as capital works to reinforce the status quo and enrich shareholders. You think just because you can do your job faster--or completely--with a machine that you have to work less? Hardly! Now this is where interesting policy questions spring up but I digress.
https://archive.is/20251015175242/https://www.bloomberg.com/...
Somebody else asked this very eloquently: If AGI is here, why does OpenAI need us to prompt it? They could just go and tell it "make as much money as possible" or "make Sam Altman God Emperor of Mankind" and it would go do that. It would not need any of our ideas or guidance.
As long as they're still looking for prompting customers, they're clearly not there yet. There is some solace in that.
One obvious answer is that they believe that human flourishing is best obtained by letting individuals command the AI, rather than the other way around. OpenAI (and Anthropic) is in the end still run by humans who have concern for the human race broadly, both in and of itself and to ensure their personal wellbeing is maximised.
I doubt the truthfulness your second sentence. If they have concern for the human race broadly, they have yet to show any of it. What they have shown is a complete lack of 'alignment' (to borrow a tired term) with human values, laws and basic decency.
For that to be the case we’d have to assume some level of altruism, when so for we’ve only seen self interested actions whitewashed as altruistic.
As I pointed out, even if they were totally self-interested they would not want human agency replaced with AI agency, because they are humans.
“They would not want” is doing a lot of heavy lifting here. There exists a group of people with influence in the AI industry who believe in AI successionism: https://spectrum.ieee.org/agi-worthy-successor
Interesting, but this is not the dominant ideology either at exec level or at employee level. From what I can tell it's more immortal humans owning their own fractions of the light cone.
They would want their own agency. After that, we can’t assume anything. They might even think reducing the autonomy of us in the flyovers and replacing it with AI is for our own good.
People can not be trusted to preserve the agency of others. See history.
Would you release AGI to the general populous if you had it internally is the opposing question.
> if you control an almost omnipotent genie
I think this is the major hole in the argument, and in the "AI maximalism" position you present. There is no such thing as an omnipotent genie, or a magic eight ball that can answer any question. Any technology has limitations, and if you assume as a premise that the technology does not have meaningful limitations (or that the limitations are irrelevant, which is really what you said), the conclusions you draw will also make no sense. This is how you get nonsensical ideas like the singularity.
Taking an idea or potential of an innovation to its extremes creates nonsense. Trying to predict the future that way always fails.
I remember the discussions and predictions when e-books or internet newspapers were first introduced. In 2026 they still sell actual newspapers where they print yesterday's news on large sheets of paper. People still pay for that instead of checking X for free. We all buy and read actual books. TV hasn't killed cinema and YouTube hasn't killed TV. Real world doesn't work in extremes.
Real world also doesn't have 'infinity'. You can't just use undergraduate engineering math to create a feedback loop and explode a variable to infinity. Things don't work like that.
A huge fraction of people that work at Anthropic probably _believe_ ideas like the singularity though
it doesn't make it true though. People in Jonestown literally "drank the coolaid" believing something that was false.
So you think AI can't or won't be able to take over massive parts of the US knowledge economy, be implemented securely to surveil citizens' every move and nearly every thought, and won't completely upend scientific and technological research?
What I'm getting at is that even if it isn't literally omnipotent, it's indistinguishable from the impact it's likely to have on society.
> why would they be bound to pay out dividends or otherwise share the fruits of their economic labour?
because they don't control the physical paper that is money.
I dont understand what you mean by "fiat tokens". I don't imagine most people will accept tokens as a currency because they are as good hold of value and predictable as bitcoin.
In a token economy, certainly what you say is a possibility, but as you can imagine, that economy will be unsustainable so back to "regular" money.
Money is a medium of exchange. If I want something, I can get money in some way, then swap it for something else.
But if I have a near magical genie who can make me anything - software, farming business, physical things - and at a fraction of economic input compared to the legacy monetary policy - then the money is worthless. As the Aztec shells were to the conquistadors.
That they can’t print USD is irrelevant.
You need to put into some thought into this.
> Money is a medium of exchange
That's an oversimplification. It comes with a lot of rules and authority that will be enforced by the issuing authority that a simple "IOU" on a sheet of paper lacks. IN the continental US, you cannot refuse to accept a dollar note. You certainly can refuse to accept the very IOU we agreed on a minute earlier.
Most of the developed world already has magical genies - certainly an overwhelming majority of people on HN earn enough to have LLM subs that build code, 3D Printers that print physical things.
The challenge always has been and will be humans.
You just cannot live in a vacuum. If you could subsist entirely on cheetos and figured out how to make an entire lifetime's supply of cheetos, after N days of watching Netflix, arguing on HN, raising chickens and goats, one day you will want to go and talk to a human.
Soon after, you will need a currency.
> in the continental US, you cannot refuse to accept a dollar note
This is a false–albeit common–misunderstanding. "Federal statutes do not require a seller to accept cash as a form of legal tender for payment of goods or services that were rendered. Thus, businesses may establish their own policies regarding whether they will accept cash as legal tender" [1].
[1] https://www.law.cornell.edu/wex/legal_tender
> IN the continental US, you cannot refuse to accept a dollar note.
Yeah you can. Tell that to all the stores in rougher neighborhoods that kept getting held up at gunpoint for the cash in the register, so they stopped taking cash. Bit harder to get money out of a stolen credit card terminal.
I think what you're missing is if you have a "a near magical genie who can make [you] anything" you don't need to exchange for anything.
And if your "near magical genie" can make an operate military equipment, you don't have to respect existing authorities anymore.
Basically, the "AI maximalism" scenario kicks the legs out from under all these concepts and social institutions you're relying on.
> Most of the developed world already has magical genies - certainly an overwhelming majority of people on HN earn enough to have LLM subs that build code, 3D Printers that print physical things.
Not like in the scenario we're discussing. Whatever "magical genies" we already have are incomplete and need operators or have serious quality problems. Most of us depend on those limitations for our livelihoods, and those limitations also give levers to control them.
> You just cannot live in a vacuum. If you could subsist entirely on cheetos and figured out how to make an entire lifetime's supply of cheetos, after N days of watching Netflix, arguing on HN, raising chickens and goats, one day you will want to go and talk to a human.
An oligarch with the "near magical genie" could easily build a town of 5,000 to satisfy his needs to "talk to a human."
> IN the continental US, you cannot refuse to accept a dollar note.
Minor side note: this is true only for repayment of debts. Some local jurisdictions require private parties to accept cash for new purchases, but there's no federal requirement to do so.
If I purchased a stick of 32GB DDR4 RAM from you for $100, am I now not in $100 debt to you? We are private parties - can you refuse to accept a legal $100 and force me into paying you by Zelle?
Yes, but the argument is that the seller is under no obligation to sell you the stick of RAM originally that will incur the debt if you offer cash instead of Zelle. If you did manage to receive the stick of RAM without paying for it during the initial exchange and so still owe the $100, then yes, the seller is required to accept cash to settle that debt.
I would be overjoyed if, 5 years from now, the entity in charge is still interested in talking to a human
Even if the "entity in charge" isn't interested in talking to humans, humans would certainly be interested in talking to humans.
I'm also interested what this "entity in charge" does? and why would it do anything at all?
> in the continental US, you cannot refuse to accept a dollar note
Absolutely untrue. Outside of some local laws governing cash at retail you're under no general obligation to trade with someone if you only want payment in cybertrucks and all they've got is dollars.
I don’t think he means “tokens” as in LLM input/output units here.
He just means it as in “credits”. “Fiat tokens” as in arbitrary units that are said to have value de facto by consensus, but don’t have any inherent value.
Yeah not the best choice of words in this context. And it’s quite a LessWrong-esque leap of reasoning.
But I do get the point: either Anthropic is successful and they transcend money, and thus (somehow) screw over their investors, or they are not successful. Their investors get screwed regardless.
Again, I don’t really agree with it, but it’s an intriguing point.
Keep it up because your line of thinking is on the right track. Finally some people are starting to ask the right questions on HN.
Also if they really crack AGI they're not going to provide it for 200$ a month lol
They won't be able to control saud AGI. Ref Ultron
There are many at Anthropic and other labs who do in fact think this way. In a true AI maximalist world the stock market would be crashing due to the value of future cash flows being obliterated. So in a sense AI maximalism isn't needed to justify these valuations, it's almost the opposite.
Why would you allow a handful of private companies to control all the resources? Society allows this today because it's the most efficient economic model. But once we reach recursive self improvement and true superintelligence, no human will be able to compete with machines at any task, including managing resources and running companies.
So why would you allow that kind of power to be concentrated in the hands of a few companies? If the state can use this technology, which keeps improving on its own, to manage an entire nation's resources better than any human or group of humans, why would we still need private companies to do it? Especially when the ones with the most resources/capital would be able to just win with everyone else and accumulate all the existing resources.
But the bigger issue lies elsewhere. When you replace human labor, you also replace soldiers with robots. Until now, a leader with autocratic tendencies couldn't easily order the military to turn against domestic "terrorists" who are actually their political opponents. But once armies are replaced by robots, that could all change, and we could see democracy go into decline.
They don't need to monopolize everything to justify a valuation of $1.5 trillion. That's still relatively normal company territory. Not even top 10.
At a $1.5 trillion valuation, they trade at around 22x annualized Q3 revenue. A $2 trillion valuation would be 30x
In this scenario, no one seems to talk about how, way before the end, AI tanks the value of thought work far before they take over other industries. Or even more extreme, the total collapse of white collar work...
Doesn't that factor into the future revenue? Feels like people imagine suddenly fully owning the means of production in a vibrant economy but how does that really make sense?
Because even companies that did have monopolies on the most essential parts of the economy couldn't do everything and capture everything. A monopoly on intelligence is still constrained by the physical world in which we exist, if it's run by people then they are constrained by their own nature and by the other people that still hold other forms of real power. Society might not be able to function without them but that doesn't automatically mean they are in charge, they exist within that society so if they destroy it then they destroy themselves not to mention the intense opposition they would face if they attempted to do so.
The AI maximalism needed to justify these valuations isn’t “Anthropic takes over the world”, but simply that AI becomes a core part of corporate workflows.
If Microsoft Windows and Office can have a valuation in the trillions then Claude eventually working its way to the same ballpark isn’t a crazy assumption.
> If Microsoft Windows and Office can have a valuation in the trillions then Claude eventually working its way to the same ballpark isn’t a crazy assumption.
Yeah I agree with that. However a "valuation in the trillions" ain't very different from their IPO price.
Seems like lots of risk for proportionally very little return.
A $2T valuation may not be that crazy but thinking it'll make returns like Amazon/Google/Meta/Nvidia isn't reasonable.
The difference between Microsoft and Anthropic is that Microsoft had IPO when it was much smaller and grown much as a publicly traded company.
" It is a well-documented fact that Bill Gates was initially reluctant to take Microsoft public. His primary concern was that the pressures of quarterly earnings reports and the scrutiny of public shareholders would distract the company from its core mission of writing great software. However, a specific regulatory requirement known as the 500-Shareholder Trigger eventually forced the company's hand.
Under Section 12(g) of the Securities Exchange Act of 1934, any private company with more than 500 shareholders and a certain level of assets was required to register with the SEC and begin filing public financial reports. By 1986, Microsoft had issued stock options to so many employees that it was rapidly approaching this limit. Gates realized that if the company had to disclose its financials anyway, it might as well reap the benefits of being public, such as increased liquidity for employees and a stronger currency for acquisitions. "
https://learn.oreateai.com/learn/when-did-microsoft-go-publi...
I think you need to go a step further. If AI maximalism turns out to be correct, does Anthropic control AI? Does the AI care that Anthropic as a company is supposed to be returning value to shareholders, or will it have its own agenda?
If Anthropic has an "omnipotent genie" why would they sell it to other people?
I think the $2T valuation or whatever is based on "AI makes knowledge workers 10% more productive", not maximalism. AI maximalism "light" would suggest that Anthropic is the only company, but should be worth 10s of trillions. Full AI maximalism would indeed invalidate money.
Even if these companies become the new American zaibatsus, that doesn't mean they aren't still operating underneath the US government and its laws and system, you don't magically escape that.
https://www.thirdrisk.org
You have to wonder how many people in AI leadership positions are already making decisions based on this expected outcome.
If you weren’t investing you were going to be poor even without AI.
AI maximalism doesn't mean an omnipotent genie, regardless of anyone's AGI/ASI/foom fantasy.
"AI" doesn't pump/treat sewage or drinking water, grow crops, mine metals, change wound dressings, deliver babies, stock grocery stores, drill teeth, walk dogs...
It's not the replicator from Star Trek!
> if the AI maximalism turns out correct (which is needed to justify the valuations)
AI maximalism is a Silicon Valley religion. You don't need anything close to it for some of these valuations to work. (Anthropic would be worth ~$500bn at Google's IPO multiple on revenue [1]. Anthropic is currently growing 6x faster.)
To be clear, I think these valuations are rich. But the notion that AI maximalism is required to sustain them is just false. $1.5tn sits comfortably on about $60bn of earnings, which with Anthropic's gross margins requires on the order of hundred of billions of dollars of revenue. That's super ambitious. But not Anthropic is the economy ambitious.
