ChatGPT became publicly available in November 2022, and Claude followed in March 2023. It's year 4. It's foolish to think we know who the big names will be 20 years down the line, which is the kind of timeline bond investors are thinking about. A lot of people probably wish they could have invested (or invested more) in Google or Facebook in 2006, but they are probably very glad they did not invest in Yahoo or MySpace (or Friendster or Tumblr .. you get the idea) at the time, despite looking very promising (MySpace was beating Google on pageviews on some days in '06 and '07). Instagram and Snapchat and TikTok and WeChat didn't even exist yet.
My favourite example is amazon.com and pets.com. In hindsight amazon looks like an obviously good investment and pets.com doesn't, however amazon was heavily invested in pets.com itself.
That argument swings both ways. There's no real reason to bet on OAI or Anthropic. Not with the rise of local models and the increasingly desperate attempts at regulatory capture.
Rise of local models? what rise? I run qwen3.8 flash next on my 200GB/s 128gb Strix Halo and even that is barely acceptable, big models require so much more. Nobody's running a local model on their power sipping phone. It's just a nerd's wet dream.
That's what I'm saying. Either one could be Facebook. Or it could be Friendster. The rise of local models raises the even more daunting possibility that nobody becomes Facebook, but you have to imagine somebody will win the consumer market for people who just don't want to bother figuring out a local setup. That market is orders of magnitude less lucrative than the enterprise market, but a company that dominated it would still be one of the hundred or so largest in the world.
Someone can always optimize a model down to running on a typical 32 GB M6 or M5 Mac.
It doesn't need to be the best. It just needs to be good enough. I'm not smart enough, but if I was I'd be working on a locally ran interface engine. That's where you charge say 100$ a year. Said engine would allow you to use a large open source model locally to the point where it's good enough to rival Haiku.
I’ve discussed with many people at work, all engineers, they’re weirdly oblivious. Most are shocked when I say things like OpenAI and Anthropic are gonna crater.
There’s a notable difference between saying those companies may crater, and predicting confidently that they will crater. The wording of your comment makes it seem like a foregone conclusion.
I still think OpenAI holds on as a Google competitor and Anthropic does fine as a business tool. Do they match their outsized spending with future growth? Well, that I'm not very confident about. A lot of this really comes down to what is the business model