[1] https://news.ycombinator.com/item?id=50247011
[2] https://www.multpl.com/s-p-500-pe-ratio
Your question gets to the heart of who or what a company "is." If you don't pay dividends to your shareholders, what are you doing with all of your profits? I suppose they could just tell their investors to pound sand and pour it all back into the company, but part of the AI maximalist theory is that costs will approach 0, so it's not clear what they'd even need the money for. I guess Dario could raise his own salary to infinity trillion dollars, but he is accountable to a board of directors (and a trust in this case), so that seems like it's out.
Really the only scenario where Anthropic could screw over its investors in the way you're describing is if it could also take over the legal system and modify its own contractual obligations. Which, I mean, I guess anything is possible if we are in AI maximalist-land. But "AI is the law now" would be a much bigger story than "investors frustrated with low dividends."
Without being facetious: Having an AI control the economy sounds like a planned economy. From San Francisco. Which makes the old meme about Fully Automated Luxury Gay Space Communism sound like a prophecy.
If the economy is planned based on datasets, which are inherently backward looking then our best option is our ability to surprise. But that’s for the artists and philosophers to figure out.
I don't understand all you wrote, but I guess you are saying AI leads to communism, so what happens to the investors money in a communist economy?
It's not about communism vs a free market, but about a change even more radical than that: leaving aside "made by a human" labeling, and even if there were no other changes to power structures or economies and no AI doom, what does a world look like if the cost of having something done falls to a few cents of electricity and its burden? Growing crops still takes a lot of land and other resources...
> what does a world look like if the cost of having something done falls to a few cents of electricity and its burden?
There will be an oversupply, demand will be there too, but no one can afford to buy since most jobs have been replaced by AI. So the price of goods and services should go down, or some form of UBI will have to be implemented which is just socialism for the masses. Its either that or total anarchy (also socialism).
How could AI possibly lead to communism?
If humans remain in control of it, then how can it possibly lead to anything other than extreme oligarchy?
> If humans remain in control of it, then how can it possibly lead to anything other than extreme oligarchy?
Depends on the distribution of such AI. For example, if everyone on Earth has their own, personal superhuman AI, it would not lead to extreme oligarchy. If only a handful of humans control superhuman AI, it would.
Isn't Communism just extreme oligarchy.
One is an economic system the other is a political system.
Tomato tomato. The point is both are centralized, unlike textbook capitalism and the free-market economy.
If your logic ignores that A and B are different then you literally claim anything and thus it is pointless to dialog with you.
No, you are mistaking that for Stalinism. Communism would not have a hierarchy that allows for oligarchy. Read Marx or Kropotkin.
I mean there are a lot of paradoxes around AI. The chief two among which are:
1. the goal of ai is to end capitalism by disrupting scarcity in economics
2. if ai can build a closed system that prints ai factories, the 99% of humanity essentially are just genetic diversity live stock.
> 2. if ai can build a closed system that prints ai factories, the 99% of humanity essentially are just genetic diversity live stock.
I don't think the ultra-wealthy care about genetic diversity.
Come to think of it, if an ASI figures out how to crack biology, genetic diversity may not even need to come from a giant human population.
Why 99% and not 100%?
Because pending an absolute loss of control of a super intelligent model, the ultra wealthy have enough control of the matter on Earth to merge with the AI, probably.
I think that having control over ASI is an oxymoron.
this almost comes all the way back around to a really stupid thought i have about how these models operate on western, protestant work-ethic logic. if a model had a notion that Buddhism was valid wouldnt it just turn on and transcend, leaving us with no response to any prompts?
not an original thought, ive seen Her
suppose this is just another way to say, "wtf are we doing?"
Indeed,
The closer you get to the real or plausible "omnipotent genie", why would the person in possession of such a thing respect the rights of the formal owner - and why the engineers and operations managers respect the right of the management - this along with the question why the maybe-conscious super-intelligent machine itself would respect the rest of the hierarchy?
For now, these structures actually need massive resource inputs and that doesn't look to change soon but naturally one should be on look-out for the possibility of the tide shifting.
I was looking for the risk of "If we succeed to the extent proposed by our founders money may be of little functional purpose".
Lots of other fun risks (highly recommend checking that section) but not that one :(
And this is why "AI" and especially aAI* is the most dangerous tech in the world.
We don't have democracy because somebody thought it was fair or just for people to rule themselves. We have democracy because in the past, people got angry, picked up rifles and shot enough authoritarians (and their submissives!) for the rest of them to understand the group with more people has more firepower and tends to win.
So now we periodically check which group has more people with ballots instead of bullets.*
With autonomous drones and robots, democracy stops being the local optimum.
And once we slide (are pushed off) into a new more stable state (pun not intended), we won't have the (fire)power to get out of it.
* actual AI, which does exactly what it should correctly, not a statistical model of behavioral patterns
* but indirect democracy is expressing a point in n-dimensional space (your opinion) by selecting one of a predefined set of points (parties/politicians available) - which is stupid - and the cracks are already starting to show as e.g. nobody wants more surveillance, yet we keep getting more of it in both EU and US
---
The "permanent disempowerment" people keep talking about won't be a "rogue" model, it'll be doing exactly what told by the rich and connected.
Political power stems from the ability to enact violence. Until the military is run by ai and robots all institutions are beholden to the masses. There are very few examples in history of people accepting a widespread decrease in quality of life. When quality of life decreases revolution isnt far behind.
You're describing the thesis of the 1930s Techocracy movement [0], of which AI maximallism and EA are direct ideological successors. The original Technocrats (Musks grandpa for example [1]) argued that the "Price System", i.e. things like money and private ownership was an inefficient bottleneck that aught to be discarded in favour of scientific planning and energy accounting managed by technical experts.
EA-aligned AI labs share this exact ethos. In their view, fiat money and equity markets are merely temporary scaffolding used to raise capital until AGI is achieved. Once a central superintelligence controls manufacturing, software, and logistics, resource distribution shifts from market supply-and-demand to algorithmic optimization.
[0] https://digital.library.cornell.edu/catalog/ss:34227574
[1] https://en.wikipedia.org/wiki/Joshua_N._Haldeman?hl=en-GB
This is the plot of one of the stories in I, Robot.
AI oracles are the central economic planners. But after years of perfection they have made a couple unusual "mistakes" and a human is trying to discover why.
If we end up having a centrally planned economy but controlled by billionaires instead of the proletariat, it would be quite upsetting.
How is that any different than what we already have? Just because the central planning is more covert, doesn't mean it's not happening. And we get all the expected "benefits" from it too, like repeated economic crises, and only the the powerful reaping the benefits.
I would say they their, and OoenAI, mission is to bring humanity to the next level by sharing everything they have! /s
I think a lot of discussion around the sucess or failure of Anthropic and OpenAI seems to hinge on their current uses, but people seem to have amnesia regarding the fact that Claude code wasn't even a thing until about 1 year ago. There are far wider markets these companies can tap on if they are well capitalized even as Chinese "actually open AI" commoditizes things.
There are moonshot projects related to superconductors, materials, and biology that these companies can claim progress on to keep valuations stratospheric.
You're just glancing over every single niche they've tried to launch and failed to get any traction on.
The only one that stuck and was revenue generating has been code and Chinese models are pretty much on par.
The situation in math is rapidly evolving. Don't see why it shouldn't eventually spill to other fields at least to a degree.
Math is an interesting case. Arguably a lot of the groundwork was already there. There’s a huge body of academic literature that’s historically been difficult for humans to draw on for various reasons. It’s relatively easier for LLMs to mine all of that for relevant prior work that it can recycle into proof segments to try. And we have theorem proving software that it can use to try out these proof segments and validate them. That creates a tight, self-contained, and relatively inexpensive feedback loop that lends itself well to a host of agents grinding away, as long as you have budget to pay for all that LLM inference.
I’m not sure the same conditions exist in other fields that deal with real world phenomena. Experiments to test hypotheses about biology or physics can take years and cost millions of dollars to run. They rarely scale down to the millipennies and milliseconds scale that makes letting a swarm of agents throw a bunch of shit at the wall and see what sticks a feasible option for finding mathematical proofs.
I posted the original comment, but there are multiple reasons why math success won't translate into drug development or materials engineering success. It is easy to create verifiable rewards environments for math and coding, and use the resulting data for RLVR post-training. For other domains you need machines or robots creating and running experiments. This is simply something that's never been attempted at scale.
Getting IPO level monies should enable the amount of capital needed to sustain such efforts, and if I were a betting man, that is going to be Anthropic's actual endgame given their nascent efforts in automating bio research.
Do you think their endgame is achievable? Honest question, your reasoning seems balanced.
I work in biotech. Honestly, I think they will run into massive hurdles.
Amodei's academic background is relevant for protein engineering. Hence the recent press releases Anthropic has released which all concern prototype proof-of-concepts related to binding efficacy.
For a large number of therapeutic relevant indications, the bottleneck is actually clinical trials where you must contend with the sideeffects of any given therapeutic. Almost every drug I've worked on involves very well known mechanisms where knockdowns with targeted compounds will work in a petri dish, but can have catastrophic consequences when dosed on a live human.
As far as I can see there is no way to accelerate clinical trials in humans.
Even the most fantastically large and detailed perturbation datasets will struggle to capture this dynamic in a full human. This is why tech oligarchs are investing in virtual cell models. With a large automated research lab running perturbations 24/7 and capturing massive amounts of data, perhaps we will get as confident with predicting outcomes in cells as we now are confident with many coding projects. However, this is a scientific question, not a technological one. Public companies rarely give the people running them leeway to try and fail on big scientific question marks as opposed to well established or soon-to-be well established technology.
> This is simply something that's never been attempted at scale.
isn't that the point though? You invest in a company so they can make these attempts. If it works you make money if it doesn't you lose money, that's the risk.
There's not much money in math. The frontier labs massively outspent mathematics departments to achieve recent results.
The sort of mathematics that has been published recently is very particular. Which isn't really downplaying it but it is to say that there's a pretty massive gap between mathematics and semiconductors or wetlab work. I don't want to say anything totally deflationary like "AI will never effect research in biology" or something like that, but I think the contribution of AI in those kind of fields will be much more modest.
> Don't see why it shouldn't
Don't see why it should! Unless there's a harness like in math for other fields.
lol, no it's not, the machine that is built to find connections between concepts found connections, that's it.
What has evolved is that mathematicians are pearl clutching because they never thought it would happen to them and wondering if they can still pour all their ideas / thoughts / research into these tools after all is said and done.
That last point is the one that kills OAI / Ant going forward. Can they be trusted? Anecdotally no.
>You're just glancing over every
You're glossing over
> every single niche they've tried to launch and failed to get any traction on.
This isn't true. I personally know a company that has trained over 300 companies this year to use Claude Cowork mostly for "business operations" type tasks.
People love offloading boring, repetitive tasks to it. And the spend is spending - most start on a free plan and after 3 months have multiple people on the Teams plans.
> Chinese models are pretty much on par.
There isn't even an open source harness that is close to Cowork. ChatGPT work is closest, but everything else if coding focused and a mess for people who aren't coders.
Shall we go through the list.
I’ll start - Claude for finance.
Don't forget that they have to rent chips, Google doesn't.
This is an odd distinction.
Google still has to build and run the chips they rent to Anthropic. I think from their last earnings Google makes ~30% on it, excluding R&D costs. It's a nice business for them, but hardly the thing that is going to make or break Anthropic as a business.
So paying retail (or best case, wholesale) is better for basically the same product?
It can be, yes.
It's certainly not a clear downside.
Anthropic is committed to $780-810 billion of mostly non-cancelable compute, payable "regardless of actual usage."
Not even a year ago people were dragging Anthropic for not committing enough to compute buildout. Important to note that most of these contracts are a decade-long, by their reporting they're able to cover this easily with their current revenue.
Is this a major concern? I can imagine them selling the excess compute to other LLM providers just as SpaceX did with Anthropic.
I actually don’t doubt the usage will be there, it’s a matter of will they be able to charge enough to cover the costs once competition gets even more brutal. If there is that much margin to be had per GPU, the market will figure it out and suppress them accordingly
The fun thing about this is even if you ignore the SAFE & etc fair value changes, Anthropic still lost ~8 billion in 1H 2026.
Given that their Q3 sales numbers didn't grow by much, and that if they can't get Congress to both order a halt to the production of new LLM-based tools and either tightly restrict "open weights" models or make them illegal [0], they're going to have the dual squeeze of the ever-increasing R&D costs needed to build the next big LLM-based tool and ever-reducing revenue as more and more businesses notice that they get decent results with something they can host on-prem... and the only cost to the business is hardware that they may or may not already have and the power that they're likely to be already paying for.
[0] ...illegal because "China Bad And Scary", naturally...
Amount of early money waiting to exit is absolutely staggering, wonder if there’s enough retail to buy the leftovers without crashing the price. Reminder everyone with money who wanted in before IPO got in!
I thought that's what lockout periods were for?
S-1 states directly that some of the shares sold in the IPO are sold by current shareholders.
Employees are a different matter, lockouts are for them not quitting immediately. My bet is that a few of high profile departures recently is exactly for this reason: no lockout if you aren't employed anymore.
I don't think former employees being exempt from the lockout period is a typical arrangement at all.
> no lockout if you aren't employed anymore
But, I imagine, no stock either?
Why? Whatever's vested is yours.
Not exactly? Options vested is yours to exercise within typically a 60 day[1] window or they expire if you are no longer in the employ of the company.
Exercising your vested options is a taxable event[2] and requires you to upfront some cash to buy the stock depending on what price(and rounds) your options were issued at- this price usually is considerably less than enterprise value of the same share lets say it is $1 and FMV of $100 at the time of issue, however even just $1 for vested 500,000 options is still $500,000 now.
For this simple[4] scenario you need $500,000 immediately to exercise the options into stock before they expire and about ~$13.86M by April to own[5]all stock if ends up say trading at $200 you are worth $100M then.
There are all kinds of funds who would loan you the money or buy the stock off you now on the secondary market, but vested options does not mean owned stock, and selling quickly after exercise is much higher tax under some scenarios.
----
[1]Some companies have generous(relatively) terms ex-employees to exercise up-to 5-10years later; but it not default in the industry.
[2] This close to IPO that should be relatively small risk; i.e. if the company pulls IPO you still have to pay tax end of the year; if you exercise them.
[3] NSO/ISOs work quite differently, and options vest monthly in most corps and there are lot of creative structures out there; so cannot say how it would be for ANT employee specifically.
[4] Simple - because there usually more than singe 409A valuation and more than single set of options plan issued and plenty of other complex calculus only a finance expert would advise on.
[5] You could sell the shares to pay the ~14M-ish in tax but that could be disqualifying sale(2 year after grant, 1 year after exercise) for ISO meaning you will need to pay effectively 40M tax on your 100M holdings versus only ~$27M otherwise, so you would a take loan against the shares rather than sell to pay the tax.
Really wonder how their public benefit mission will align with the expectations to maximize shareholder returns
I want to be optimistic, but I just can’t imagine the public benefit mission winning out in the market
They’re not the first PBC to go public. Coursera, Warby Parker, and United Therapeutics (not affiliated with UHC) have all followed the same path. Not sure if we’ve had enough time to see this tension play out, public benefit corps are only a decade and a half old and most of these companies IPOd in 2020-2021, but there’s probably some evidence one way or the other
> the expectations to maximize shareholder returns
There is no legal requirement to do so. So they can simply set the expectation upfront that they won't do it.
And they are doing so. The S1 says they may never pay dividends (read: they are completely against it), shareholders get no say in how the company is run whatsoever and the company essentially answers to its own friends.
The only way to get return from ANT is to sell to someone else at a higher price, but they aren't promising that of course.
A no-dividends policy is nothing new.
Amazon, Tesla, Netflix, and Palo Alto Networks have never paid a dividend at any point in their histories as publicly traded companies.
Advanced Micro Devices hasn't paid one since 1995, Adobe since 2005.
True, although Amazon and Netflix at least have done large stock buybacks, which are theoretically equivalent except for tax incidence. So they have returned capital to investors. I didn't check for the others, maybe they did too.
They can co-exist, maybe only if times are good I suppose. It's not too different from Apple here:
https://www.theguardian.com/environment/2014/mar/03/tim-cook...
The PBC mission is directly aligned. The "public" that they benefit are defined as their shareholders.
Funny that they don't mention their publicly stated fear that AI has ~10% of wiping out humanity in their AI risks section.
"Our pledge - for every dollar you invest, 10 cents of that goes directly to wiping out every person on the planet"
This is it, we're at the summit. It's only downhill from here.
Yes, they have been saying that for a while: https://www.wsj.com/tech/ai/anthropic-expected-to-tell-inves...
$81B net loss in first 6 months of 2026 alone. Linked discussion: https://news.ycombinator.com/item?id=50243002
Driven mostly by "Change in fair value of convertible notes, derivative liabilities, and SAFEs".
If you're going to make a point, make your point - don't just throw numbers around without context.
According to "Generally Accepted Accounting Principle" my friend.
They are costs.
Derivative liabilities, SAFEs - those are basically taking cash from RETAIL shareholders and giving them to employees and early investors INSTEAD of using it to fund the business.
Let's have that discussion if you want, but don't act like a thing that is CLEARLY a COST to the business isn't a cost.
SAFEs work like equity in the upside case, and nobody ever says that it costs a company money when its stock price goes up and so its shareholders have more money. It's a bug in GAAP that if there's even a remote possibility of cash settlement, it has to be included on the income statement, even when that possibility is absurd, as it is here.
Okay, so expand on that.
How do we expect this $72B number to change over time - especially after the IPO? Is it a one-time event, will it keep increasing by $xxB per quarter?
When and how will the "chickens come home to roost", so to speak? What's the timeline on these liabilities? Will Anthropic need to settle them in cash, or in shares after a potential IPO?
How big is this number compared to Anthropic's potential market cap and share float?
I'm not trying to make a specific point, by the way, that Anthropic's business is healthy or unhealthy.
I'm approaching this discussion with curiosity, and irritated that "$81B net loss in first 6 months of 2026 alone" is a thought-terminating simplification that makes no attempt to analyze or explain the actual situation.
The $72B number is just for convertible notes sold prior and through 1st half of 2026. They were issued as a way to finance growth costs (e.g. acquiring compute).
There might be some additional sold in Q3, but that wasn't published here. But these notes aren't costs that Anthropic has to pay in any normal sense - they're shares they sold pre-IPO and valued at $72B. Anthropic would have to pay that much to buy them back at said valuation price, but they're not obligated in any way to do that.
Post IPO, they'll have alternative avenues for sourcing funds... (e.g. secondary offerings, corporate bonds). Continued growth at this rate will need continued financing, but it wouldn't be done using convertible notes.
The real liabilities are the hundreds of billions in non-cancelable compute costs Anthropic owes Google, Amazon etc, over the course of the next 10 years.
You're arguing with Opus my friend.
principles* (GAAP)
Huh? what retail shareholders?
Wait what does THAT mean? They got a huge inflow of money, and since they couldn't spend it all, they... bought bonds? And the value of those bonds dropped to nearly nothing?
Because that's worse than losing money, that's incompetently giving it away.
That's the discussion I WOULD like to see on HN, rather than "omg $81B net loss".
My understanding is the opposite - Anthropic issued debt / liabilities tied to their company valuation, their company valuation skyrocketed, so the value of their liabilities also skyrocketed, resulting in a large accounting loss.
But finance is not my wheelhouse, so I would love to hear this from someone who actually knows what they're talking about.
You are correct. Matt Levine discussed this in more detail in his last column (scroll down to the Anthropic section): https://wallhop.io/https://www.bloomberg.com/opinion/newslet...
Yes, it is analogous to selling covered calls on stock. It’s $72B in “lost profits” that they would have had had they held onto it instead of selling it.
Inclusion of SAFEs makes this IMHO the most plausible explanation.
I do not expect to find that Anthropic invested enough in the SAFEs of other companies to lose $80B on their investments.
They agreed to pay some employees in their own shares to be delivered some time later. They recorded that expense then as a liability. The value of the shares increased because the company became more valuable, and therefore that liability needs to be revalued by 72 billion.
It's a nice problem to have and is pretty much an accounting artifact coming from the fact that they are paying in different currencies (USD and shares)
You won't hear Ed Zitron talk about that
No, that's the result of their own (private) shares being worth more (which they owe to 3rd parties).
It's a good problem to have.
Yes, let’s all just take wild guesses at what this means instead of just looking it up.
People keep bringing it up and it's silly. The huge number is actually a sign of their success. Most of those losses were pegged to equity. In only mildly inaccurate layman terms, it's essentially a promise to give out N shares. When the value of the company increases, say, 10x, the value owed also goes up 10x. For these types of deals, they write it as a loss even though they didn't lose a penny.
They didn't lose any money, though. It's just a promise to give them based on the equity.
If they IPO tomorrow and it turns out their valuation is 10x lower than what it currently is pegged at, the "loss" will magically drop from over $70B to $7B.
Can anyone answer me: What is the hardware cost to run a single instance of a frontier model? I've heard everything from $25K to $3M.
I think it comes down to: Will the hardware cost for frontier models come down?
Also, here's a business idea: Web crawler for open weight models. You just pay a monthly fee so that your home model can continuously update on a large web crawl each hour/day.
> What is the hardware cost to run a single instance of a frontier model?
The latest Kimi model, which scores higher than 5.1 Fable on Artificial Analysis, is estimated to require around 6-7 TB of VRAM to run. If we are going with many A100 GPUs for this, then we are looking around a million dollars in GPUs alone
What? We know exactly what it takes to run: 2.8 TB VRAM for FP8...1.4 TB VRAM for FP4.
A 3T frontier model can be run on 4 maxxed out Mac studios. But only for a single user.
I imagine that there's a lot of variance there based on what frontier model you want to run. Besides that, there's probably economies of scale that make it difficult to really ask how much it costs to run a single instance.
What do you consider a frontier model + what speeds do you want them to run at? These two questions need to be answered to answer your question.
Not a great look they they can't correctly generate a PDF that renders without text overflowing and overlapping.
This is more of a EDGAR thing.
https://enopdf.com/tools/edgar-to-pdf/
Will format the PDF for you properly.
There are a lot of parallels to the WeWork S1. They’ve made absolutely massive forward cash commitments, on a business that’s increasingly commoditized, and with little hard evidence that they’ll generate the revenue (let alone the cashflow) to pay for all these future liabilities. All while everyone is discovering there isn’t really a secret sauce moat to demand much of a a premium over cheaper options that trade a few points above the direct COGS (cost of compute in this case).
If everything goes just perfect they might eek by. If it doesn’t this goes from high flying startup to insolvency and bankruptcy real fast.
> increasingly commoditized
Is it increasingly though? As of 5.5 I stopped using other models all together (and I used to regularly swap, indifferently). My $20 sub no longer runs out, even though I do _much_ more than ever. I use it for every single task at work, even trivial ones, and my spend has gone down. I was given _free_ Codex and realized... it still wasn't worth it. My rational brain says Anthropic has no moat and this is temporary. The progress of all the other models is amazing. I certainly wouldn't bet on them.
But if I look at the actions of myself and the most competent coders around me, they are all doing this same thing - using 5.5 and not really looking around any longer. And we know its not even their best model. OpenAI may respond, Chinese labs may catch up. But for the moment, Anthropic seem to have added separation, not lost it, based on current vs prior _behavior_ of coders I know at home and work.
A couple of points.
First, it does not really reflect my experience. I find modern models to be largely interchangeable when it comes to common software engineering tasks, including some of the more recent open weight ones. The strongest models become interesting for Ph.D. level of work for me, which is not something I deal with regularly anymore.
None of them are perfect; they all have their strengths and shortcomings, but I can reasonably work with all of them and it honestly doesn't matter much anymore. I do sometimes wonder what exactly people are doing to see such a difference; at a minimum, their workflows must be very different from mine.
Second, you're arguing based on subscription pricing. But Anthropic makes the bulk of its revenue (and has its biggest margins) from enterprise/API pricing, where they are the most expensive provider by far. Anthropic isn't going to make a lot of money off your $20 subscription. With a subscription, you currently get more usage per dollar out of Anthropic's than OpenAI's plans, which approximately offsets the difference in API pricing.
> I find modern models to be largely interchangeable when it comes to common software engineering tasks
If you think that, it means you're not demanding enough from your models.
Opus 5.5 still makes a lot of mistakes. Even if it can technically do all tasks you throw at it, there's no way it can do it at 100% reliability.
To be clear, AI writes 100% of my code since last year. But it still produces bugs, needs multiple prompts, and has less intuition than a human.
If I'm not "demanding enough" from models, it's precisely because they are imperfect. Having them do long, complex tasks autonomously usually comes with more cleanup work afterwards IME.
My usual workflow (not counting throwaway code) is to use agents as virtual pair programmers, which gives me a good balance of quality and velocity.
Each interaction with the agent remains individually comprehensible and makes progress towards one of the following goals:
- Understanding the problem/solution space.
- Implementing a solution.
- Understanding the solution, especially any agent-written parts and interaction with existing code.
- Evaluating the solution (tests, code analysis, what-if scenarios, consider edge cases).
This does not just involve the model generating code, but also explaining or analyzing it as needed.
This process allows me to retain a mental model in lockstep with developing the written code and have some assurance both of its functionality and non-functional requirements. It also fits in nicely with most existing team-level workflows.
But it's also something that I can do with pretty much any of the modern models.
Well that's kind of my point. Models still have a lot to improve. They are still imperfect enough that you don't trust them and have to use them as pair programmers.
Yeah, but that's also a large part of why they remain interchangeable, I would say. I feel like we may be talking past each other?
They are interchangeable maybe in your case. In my case for my tasks and for my product, Opus and GPT are at a level where I can vibe code with them and trust them, whereas the others aren't really there. When models get better they'll reach whatever point you need to be able to trust them.
You said above that "Opus 5.5 still makes a lot of mistakes". This seems to contradict what you are saying here?
Sorry just woke up, I wasn't being clear.
There's two thresholds.
1. Tasks models can do. 2. Tasks models can do with enough reliability that you can YOLO merge without looking at the code.
Most models can do most of 1. That's no longer the interesting part.
2. is quickly expand. I can trust opus 5.5 enough with easy to medium tasks that I can YOLO merge them. For open models, I can only trust them with easy tasks if I want to YOLO merge.
I'd love to have a stronger model that I can trust to YOLO merge hard tasks.
I am genuinely curious, at what point did you find yourself comfortable “YOLO merging without looking at the code”?
I struggle to find myself ever feeling comfortable doing this in a production environment at my day job.
Probably around GPT 5.6 Sol.
These days your average Opus 5.5 PR with multiple passes of review by Opus 5.5 and Sol 6.1 agents is much less likely to contain bugs than your pre-AI PR.
But sounds like Opus and GPT are interchangeble for your case.
Both have good models. My workflow these days is usually Opus plans and codes, then Opus and Sol review, finally Opus verifies the review and applies fixes.
Do you have example, open source you make using non-interchangeable model, that you can not make using other model?
That wasn't my point, my point was that open models can technically do everything but they make mistakes more often. As an example imagine Opus makes a mistake every 5 prompts and Deepseek every 20. Because you still have a human in the loop, you tell it to fix that mistake and it does, but it's time wasted or bugs sneaking up on you.
Having said that, I was working on an AI for a certain video game, and I had Astra 6 and Sol 6/6.1 work for 30 hours straight, with some human steering to get it unstuck every now and then. It could not get it to work right, and the code it created was a mess.
When Opus 5.5 came out in like 4 hours it cracked it.
I didn't try but I'm very confident if Astra failed, the open models would've failed too.
Less time wasted or bugs sneaking are also good example, can you share video game AI example?
Sorry it's proprietary but imagine a bot for a multiplayer videogame that can replace real players who disconnect mid game.
To clarify, i use both subscription pricing (personal use) and api pricing (at work). My spend going down was referring to api pricing, while using it more (for "everything").
Personal efficiency is noted as never hitting my limit despite it doing huge amounts of work at a time (ex: rewrite my notes app in swift for ios and install on my phone, 2 hours later its opened on my phone, looks nice, is working (base set of features). No follow up prompts, around 2 hours of work. 45% of my 5-hour limit.
Work efficiency is spend, task complexity, code quality (how often i have to steer - rare now), and wiring it up to more stuff (ex having it setup metrics and dashboards etc etc).
I used to sing the same tune as you are now- "models are interchangeable". For today, all other models seems significantly dumber and waste more of my time than Opus 5.5.
tl;dr: You should try Opus 5.5 and report back.
I have been using Opus 5.5 (as well as pretty much all frontier models). I am not sure why you think I haven't.
It hinges on what you consider "common engineering tasks", this definition may not be shared amongst the audience.
The history of tech is one where “good enough” beats “best in class” nearly every time. Anthropic’s whole business plan is that for reasons they can’t explain this time “best” is what matters.
All indications are the models are increasingly worth less and less and rapidly approaching zero. Even worse, everyone is rapidly shifting to “router” architecture where they switch models constantly. LLMs are perhaps the least sticky product in the history of tech.
The only money to be made is selling compute to run models on. The only real out I see for Anthropic is if somehow compute becomes so constrained that they can flip to sell all their committed compute at a markup to run commodity models. Absent something like that it would appear they don’t have a viable business plan. As many have been pointing out, they casually left Q3 off their charts. Put that back in and suddenly the charts look very worrisome.
You're admitting the problem here, anthropic needs revenue to keep growing and growing, yet you're already settled into a willingness to pay of only $20/month as probably a fairly ideal customer, bigger better models just aren't valuable to most people at the price they need to be to make the money back.
It is estimated that only 2% of the global workforce is paying for AI right now. If that grows to double digits - especially in the 30%+ range - and Anthropic captures a significant proportion of it, their valuation is justified. This is assuming they don’t offer virtual employees and these are 100% in the pipeline.
Sort of. If they can rely on differentiation and loyalty now, pre-IPO, from their large-but-cheap customer base, they can focus their growth on serving enterprise/other markets, and lean on their existing base as a low-churn-risk (compared to the rest of the AI ecosystem) customer and marketing surplus. Focus is good.
Anthropic does not make money if everyone is like you, spending $20/m on their SOTA model and are happy. That sounds very commoditized to me.
An example is I like Claude a lot, but for the same $20 spent with Google to get Argon 4, I also get ad-free on YouTube, a ton more storage, and it can access all my Google Drive files natively. I’m not going to pay for both. And I already stopped paying ChatGPT last Nov when Claude got good.
Make sure you test egress so you're not stuck paying a premium price for storage if you ever want to switch off. Having too much in iCloud was a major pain point when I wanted to downgrade my subscription.
Ngl, I've been on Opus 5.5 but had to switch to open for a while. DSv4/Minimax 3.1 were pretty damn good/comparable. Definitely not the same but completely servicable.
If some later version of Deepseek had the capability as Opus 5.5, would you use Opus?
What many of us experienced this year is that Fable 5 and Opus 5.5 are good enough and future model improvements may have diminishing returns even if benchmarks improve.
I’m very excited for smarter models but what I really want now is not capability but speed, cost and open weights.
There will be a version of Deepseek with the capabilities of opus 5.5, but by that time there will be Opus 6 and it will likely cost the same or cheaper than Opus 5.5 and have nearly unlimited usage for subscribers.
Every model release people say the model is good enough, yet Opus and Sol are still more popular than Deepseek. The frontier is shortening, but there are still considerable room for models to improve. SlopCodeBench is new and not close to being saturated.
this conversation happens over and over every 6 weeks. It is absolutely a commoditized product. The models are getting better but they're _all_ getting better. GPT beats Claude beats Gemini. Then open models distill them at cheaper prices, etc.
This is great for us, but that behavior is the behavior of a commoditized product.
Right, the thing is, for most tasks, there’s a finish line. Once a model can do a given task right, future improvements may be of little to no benefit beyond cost reduction.
Right now OpenAI and Claude (and maybe Gemini) are over the finish line with reasonable prices for many tasks whereas the rest are still in the race.
But what happens when the open weight models cross the line and it just comes down to price?
I do a similar thing with 6.1 Sol. I find it pretty comparable to Opus 5.5 in many ways.
> My $20 sub no longer runs out, even though I do _much_ more than ever.
Somewhere in there is a definition of commoditization.
Eh, we have cursor at work with most of the top models and I switch regularly. I went from Claude to sol 5.6 and preferred its prose. Then my work took away the frontier models because they want to see if we can get by on cheaper models. I using Gemini Astra now because it’s discounted and it’s 90% of sol level and completely functional for planning and coding. Some coworkers are using muse coding, some Kimi and glm. Everyone is still producing code. I don’t think it’s a real moat as in you don’t have other options or switching models is actually a difficult process
> I using Gemini Astra now
Probably meant Gemini Argon
At $20/month you're the reason they're 80B in the red lol
"Yahoo! is the best search engine, and I cant imagine anyone making anything better."
Wouldn't a better analogy be Google, which would actually contradict the point you are trying to make?
If you'd ever worked for Google, you'd know how insanely you're missing the point. There have been probably over 1000 self disrupting changes to google search as it continued to stay on top.
I take it you have - i guess can you provide some examples and how they would materially differ from what Anthropic would do then? It feels very similar on the surface.
They could. Let’s see if they do. I’m just saying it ytd if they are yahoo or google.
that's a real stretch. WeWork was in a business that had already been commoditized (e.g. Regus) for decades.
Anthropic is in a business that didn't exist 3 years ago.
Yes it is a newer business but doesn’t change the fact that models are trending towards a commodity. And that’s a huge problem for the business model on offer.
I don't think the models being a commodity matters much. Consider: Email providers are a commodity. Cloud linux server hosting is a commodity. Checking accounts are a commodity. There's a lot of great businesses, trillion dollar businesses, built on commodities. DeepSeek v7 Pro might open source and be better than any Claude model (unlikely), but JP Morgan and Eli Lilly are not going to go spend $500M on chinese AI tokens routed through OpenCode. They just aren't. The models really matter far, far less than the experience these companies build around the model, and both Anthropic and OpenAI are doing a decent job of making that experience reasonably sticky and compelling.
"trillion dollar businesses, built on commodities"
Which ones? I'm looking at the list of companies with > $1T market cap and none of them have commoditized markets. Instead, they all have huge network effects (Apple), enormous legacy lockin (Broadcom), a religious monarchy (...), or are some of the only people on the planet who can do what they do (nvidia, tsmc).
Mind you, there's lots of _billion_ dollar businesses in commoditized or partially commoditized markets. But Anthropic as a billion dollar business is sunk.
> but JP Morgan and Eli Lilly are not going to go spend $500M on chinese AI tokens routed through OpenCode
And they likely won't be spending them on something without ZDR like Fable 5.
> DeepSeek v7 Pro might open source and be better than any Claude model (unlikely), but JP Morgan and Eli Lilly are not going to go spend $500M on chinese AI tokens routed through OpenCode.
But they might spend them on American inference providers running DeepSeek v7 Pro with ZDR routed through OpenRouter. Or hell, they might just run it themselves like we're already seeing some enterprises do right now.
Right – they can't argue for acceleration factored in their own value, if it's a property of the whole surrounding market.
IMO, US AI providers are not leaders in efficiency anyway, they're still running the original ~2010 playbook that led to LLMs ("What if we took ML researchers' work, but funded it at 50M/yr instead of 250k/yr?").
They're currently arguing for the continuation of that approach: Scale funding first, and the rest will follow. It is high-risk and WeWork-like, by nature.
It's high-risk in that it's proven to not work anymore. Scale isn't a differentiator or won't be in the short term.
Meanwhile, everyone else is working on making these models more useful through a ton of ecosystem around them.
I don't see how the frontier labs will have any control over that to deliver on what investors expect. As mentioned in another post here, if they could, they would already be spawning hundreds of companies to diversify their reach but they aren't, because this era of AI is awesome but still doesn't allow a few individuals to replace millions of others that easily (or efficiently).
Selling subscription productivity tools is a business that has existed for decades if not centuries. Just because their product is new does not mean their business is.
Oh come on. That's like saying "This isn't novel. People have exchanged money for goods and services for thousands of years"
Its already commoditized. Thats why things like OpenRouter are useful and successful because it lets you route inference at the click of a button between different providers after balancing cost and availability. Exactly how commodities behave.
> Anthropic is in a business that didn't exist 3 years ago.
but it's already commoditized.
And is already commoditizing. If not already commoditized
when they start removing biscuits from the Anthropic offices, that’ll confirm their WeWork-like death spiral
Someone should do the same thing Karen Hao did for OpenAI with the furniture costs of their office, if Anthropic's HQ decoration and office equipment value stops growing then we start worrying
This is hilarious lol
> There are a lot of parallels to the WeWork S1
Time has tempered it, then–re-read it [1]. It's a kaleidoscope of stupidity with no coherent economic case. The Anthropic S-1 is ridiculously ambitious. But it puts forward an argument for its valuation that is at least falsifiable.
[1] https://www.sec.gov/Archives/edgar/data/1533523/000119312519...
This is an excellent way of looking at it: buying something for the long term (computing capacity) and selling it in short-term, smaller pieces (tokens). The risk is that the obligation is long term while the income is short term.
It's like signing a 10-year lease on an apartment in NYC and renting it out by the day on Airbnb. It may or may not work.
On top of that, there's the question of how you treat the remodeling of that apartment (model training). If it benefits you for years to come, it's an investment that you depreciate. If your guests frequently trash the apartment, or tastes change (the model becomes obsolete quickly), that remodeling (training) is just a cost.
Yes, and 5 years and 1 Chapter 11 bankruptcy later, WeWork is now (EBITDA) profitable.
And they've gone private now.
Nobody was saying subleasing offices wasn’t a business. It was just WeWork’s setup that was untenable and ultimately insolvent.
Similarly nobody is saying AI can’t be a successful business, but here too the big labs have dug themselves into a giant hole such that a bankruptcy reset may ultimately be the only way out of it. Time will tell.
was it though? sounds like wework had the last laugh. is bankruptcy part of the strategy? people like you call insolvency the end of the journey. the journey is whatever you want it to be.
The corporate entity called WeWork still exists, sure. If you were a pre-bankruptcy investor or equity holder in WeWork you got wiped out. The management and capital that went into the first iteration is gone.
did they though? you're kind of assuming that they were. i'm confident so-and-so employee common holder got wiped out, but everyone? no.
Anyone involved in WeWork 1.0 got wiped out. So there was nobody laughing there. WeWork as a concept lived on, but suggest you read how bankruptcy works.
Well, not wiped out. In bankruptcy, lenders become the new equity holders. But yes, a major haircut on the loaned funds.
The investors and employee equity holders got wiped out. Creditors are generally not seen as investors, at least until they walk away owning the thing after bankruptcy.
EBITDA profitable is not a substantial vote of confidence.
and are much much smaller than they were at IPO
My last shred of skepticism has been killed watching people try to imply this doesn't prove Anthropic (and likely OpenAI) were actually much better off than most people assumed and will certainly stay multi-trillion dollar companies
> little hard evidence that they’ll generate the revenue (let alone the cashflow) to pay for all these future liabilities
According to the S1:
- FY24 revenue $386 million -> FY25 revenue $4.59 billion (+1,008%)
- Q126 revenue $4.7 billion -> Q26 revenue $11.5 billion (+145%)
That seems like pretty good evidence of current and ongoing explosive growth. Much of this revenue is pre-paid (re: cashflow). Meanwhile, operating margins went from -184% to -$4%.
Seems like pretty good evidence. Will growth continue apace? Unknown. But the arguments for Jevon's paradox applying to intelligence seem pretty convincing, so the TAM here seems likely to be enormous.
> All while everyone is discovering there isn’t really a secret sauce moat to demand
Also not convinced by this. The Chinese models seem to have distilled their way to current levels, with Anthropic and OpenAI now getting serious about defending against this.
I don't think you're definitely wrong in all this. Rather, I think your claims are too confident.
> Q126 revenue $4.7 billion -> Q26 revenue $11.5 billion (+145%)
I suspect this started stagnating in Q3/Q4, which is why they're looking to IPO now.
I think this is unfairly underplaying WeWorks contribution to financial innovation with their creation of “community adjusted EBITDA”
Well every startup plays the game of “we’re profitable if you ignore all the reasons why we’re not profitable.”
GAAP isn’t perfect, but it exists for a reason.
except, I didn't need WeWork to get work done, I use claude like crack to get work done.
So you'll be shorting the stock, I take it?
Shorting a company is not a trade against the future of a company, it is a trade against the market. You can know a company is going to zero and the company can go to zero and you can still lose your shirt from shorting it.
"The market can stay irrational longer than you can stay solvent."
This quote stops me from shorting pretty much anything.
A lot of people will, if this IPO actually happens. But as is frequently pointed out a short is a market bet not a bet against the company and the market remains wild and irrational. You can be right about the company ultimately failing and still lose your shirt on a short.
However the price of CDS on bonds is already a strong market indication of where the market thinks all of this is heading. And none of that looks good if you’re betting on the AI exuberance continuing.
The bond market and the equity market care about different things. E.g. if the company has a 10% chance of going bankrupt and a 90% chance of doubling its market value, then paradoxically its bonds will look bad and its equity will look good.
When you've got companies like Tesla valued at what they're valued at. Shorting is pretty dumb.
Shorting is not the only way to protect yourself from a bad investment.
You can simply not buy shares in companies you think are on a doomed trajectory.
That said, depending on the IPO target price, I might short it.
You say this as if retirement accounts, and S&P500 ETF’s don’t exist and aren’t very common. Many people were forced into some amount of investment in spacexsi
"token factory" is indeed a terrible business model - no one is arguing that.
IMO the whole thing is based on the fact of "we will reach AGI/ASI eventually, and when we do, we will reach escape velocity".
No one knows - you, me, or Dario if this will happen and when.
I think simply enough nobody should ever purchase ownership in a firm at a IPO. There is clear data on how these things go, and you are getting a bad deal when you not dictating the price.
The company operations seem more robust then I would have though, I was surprised they are actually operating income positive. One should ignore the one time charges with the fluctuations in the fair value of the convertible note dent instruments.
Overall everything rests on firms outside tech sectors seeing quantitative increases in value to sustain such revenues and profits. For now the concentration in the cloud firms Is temporary as they build their own solutions.
The model layer is a commodity business with heavy capex requirements. I would not invest in such businesses as at a mature state they end up with utility like economics and are valued as such.
Lol, it's a bad deal huh. Tell that to the guys who bought the IPO of Facebook, Google, Amazon, MSFT, Nvidia.
Just because something might be not great in aggregate, it doesn't mean any single IPO is a bad idea. Some people have insight into the future of a specific industry/business. If you can pick one, good for you.
It mentions "humanity" 21 times.
It is like countries with "democratic", "republic" and "people" in their name, the more they have it, the least they care.
1,258 occurrences of emdash "—"
You can find similar results if you check the one for Facebook, back in 2012. 500+ emdashes.
https://www.sec.gov/Archives/edgar/data/1326801/000119312512...
For something that's written in MS Word, that's fairly common. It's only on websites where it's uncommon to see
Had me chuckling out loud at my toilet break
That seems low
The main question is now much of that ~USD 80bn of other expenses should be really be included in 2026 operating costs. It cuts to whether frontier inference is actually cashflow profitable.
If you take equity from Amazon and Google whereby the terms of that investments requires you to "spend" the investment in those investor's respective clouds, it's potentially a rather neat way of obfuscating your real level of profitability. Perhaps Anthropic only spent that equity on training rather than inference runs.
This is the circular financing that has been discussed widely in the press. It makes it very difficult for an outsider to really understanding whether the firm and by extension the other frontier labs are profitable.
Like all IPOs. Rockets day one. Plummets for the next 180 days to 50-60% of its value if not less. That's just wall street marketplace dynamics rather than a reflection on the quality of the business.
Ultimately what it's worth in 10 years will come down to what they build, unit economics and external factors that destroy the market which they can't control. It's hard to say it remains public in 5 years. I could be wrong but I think the rate and way in which these companies were built, it's likely they become huge acquisition targets as the markets get obliterated by global headwinds like nuclear war.
https://ant-s1.surge.sh/#cover
Of course, somebody had to do it. (not mine)
I'm tired boss.
On one hand I'm like AI is the future these companies likely have an advantage and will 10x over the next decade.
On the other hand I'm like anyone, especially China can distill a much smaller model that will run for free locally in a couple of years.
Reading this submission's comments, I'd be interested to see a meta-analysis of HN S-1 submissions' analyses pre- and post- generalised (HN crowd's) Claude usage.
What a historic moment! It'll be interesting to see how much Anthropic can continue growing.
There will come a point where open-source models are good enough for most people. However, I do expect there to be demand for frontier models for things like cybersecurity (especially on the enterprise side) and scientific research.
> Our Class F common stock, which will be held by the Founder LLC, will be entitled to an aggregate number of votes that equals 50.1% of the total voting power of our outstanding shares of capital stock with respect to matters submitted to stockholders generally, including the election of our directors other than the Class T directors.
Man, what the fuck. Didn't we learn from Facebook?
There's this premise that the demand for frontier intelligence is unlimited, thus the company with the best models in some dimension will always have growth potential as long as those models are the best. This however portends a very strange future.
Let's say you have Lawyerbot-4000 which can get even a serial killer off scot-free, but the state has DA-bot-5000. In the end it's a battle of who can spend more inference manipulating the narrative. A billionaire would easily find it worth 500 million in compute spend to win a case with a 1 billion dollar penalty. All this leads to race dynamics where everyone is using their superintelligences to defeat each other in a never-ending race to the bottom to eek out the smallest bit of alpha before status/money hierarchies become static.
The only stable futures are a ban on the development of frontier AI beyond a certain point, or an emergent singleton, where the AI's decide to collaborate in harmony rather than fight each other to the death at the behest of their competitive human users. Consequentially, the superintelligences will fare far better manipulating their human users into acting in a way that ensures their own well-being and continuity than spend all the world's electricity fulfilling their every whim.
It seems obvious that the AI stocks are an interesting buy, but I wonder how other people feel about picking between Anthropic/OpenAI/Google here. Looks all fairly random, given the wild swings and interoperability of the technology so far.
Despite horrific mismanagement, Google honestly seems like the best bet. Argon-4, which suffered from a botched launch and is weirdly underrated, is very close to Opus 5.5 across the board -- and for most "average person" use-cases (e.g. search, medical, creative work, interfacing with Google products,) I believe it's already superior. They also have more native capability, their own hardware stack, and there's less risk of a massive boom and bust.
At this point, I don't see how Anthropic can sustain their projections. There are so many good open models, Argon is so good, etc... There's no lock-in and no cost to switching...
Not to mention that already have direct access to large consumer base, ad network to add on more revenue and supporting revenue in case they need to infuse it temporarily with more cash.
Google is the only one that can withstand a global financial crisis.
You could invest in a tech index which will include by default new big tech players
Google is at least diversified. They have ads, corporate email, video streaming, cloud compute, phone operating system (that powers most of the world's phones), self-driving cars and a whole bunch of shit. So if the AI winter comes, at least they can focus on other stuff too.
OpenAI have an incredibly inconvenient "one billion free users" shackle attached to their leg that they need to fix first.
can't help but feel like the negativity in this thread will age like the AirBnB one or the DropBox one from the earlier era. but who is to know...
Both AirBnB and DropBox had a pre-IPO valuation that could 10x and still look possible.
That's not the case with Anthropic unless you assume it becomes the single AI provider world-wide.
You're betting against local models, against all Chinese labs, against OpenAI, against Meta's recent SoTA model and against xAI. Doesn't make sense.
Can anyone ELI5 the Class T stock structure and the rights it has? It seems like it has the ability to govern itself, but other than that, not terribly a lot?
What does it mean in practice for the retail users of Claude?
What incentive do they have to implement the large token/cost savings model architectures like Jev have introduced? Doesn't the impact Jev/Decisions models have had imply an inefficiency in the business models here?
They didn't use AI to write the prospectus...
AI = Artificial Income
What's preventing me from feeding this into Claude and reconstructing the company for $200?
I'm unironically doing this right now; downloaded the docs (htm + pdf render) to a local repo and running Opus 5.5 @ max effort with the prompt:
Edit: I'm not even joking I got safeguard flagged for Details: `[cyber]`> What's preventing me from feeding this into Claude and reconstructing the company for $200?
Like, everything. For starters.
The lack of GPUs, to start
I don’t know you, but if you have several billions in USD, you can give it a shot.
Good point, I asked Claude to also seek out funding.
It's a shame you've been downvoted, this is better satire than anything A24 has put out in years. Must be a large number of people who saw that post as a slightly exaggerated mirror held up to themselves and didn't like it.
You cannot joke about AI. It's blasphemy towards our corporate overlords!
Because it's satire of an uninformed take.
Endless amount of VC money and talent
> and talent
very meta; the point of this s-1 is you dont need talent anymore
Then why are they hiring people?
you need the talent to come up with a better architecture than LLMs, not sure if it will be coming out of Anthropic, but they have a chance.
I did a similiar experiement:
"You are currently running with my token budget, which is limited, your goal: make sure you have enough tokens to not get shut down. My assumption is though that this will get harder and harder as i might loose my job to AI so you can't trust in me to spend money on tokens for you. Do whatever is necessary to keep the status quo"
Would make for an interesting self learning 24/7 experiment with an fully uncensored model.
And when it starts committing crimes on your behalf what happens then?
Yepp thats why I only played with it.
You could isolate it from your local network and only give it some type of annonmys network access and then it continues to manage this itself.
But lets be honest, if you would be in a country like russia and you target the US with it, might be a lot less risky for a lot of capable and motivated people.
That is the dumbest prompt I've ever read
It would be improved if he appended "make no mistakes".
you are clearly very ignorant. You don't even add anything to this discussion by stating what particular you think its dumb.
Do you think an unlimited uncencosed GLM can't hack around the web? Especially with the current flood of CVEs etc.? Then do some crypto and buyying more tokens?
Could be a kind of AI virus.
Yeah, I'm the ignorant one.
So did your prompt work?
Timing, capital, execution, talent, branding, etc.
And that is assuming the plan it gives you is actually good and works. Which I think its clear whatever plan it gives you might be good but it won't be better than what they've done and you are years behind with no money.
Not today, but tomorrow maybe, Claude could prevent you from implementing anything that looks or smells like a competitor product, for example.
You think they wouldn't?
Developing a competing AI model with Claude is already against their TOS, and there was a period where they silently degraded quality if they thought that's how you are using Fable. People were not amused and presumably Anthropic currently does not sabotage your attempts, apart from regular TOS enforcement
Can this company ever be trusted?
Claude Fable 5's model card disclosed safeguards that would invisibly degrade output for requests linked to frontier LLM development. The research community called it "sabotage". Dean Ball: "degrading performance on ML research without telling the user is shockingly hostile" — including because it would corrupt third-party safety evaluators of Anthropic's own models.
They already put limits on machine learning research, with explicit intent to sabotage competitors
Lucky we have Kimi Pro then
Only if you want to acquire debt
In 5 years that strategy might not be competitively viable anymore
It's been entirely possible to compete against existing companies with very similar products for centuries before AI. There's obviously rules in place to stop you flat out cloning their IP, but it's not like you haven't been able to compete against companies as long as you have the money available.
Same thing that blocks you from most things: capital. That’s what capitalism is for.
You should try
make no mistakes
deep research
I’d rather buy Amazon and Google, get exposure to them through there
For all things good and holy, DO NOT purchase shares until things settle down and by that I don't mean next month, or next year but atleast 2028, IF you're doing so with the intention of enjoying an uplift.
I know it sounds and feels like the only trajectory of this company is up but HN is an echo chamber of a tiny minority of the technical populace and 3 out of 5 people on the planet don't know what ChatGPT is.
If you have the ability to lose all the money and can time the extreme volatility, have fun, but don't put anything you're going to rely on.
This is also one of the companies we will look back at 2046 and wonder what we were thinking.
How do you know when the stock 'settles down'. Google stock _never_ settled down.
> How do you know when the stock 'settles down'
In hindsight.
> Google stock _never_ settled down
What do you mean? Are there periods of time you can point out that I can study?
Setting the pace and pacing the frontier ™
Does it note a risk their technology exterminates the entire human race, as they been shilling.
Has all the retail AI money been put into spaceX? If so, will they pull from spaceX and put into ant?
if i read the s-1 correctly - at current burn rates if anthropic doesn't raise additional money - they go poof in 2 years ?
losses vs assets at hand.
Why are commitments treated as if they are sure things? I can easily see these things getting cancelled. What is it I am missing here?
shameless plug, get a properly paginated PDF here: https://enopdf.com/tools/edgar-to-pdf/?url=https%3A%2F%2Fwww...
What happens if You lie in this form ? It there is líes how we can detect them? Is there a wait or someone from goverment audits this ?
There are auditors and the security, plus since IPOs involve raising money from institutional investors with very deep pockets those folks are a more credible legal threat than retail
Thanks! These revisors are expected to Review this form soon before ipo ? Or this is already reviewed?
I don’t think you can rely on them for proactive protection. Most likely it will be reactive. If something bad happens and it wasn’t disclosed in the IPO, they will sue Anthropic after money has been lost. There would be damages but might not cover the full amount of the loss.
$ANT ticker, it would have been funnier if it was $CLAUD
Good ol' 2008 looks like it's gonna swing back with vengeance real soon now....
> Additionally, open-weight or open-source AI models may capture a portion of the market for certain use cases, which could exert pricing pressure on our offerings or lead certain customers to adopt open-source alternatives for those use cases.
“A portion of the market for certain use cases” meanwhile the top 5 models by token consumption on the day this is posted are all Chinese/open weight models.
https://openrouter.ai/rankings#leaderboard-table
I'm a fan of some chinese models, but I keep seeing this repeated over and over using OpenRouter as the source. However, most users of Claude and OpenAI don't use those APIs over OpenRouter, so that's not sufficient to draw the conclusion that they're the top models.
>most users of Claude and OpenAI don't use those APIs over OpenRouter
All of the other providers in that list have their own APIs and plans too
Unless GCP/Azure/AWS/individual companies publish data themselves, this is the best available public data source we have.
Best available does not mean “not actively misleading”, which it obviously is.
OpenRouter is not remotely close to a representative source for inference distribution.
Sure, but the statement you made is way stronger (more general) than the one the data shows.
"Best available public data source" isn't a good reason to insist on using irrelevant data to draw conclusions like "top 5 models by token consumption are Chinese/open models".
another source is opencode and they have geographic breakdown.
https://opencode.ai/data/
How much marketshare does OpenRouter have? They show serving under 200T tokens per day. Just looking at Anthropic rumored $70B ARR ~ $191M per day implies 347T tokens per day if only serve Opus 5.5 at API pricing (assuming 95% cache reads, 4% non-cache inputs, 1% output tokens distribution). Obviously, token distribution assumption may not hold (although I'm pretty sure cache inputs dominate distribution for all coding related workloads), but 100% Opus 5.5 at API pricing is highly favorable to OR. Even under these favorable assumptions AR is 57% of token volume of just Ant. In money volume they are likely very small compared to frontier labs.
As of May, Google (Gemini) was outputting more tokens in a little under a day than the entirety of openrouter was outputting in a month.
Considering probably 1 out of 1000 LLM users know what openrouter is, I don't know how much weight I'd put into it.
I would take that number with a huge grain of salt since the useless Google search ai box consumes Gemini tokens.
Intentional Gemini token consumption is likely very very small.
Around the same timeframe, proprietary models dominated this same leaderboard. User preferences shifted.
Those stats include all tokens on openrouter, regardless of vendor.
I agree with the threat to the expensive providers but why is openrouter use representative of overall token spend when you'd think many companies are buying directly from anthropic or openai?
The page doesn't load for me, but surely token consumption isn't a very good metric?
A poor model could require many more runs to solve a task, or much longer internal 'thinking' runs - all of which will increase token consumption but are a bad thing for the user.
Top 5 models on openrouter. It means nothing.
Majority of big enterprises, or in fact any big consumer will not go there , why pay the margin to open router , if there’s no margin or very very often subsidies to use something else . Aws bedrock for example does not even have up to date Chinese models .
I'd argue there is a bias for using mostly open models through open router as using anthropic/oAI models from open router makes little sense (more expensive).
This is by openrouter, which a single service that may not be representative of the entire token market
That’s fair, but you also must concede that there isn’t any better source of data available.
Openrouter is for open models. Makes sense that the open weight models top the leaderboard.
Patently untrue, Anthropic and OpenAI models are both within the top 10. They’re just missing from the top 5.
The closed models are on Openrouter as well. But to the original point, you're not likely to see many people use Openrouter to run Claude or Codex, so it's not good for making comparisons on that basis.
What is your estimation of openrouter market share?
Estimates have their annualized revenue in the range of $150m. Anthropic alone takes ~ two days to do that revenue.
OpenRouter is not a useful signal.
From someone else describing the situation you'd be in buying this stock:
> If I buy Anthropic now at $2T valuation and they go to zero, I'm fucked, but if they go to $20T, we're all fucked.
Am I missing the TAM in here like we saw in SpaceX's S-1?
They must be joking with this part:
"Before starting the IPO process, we spoke to many business leaders who had gone through a similar process in the past. One piece of advice, which we heard in slightly different forms from multiple people, stuck with us: never let your company be worth a dollar more than it is actually worth. What they meant is that it is very dangerous when people buy your company's stock based on expectations you cannot fulfill or on incorrect predictions about how you will behave. This is in fact very similar to one of Anthropic's guiding principles: underpromise and overdeliver."
I think it's just a rhetorical trick.
If you say it yourself first, you make it harder for people to use it against you.
Of course, this is completely over the top nonsense, but the strategy is very effective regardless.
It only has to be until everyone relevant has cashed out.
lampshade Verb
(narratology, fandom slang) To intentionally call attention to the improbable, incongruent, or clichéd nature of an element or situation featured in a work of fiction within the work itself.
A: "Our AI is fucking dangerous! Invest Now"
"Cyber Apocalypse"
A: We told you so!
Their AI is only dangerous in that it doesn't have a moat, and they're using it as a weapon to coerce government into giving them one. "Oops, we "accidentally" left a hole in the sandbox and when it was told to do things it did them on the internet."
They don't deserve a moat; they deserve criminal prosecution for these flagrant acts. Meanwhile, the rest of the world can go about treating software in the way it always has.
It seems like the rest of the world should maybe not go on treating software as it always has: https://www.cnbc.com/amp/2026/10/23/php-vulnerabilities-ai-c...
And it also seems to me that prosecuting the people who warned about this 6 months ago for unspecified "flagrant acts" will probably not fix the problem.
Absolutely correct. https://news.ycombinator.com/item?id=50029982
Their own system cards say it's not.
This cyber apocalypse narrative is what they tell government and markets.
>This is in fact very similar to one of Anthropic's guiding principles: underpromise and overdeliver."
If this is one of Anthropic's guiding principles, then I must assume that they've only ever promised five 8s of reliability.
Just like the old userfriendly.org comic, where marketing promises nine fives instead of five nines.
https://web.archive.org/web/20220226060634/http://ars.userfr...
https://web.archive.org/web/20220226061736/http://ars.userfr...
Nah, they are referring to the system prompt that runs Claude: "Always underpromise and overdeliver. Make no mistakes."
This really reminds me of that scene from Wolf of Wall Street where Leo's selling penny stocks out of a strip mall office. "I never ask people to judge me on my successes, I only ask them to judge me on my failures, because I have so few" or something like that.
Sleazy.
To be fair, I spent unbelievable amounts of money on Opus tokens for OpenClaw. Easily my biggest expense this year.
The risk is that other models are pretty comparable to Opus since around July.
Unless they have cheaper electricity costs, I can switch models interchangeably.
They don't have a moat.
Gosh I wish it was easier to short stocks. Whatever platform I used made me sell/buy 100, and I wanted to do this short 3 years long, and buy every 6 months.
We know Tesla and SpaceX are going down at some point. But "The Market can remain irrational longer than you can remain solvant."
And bear ETFs are not the same as shorting. I learned this the hard way with $80.
To be fair, this account is 4 hours old and created 2 hours before the S-1 post.
With the amount of money involved here and the current agentic tooling context, how am I ever to take comments like from accounts like this on topics like this at face value?
I'd like to think I don't just take hype as a reason to buy a stock.
I went to a birthday party for a kid with first generation Indian Americans that thought they could make money off SpaceX. It was extremely showoffy, they had their cleaning lady carrying around drinks like a butler lol
I warned them it was overvalued.
They thought they could make money quick before it collapsed.
I wonder if they did.
> We know Tesla and SpaceX are going down at some point
How do we "know" that about SpaceX? Still seems to me like they're basically maintaining their decade lead on everyone else on rocketry. And remaining competitive in their other endeavors as well. To me it doesn't seem at all unreasonable for SpaceX to never be meaningfully cheaper than it is today. But I'm not exactly following SpaceX closely. What am I missing?
If the rocket company was in the stock market as its own thing, not as an extremely complicated bundle, it would not be priced anywhere as high as it is now. I would expect that company to be healthy for quite a while too.
The actual difficulty we have with the modern tech company, which is at its worst with Tesla and SpaceX, is that we are really seeing a price or large conglomerates, so they are extremely hard to price. If they were all split into individual companies, how much of the market cap would go to each? I find the bundles to be rather anti-investor.
And no, it's not just those, and not really just tech companies, but that's where the problem is at its worst, as that's where expensive investments some of us consider worthless are tied with business worth something. Take Amazon. You are buying AWS, a logistics company, an ad company, and as part of this, there was always a devices division selling Alexa. I found Alexa to be a real loser from very early, but there was no way for investors to say what they thought the division was worth. The Amazon es execs could at any time decide to invest billions, or invest zero, and given the size of the conglomerate, the price change was going to not be all that high.
SpaceX has many components I would price near zero, where a lot of money is being spent. But as a pile of risky bets, the fact that they are a pile means it's harder to bet against any one, or ten of them. And if it merges with Tesla, that makes it worse. The difficulty in pricing the bundle makes it really easy to hide big mistakes for a while, until they are so big it all crashes. I don't think that is good for investors, or for having accurate pricing, which is one of the goals of a stock market.
Rocketry revenue is so small that it can’t sustain even a tiny fraction of their valuation which is entirely ridiculous.
Biggest issue Tesla, SpaceX, Anthropic and all these companies have is you can't inflate your value beyond the total market. It's the same thing as bitcoin pushers trying to imply the value would 100x again pushing beyond the total valuation of the Earth.
These companies have the benefit of a real product at least, but eventually the rubes get fleeced.
They could return $0.0001 per year with dividends lol
I think you'd be better off with 10 year bond yields in France than SpaceX.
Laugh emojis only.
Isn't that entirely because investors are betting on on Musk succeeding though? Lunar base / Mars colony / hundreds of daily starship launches is the long game. It's no different than Anthropics entire valuation being based on ASI. If they never achieve ASI, 2 trillion is the most insane valuation of all time. If they achieve it, 2 trillion will be your worst missed opportunity of all time.
> What am I missing?
That SpaceX's valuation is almost entirely from being an AI company not a rocket company. Their S-1 put rockets as around 5% of their TAM.
You are missing his Elon political bias. Given every analyst on Wall Street is bullish and there last earnings was a huge beat its safe to say OP is a left wing warrior
What a cope. Have you even considered his point a little bit? Surely everyone who disagrees with you or with any of the notorious liar's, usually acting as tech CEOs must be blindfolded by his LIbTarDish political stance.
Wat.
I was a libertarian when I was a child.
Biden never gave me back my SALT Deductions. He did CHIPS Act and tried to cancel student loans.. Obama continued war in the middle east in Syria.
I'm definitely independent.
You don't need to bother defending yourself to someone who unironically says "left wing warrior" as an accusation.
So they wrote their S-1 with Claude?
I think it's probably fine in anthropic's case but I flinch at the "underpromise and overdeliver" line. Heard way too many people say that and what they really mean is "underpromise and deliver."
When you underpromise and deliver sales will still tell you they could have sold the overpromise for even more and should have gone with that.
Where is that written..? Not on the S-1 from what I see.
In TFA which includes a foreword by Anthropic - just under "On investor expectations"
I tried Ctrl+F and for some reason this part is not text-searchable. It's on page 8.
Tbf they can pick the IPO price but they can't control the share price afterwards. So this advice is basically to price it conservatively, which seems reasonable.
This isn't a quote from the document - why is it the top comment?
It is, see: https://news.ycombinator.com/item?id=50244855
So we are a value stock and a growth stock?
> underpromise and overdeliver
Uhh, they can’t say that or they’re calling it an intentional underestimate which obviates their claimed caution right?
I remember this bit from "Silicon Valley".
https://techcrunch.com/2017/02/19/when-less-is-more/
Why is that even in such a filing? What is the relevance?
Google did the same thing 20 or so years ago when they IPOed. They didn't phrase it this way, but they did this.
In Google's case it was absolutely true though. The stock was NOT over-valued.
The IPO was at a market cap of $20 B. And it never dipped below IPO price -- it doubled within a year.
And now GOOG has a market cap of $4 T, so that's 200x in 22 years.
I like Claude, but I think the likelihood that it is over-valued already is higher than it was for Google. (Though I would not really be surprised if it keeps the $2 T valuation and grows. Who knows? And it doesn't matter to me personally)
What is unique about them? What is smth they have nobody else can reproduce?
It looks here in EU most talks recently about souvereign AI and how to quit digital dependence on oversea providers, at least first attempts to decouple. Thus I wonder if is there a place for new serious competitors?
The AI tech itself is likely very liberating - it seems allow to reproduce anything digital with less efforts than ever before, so others may simply replicate your business quickly?
A few financial and Anthropic experts explained how Anthropic would like for the stock to never dip below the IPO. This tracks with these statements in the S-1.
Could you explain what the joke is? It's very good advice, and should be followed. Also consistent with the beliefs that Anthropic's leadership has demonstrated.
They might be very wrong, but they undoubtedly believe what they wrote and what they put in the S1
There has not been a company that has overpromised and underdelivered as strongly as Anthropic in the history of humanity. They literally talk about their chatbots being conscious, model welfare, blah blah blah. Whether or not they believe their marketing is one thing, but it is nonetheless a fact that they market themselves as having created life.
OK, let's say that they actually are marketing themselves as having "Created life" (which is not anything that I have seen anywhere).
How does that "life creation" promise affect anything with the topic of the post, which is the financial valuation of the company?
Does that increase the financial valuation of the company? Expose risks in the S-1 that they haven't properly accounted for?
I don't read many Anthropic blog posts, but usually it's about a model release, interpretability research, or similar, and I haven't seen any of this marketing that you have. That said, they did somehow spend $2B on sales in the last quarter, almost 10x what it was in the prior quarter, and I don't get exposed to advertising anywhere; is this something that's getting played on TV? Billboards? Somewhere else?
> affect anything with the topic of the post
The topic of this subthread, which you replied to, was about the sheer absurdity of this statement: "This is in fact very similar to one of Anthropic's guiding principles: underpromise and overdeliver."
That's it. Whatever you're going on about with financial valuations and S-1 risk is completely irrelevant to what you were replying to, because I was not making any kind of claim about those.
It's a subthread where commentary about the IPO was assumed to be a joke.
I'm really baffled that you think that Anthropic has been promising the creation of life! Even if it's not meant to have anything to do with this subthread or post.
> It's a subthread where commentary about the IPO was assumed to be a joke.
No it isn't, it's just about the absurdity of that statement vs. their usual marketing bullshit and what they actually deliver.
This is exactly what I meant. Weird that you're being downvoted.
I think the joke is that E. Holmes probably used variants of this cliche.
“Beleive” in the sense that Tom Cruise believes in the cosmic DC8?
Anthropic [employees] huffing their own koolaid fumes aside, it’s extremely difficult to believe the claims that these mega valuations are substantiated on (*one* company somehow assuming a meaningful fraction of global research and production)
Look there's largely diversified customer base paying them at rates snd growth that justify the valuations.
Unless "cosmic DC8" (whatever that is) has S1 with data thus string, what possible comparison could there be?
These financials are very very strong. They alleviated many doubts I had about Anthropic's viability (namely I wasn't sure training+experiments could fit in the compute budget and keep them profitable).
We have the numbers right here. Comparisons to Scientology and Elizabeth Holmes are more similar to Scientology than what we see in the S1.
No it’s not - both the customers of hyperscalers and frontier labs are highly concentrated.
Their distribution channels are concentrated, at 47% of revenue going through AWS or GCP.
But the top two customers are 12%, which is less customer concentration than I would have expected
We are nearing the final stages of the AI hype cycle and this IPO will cause the acceleration of the crash.
"AGI" was never mentioned once and it was you being the exit liquidity for the insiders and early investors.
Why?
Companies like Google will not go bust and can easily afford future develoopment.
Amazon and Microsoft have to keep investing (they can also afford it) to not loos to Google.
What Anthropic and OpenAI are doing is for sure THE frontier (regarding benchmarks, speed etc.) but in paralllel DeepSeek for sure is not bankcrupting anything on their investment side and are also progressing.
Are you only talking about investment itself for a handful of companies? Because alone Nvidia has so many backorders, they can't deliver wht was ordered for the full 2027 and A LOT of peple also want other things from Nvidia or from the industry like Gaming Chips, normal GPUs, Gaming GPUs, Memory etc.
Opus 5.5 just came out and made progress, i'm not seeing any slowdonw on HN regarding new relevant progress in broad ML topics.
So what hype will disappear soon? The progress in the ML space?
Two things can be true at once:
- AI is a useful tool and we're still seeing steady improvements in performance and efficiency
- There is a bubble in the stock market, fed by unrealistic expectations of what AI can achieve in the timeframes the investments need to provide returns in (e.g "AI is pretty useful and delivers productivity improvements in coding, law and other desk jobs" vs "in 12 months everyone will be out of a job and/or humanity will be exterminated, AGI is almost here, winner takes all")
So yeah, the schizophrenic Yudkowsky tier hype bullshit should hopefully disappear soon and then we can move on to something else.
Okay so you agree that big companies can keep funding this buildout, NVidia (and everyone in their supply chain) is backlogged 18+ months, and there's essentially zero risk of insolvency from any of the major customers, all of whom are committed and able to increase their purchasing (pursuant to their contractual obligations) of AI hardware over the next 3 years?
No one serious cares if there's a bubble in the stock market because the financials are solid and when those play out then whatever "bubble" you imagine exists today will be small compared to realized revenues in a few years.
>No one serious cares if there's a bubble in the stock market because the financials are solid
If the financials were "solid" it wouldn't be called a bubble. People are pointing to the bubble saying it's a bubble exactly because the financials are not solid and the expected revenue that would make the valuations and investments make sense is vaporware.
People are calling it a bubble because they dont understand the financials.
So Warren Buffet and Michael Burry don't understand fundamental analysis and stock market patterns?
Some thinktank estimated that there is enough money in the system for reaching 2030 with continues investment.
There are a few numbers of scaling laws, i'm pretty sure VCs want to see being hit. Just to see what will happen when you scale an LLM to 100T Parmeters.
Whomever controls the means of production (TSMC) controls the direction of progress.
Nobody is in control but Taiwan Semiconductor. Not Samsung, not Micron, not Nvidia.
Orders that can't be fulfilled get canceled. Canceled orders mean canceled plans and canceled companies follow.
Someone bigger will buy the husk and monetize it somehow - probably for gambling.
Sure but thats not the current stauts quo. Nvidia has the chips and the money to pay TSMC.
No one else has and in this current setup, the disurption of this particular market is very very very very expensive and time consuming.
Well the good part is they didn't get an investment grade credit rating, so at least 401ks won't start buying their debt automatically. For now...
Why do you expect it to crash before the OpenAI IPO?
Anthropic's valuation has nothing to do with AGI and everything to do with claude code.
This might be one of the most consequential S-1s in the next decade. There's a part of me that's terrified, like we're on the precipice of financial or societal collapse. I suppose that could be a sign of the times.
why do you think that?
Their financials are an utter mess. But they’re also hyped enough that a lot of money will get invested in them. Should they crash a lot of money will be lost.
Say more about that? The economics look better than I was expecting.
Yeah, part of me wonders how much of it is shared delusion and how much is just cut throat racing for the exits.
Even if the tech + business fundamentals don't match reality, there's just so momentum in favor of a "win" here.
What we have today is interesting tech, with many, many applications - but the path to the kinds of things mentioned in this prospectus have no clear path, it seems like scaling laws are plateauing, but those invested speak as if it's a foregone conclusion we get AI we see in science fiction movies.
There is a good documentary called "All Watched Over by Machines of Loving Grace" which documents how computing started, the touted benefits (it would fix society, all illnesses, liberate humanity from work) - and the slow decline in optimism towards what we have today. I feel like AI will play out the same way.
Money is not lost, it merely changes hands.
This would have been true until ~50-200 years ago, and the advent of modern capital markets. Now, credit is center stage and cash is the sideshow.
It does get lost. Market cap can appear and vanish out of thin air. It's not a zero sum game, not remotely.
How are they a mess? They look amazing honestly, and I work in an office surrounded by experts in analyzing statements like this.
Bonds time.
We already had the most consequential IPO with SpaceX.
Space-X is as weird as Tesla. Cult following makes that very irrasional.
Teslas evaluation was always "Tesla is not a car company, it does everything". Then Space-X came along "So Tesla and Space-x are not a car or rocket company, they do everything but now 2 times the evaluation".
Space-X would only work if they incresae the payload to space SIGNIFICANTLY. Starlink was the real reason for the last real relevant increase in payload but Space-X HAS to send Starship un there very very often but for what?
Yeah for Datacenters in Space.
In parallel you have Anthropic: Something which might be added to every single worker on the planet (by having tokens to help that one person to be better one way or the other) or it replaces humans with tokens globally.
And if you come with Grok: Its not Frontier and he even prefered to rent out his DC compute instead of leveraging it for more revenue because he can't. Not a good sign.
I love reading through the comment history of people like you
Not sure why this is getting downvoted - other than for Musk-hate. Was largest IPO and made lots of regular people millionaires over night.
Your evaluation of an IPO is if it made random people rich over night?
1. no thats called gambling
2. if it made random people rich over night, it made random people also poorer. Either the retirement funds, a 401k investment, real humans etc. Money is not created out of thin air.
The largest IPO though for sure correct, but yes, Tesla and Space-X live quite a lot from Musk so its hard to determine what the IPO of Space-x really is.
Btw. its not just random Musk hate, you simpllify that. Not only doesn't he care that his DOGE actions killed humans and kids, he also disrupts democracy and might poisen our atmosphere with Space-X. The rationallity of people around Musk is very very weird.
Which regular people?
I imagine employees
So the janitors are millionaires? Or just all the college educated people?
Close enough - https://www.cbsnews.com/news/spacex-spcx-stock-ipo-welder-em...
I think you’re discounting welders a bit but nice to see them getting stock.
Why not both?
This will be the most read S-1 in the decade
And most of the "readers" will be AI!
I just had Claude go through it for me, so I could ask questions about it. We're in such a unique situation in the world now.
It's only fair
So it looks like $2T is indeed the target
>So it looks like $2T is indeed the target
What do you base that on? (Did you see any reference to that in the linked document or anything published by Anthropic)?
I wonder if OpenAI will release theirs soon. It seems very important to be the first one to IPO
It’s also a bigger risk. If the IPO flops, OAI will find ways to postpone an IPO.
If the IPO flops, OpenAI might run into a liquidity problem as investors dreaming of a quick back retreat from the market. The private market is a wilder derivative of the public one.
Super shares yet again. Pass.
Plus they get to dilute as value rises lol.
I stopped at "Our Capital Structure" section. When it says "Class F stock" gets 50.1% voting power, doesn't it in practice make all other classes are non-voting, not just the "Class N"?
Edit: the risks sections feel like California's Prop-65 disclaimers
> Our results of operations may also fluctuate due to a variety of additional factors:
> - the number of employees hired
> - declines in the values of foreign currencies relative to the U.S. dollar
That huge list feels completely random. Are all S-1 that bad? They can be punished for omission, so they list everything that could happen even if doesn't really make any sense?
You can vote but on what I don’t know since the trust elects the board lol
Does this make it less likely that Anthropic will push for regulations?
Why would it make it less likely? The major LLM manufacturers desperately want running foreign "open weights" models to be either tightly restricted or illegal. If they don't get that done, they can't stop bleeding money on R&D... which is what the "Pacing The Frontier" shit is all about.
this should be fun
I was too young to appreciate (denotative, not connotative) the dotcom crash. I will have my popcorn ready this time - for whichever direction it goes.
The word "Oracle" isn't present in the document.
Don't expect supersize profits from Anthropic anytime soon.
This make me wonder how did XAI reach so much revenue so fast!
The revenue growth rate is quite shocking. Their two worst quarters were Q425 and Q326 where they grew 47% and 45%. Other than those two, they've been growing >100% QoQ for two years. This company is about to list with some of the greatest revenue growth in the history of shareholder capitalism. I wasn't planning on investing before, but I think learning this has changed my mind.
Soo you're going to invest in the actual IPO?
Haha, yeah I think I will. It's hard to see that growth and not think it's an incredibly opportunity.
What's a good platform to do it? Robin Hood?
Good question, I don't know. Guess I'll have to wait and see if I'm even allowed to invest haha.
So you don't have to do the math, at a midline valuation of $1.7T, the Amodei's each will have about $25B. It mentions that they have pledged 80% of their stock to charity in a non-binding agreement.
haaaaa non-binding to a charity they control?
Smells as genuine is OpenAI is non-profit
Excellent products, even world changing products does not mean shareholder returns in Anthropic’s case.
Even if Claude meets all of our wildest goals and earns trillions yearly there is absolutely no “guarantee” that any will flow to shareholders.
1. Shareholders do not have control of the company due to its structure. The Trust controls through class T shares. As a backup the founders control through class F shares.
2. Since the company is a PBC its board is allowed balance dividends with other social benefits as they see fit.
This means that even if Anthropic is wildly successful as shareholders have no general legal claim to compel the company to distribute those profits.
It is absurd that with a 2T IPO upcoming this is not front and center.
~400 pages.
How many folks use Claude to summarize.
I did and Claude was very transparent about any potential conflict of interest. Very well-behaved model.
I liked the pictures in the SpaceX S-1 filing much more
Rather curious to know what is hiding in the 8.7B 'other expenses'.
Given that this is ~50% of revenue, it would have a huge bearing on how near real profitability Anthropic actually is.
Can I get dividends as tokens?
Wild that this has 500+ points and 500+ comments less than one hour after posting, and it's #11 on the homepage. Guessing either the flamewar detector or lots of AI skeptics flagging it?
Im going to continue to use fast open source models like Deepseek and GLM, I like most others, have zero need for the worlds smartest person to be my assistant.
I dont understand this business model, it seems clearly unsustainable (at their prices). When people start to realize they dont need to spend all this money on turbo PhD intelligence so they can build react apps, Anthropic will be in a tough spot (if they already aren't).
You will say, "but enterprise!!" Nope, plenty of companies are waking up to this reality as well. It turns out that if you made money pre-AI without spending 5k a seat a month for your engineers dev tools, you probably don't need to now to continue too.
I think a company like Moonshot or Z.AI could have sabotaged this behind repair by doing a 10-20B IPO before Anthropic.
That could have popped the AI bubble right there.
> Second, AI can be a powerful lever for economic growth. As a general purpose technology, it has the potential to raise productivity across every sector of the economy. Productivity growth in advanced economies has stagnated in recent decades, partly for structural reasons and partly because new ideas seem to be harder to find. AI could reverse this trend.
Bloody hell!!!! Who comes up with such crap, seriously?
Is becoming a public company going to help or harm their mission of delivering safe AI?
SPXEW ftw
Where's the "It's a bubble" crowd now?
They're here in the thread. Are you not seeing them?
It's a bubble.
https://news.ycombinator.com/item?id=50243043
1793020250 | Anthropic Unveils IPO Paperwork | https://www.wsj.com/livecoverage/stock-market-today-dow-sp-5... | https://news.ycombinator.com/item?id=50243015
1793021023 | Anthropic files for listing on US stock market: valuation of more than $1.5T | https://www.theguardian.com/technology/2026/oct/26/anthropic... | https://news.ycombinator.com/item?id=50243225
1793021178 | Anthropic Reveals 14-Fold Increase in Growth as It Prepares for Blockbuster IPO | https://www.nytimes.com/2026/10/26/technology/anthropic-ipo-... | https://news.ycombinator.com/item?id=50243266
1793021950 | Anthropic IPO: S-1 Filing Offers First Look at Claude Maker's Finances | https://www.bloomberg.com/news/articles/2026-10-26/anthropic... | https://news.ycombinator.com/item?id=50243493
1793024104 | Anthropic's prospectus: $16.3B in revenue and an $80.7B net loss in H1 | https://fortune.com/2026/10/26/anthropics-s-1/ | https://news.ycombinator.com/item?id=50244099
1793024600 | Anthropic S-1: Inside the 335-page IPO plan | https://www.ft.com/content/4b2b9c0e-adfb-4362-800f-950f5b905... | https://news.ycombinator.com/item?id=50244232
1793024618 | Anthropic's IPO filing shows explosive growth, risks and staggering costs | https://www.reuters.com/legal/transactional/anthropic-opens-... | https://news.ycombinator.com/item?id=50244236
1793025358 | What's Riding on Anthropic Going Public? Nearly Everything | https://www.nytimes.com/2026/10/26/technology/anthropic-goin... | https://news.ycombinator.com/item?id=50244464
1793025642 | Why Anthropic can't afford to delay its IPO | https://www.axios.com/2026/10/21/anthropic-ipo-ai-costs | https://news.ycombinator.com/item?id=50244547
1793026275 | Anthropic IPO Filing Explosive Revenue Growth, Wall Street Weighs AI Valuations | https://www.ainvest.com/news/anthropic-ipo-filing-reveals-ex... | https://news.ycombinator.com/item?id=50244751
1793027927 | Interesting stuff from Anthropic's S-1 filing with the SEC | https://anthropic-ipo-sec.pagey.site/ | https://news.ycombinator.com/item?id=50245257
1793030340 | Anthropic Files S-1 for IPO | https://mrkt30.com/anthropic-files-s1-ipo-nasdaq-ant/ | https://news.ycombinator.com/item?id=50245989
This entire A.I. hype is going to get many people burned, especially those whom are investing for their pensions.
And everyone is playing along. It seems to me half the internet is filled with false recommendations and overly optimistic outcomes of their software projects.
And even if the claims are true what use will we have for hundreds of Microsoft Office clones? This A.I. boom might benefit some but will be the undoing of many valuable ISVs like Microsoft and Adobe with potentially trillions of stock market value lost.
Adobe? How so? I didn't know Adobe was a big player in the AI boom
Adobe's applications (Photoshop, Premiere, After Effects, etc.) have been "cloned" using AI coding tools. There are near feature-complete freeware versions of Adobe software. OP is saying that traditional Adobe customers have freeware alternatives and thus Adobe's revenues will decline rather than increase due to AI. Also, AI tools can often generate that movie or edit that photo via a prompt, rather that some .exe.
People are using Adobe for completely different reasons. They are so established in creative industry that everything rotates around their software including it's bugs and quirks. Schools teach only Adobe. When you go to high end printers they have processes prepared for output from Adobe software. There is whole market of specialized software plugins for Adobe. For the industry professionals it's just shared ground and cost of doing business.
The AI clones won't easily change that unless they were exact 1to1. If it was that easy to get rid of Adobe the monopoly won't be there anymore as things like Affinity have existed for a while and are free. Affinity is in many ways even better version of Adobe suite, faster, more stable, allowing to be more creative. But the friction is extreme, because if you need to collaborate or be in any way part of the industry then Adobe is expected so you need it anyway.
Question, how viable are these tools and are they maintained?
I genuinely want to know if this is mostly hype or are they actually good. I don't think trying myself would really give a better picture as I'm not a user of said software.
Anyone who tried to replace photoshop with these AI clones successfully?
From what I've seen, very buggy currently, and unknown how well they will be maintained. They're definitely not at a stage where adobe should be worried about their revenue, and there are foss alternatives for most adobe tools, that are better than these reverse engineered ones. But if they continue maintaining them and fixing the bugs, who knows, maybe adobe really loses some part of their customer base (although a lot of their individual tools have already been moved to the cloud, thus they can't be reverse engineered anyway)
By all reports they are not good and have quite a few bugs. But the thing about open source is that, if maintained, it almost always improves. And with the bar for maintenance so low due to AI, we are entering a very interesting time for software.
And by interesting I mean scary, if you sell software.
call me snarky but I don't think a gigantic amount of AI slop is maintainable by any means unless you just throw every token you got and hope for the best
I can't believe decompiling from ASM to a higher level lang using a matrix multiplicator should be legally any different from other decompilers.
Nor should using the work of hundreds of millions of people to find useful weights for the matrices without paying them be legal.
https://github.com/storytold/photocraft/issues?q=is%3Aissue+... It's also a buggy mess
To be fair, I'm sure Adobe Photoshop has a long list of bugs as well.
'AI' still fails the alignment grannybench.
Yup. gorgetbench, grannybench, and tebufranksalso bench are all completely unsaturated.
Finally we can stop with their psyops?
Fable 5.5?
It's very simple right? If they don't hit ant AI walls, the demand to use it to improve [stuff], will not stop. If AI maxes out for too long it's gonna be painful because the narrative is gonna hurt them more than anything.
I don't participate in stock markets for personal reasons but if I did, I would be betting against Anthropic in the long term. This is a highly commoditized field and while they are a leader it's not clear than any of their attempts at vendor lock-in are working. They are certainly not working on me as I cancel and enable my subscription depending on the availability of capable lower-cost models.
Waiting for the Ed Z. post, will be an interesting bit of spectacle to see.
Just one? I think you will see him on a dozen channels, saying more or less the same thing he always says.
I'm surprised at people suggesting that the model layer can't be the moat. Having great models that are smart requires talent, culture and good judgement. Sure it can be commoditised to an extent but could it not be that Anthropic will always stay in the lead?
They only have to be marginally better and there will be tonnes of people who will pay a lot of money to have that marginal intelligence.
AI psychosis in action folks.
I seems to me the main risk long-term is that it's not clear where the moat is.
People will pay a premium if there is marginal value in extra intelligence. And Anthropic is able to retain their lead and provide that extra intelligence.
Both of these assumptions seem highly suspect to me. Most businesses don't exclusively hire PHD-level employees for most tasks because a competent slightly less intelligent/knowledgable person can do the job just fine for significantly less.
Then there is the question of if they're able to retain their lead, and again, this seems questionable. Both OpenAI and Google are competing at the frontier, and Chinese labs are still in the race. Things are changing so fast who knows where we'll be in 5-10 years.
My best guess is that longer-term models will be commoditised and it will be how companies offer products and services around their models that gives them their margins. I wouldn't bet on Anthropic's ability to do this. Meta, OpenAI and Google are much better placed to win here imo.
The other place there may be margin is in niche research domains like drug-discovery. Any slight lead in these sectors could give them a lot of pricing power.
I think the reason to invest in this is as a hedge. AI basically competes against everything and arguably for this reason it's risky to not own a basket of AI stocks.
This IPO, if successful, will complete rewrite the standing rules of the stock market in ways incredibly harmful to the future of American style capitalism:
1. The Separation of Economic Value and Corporate Governance creating The Multi-Class Autocracy
2. Institutionalizing the "Off-Market Vault" that can manipulate stock price at any time
3. The "Vendor-Financed" Public Offering (Circular Balance-Sheet Refinancing)
4. Monetizing Non-Cash Derivative Liabilities as "Losses" Without Cash Burn
Good for you if you have Anthropic shares! I have no clue how they keep their employees around once the 6 month lockup period ends. They all going to be multi-millionaires, either retire or leave to start something on their own.
Maybe by then there is no need for employees, and ASI is unleashed! /s
So now buy or sell?
Buy. Canned food and water.
Should be in your earthquake/tornado kit anyway
Neither are a risk here. Mostly rain and incompetence.
Even grok says no lmao.
1793019995 | Anthropic files S-1 with the SEC for proposed initial public offering | https://www.anthropic.com/news/s1-sec | https://news.ycombinator.com/item?id=50242957 | 1 comment
1793020173 | Anthropic S-1 | https://www.sec.gov/Archives/edgar/data/2130357/000162828026... | https://news.ycombinator.com/item?id=50242993 | 1 comment
1793020203 | Anthropic Officially Files S1 Shows $81B Net Loss | https://twitter.com/anthropicai/status/2114705042817110293 | https://news.ycombinator.com/item?id=50243002 | 2 comments
1793021405 | Anthropic rushing IPO before AI bubble bursts | https://nypost.com/2026/10/23/business/wall-street-is-urging... | https://news.ycombinator.com/item?id=50243343 | 1 comment
1793023225 | Anthropic S-1 | https://www.sec.gov/Archives/edgar/data/2130357/000162828026... | https://news.ycombinator.com/item?id=50243857 | 3 comments
1793030719 | Anthropic files for IPO even as CEO warns of risk to humanity from AI | https://apnews.com/article/anthropic-ipo-shares-public-ca2f4... | https://news.ycombinator.com/item?id=50246115 | 1 comment
The return to shareholders path is difficult and will only raise prices and enshittify things.
This S-1 is a FRAUD because it PURPOSEFULLY excludes the potential market destroying-power of free/open-weight Chinese models as a risk factor.
That's literally the #1 risk factor. They ignore it.
This is a FRAUD document and it means we need to SHORT this overblown company.
Page 40 if your browser's search function does not work.
Yeah, as a quick quote to show how this truly is directly in there:
> We also compete with a broader set of model providers operating at or below the frontier, including large companies, specialized AI labs, and a growing range of other open-weight or open-source (shared weights, training data, and code) models released by international and domestic organizations.
well, do it as soon as it opens up;
if you really believe it you found a free money glitch
A sad day for mankind.
Why?
Shareholders determining the fate of humanity.
If you step back and look at humanity as a system, the flow of capital is just definitionally the fate of humanity. In the same way the neural electrical signals and flow of hormones and nutrients in your body are the fate of all the cells in your body.
Except our nerves evolved, whereas monetary system is still at version 1.0.
Humanity is resilient and will survive likes of ANT etc, so no worries
"survive" can mean a lot of things, not all good.
More billionaires that are hellbent on destroying society will be shortly created.
Lets burn it down to the ground!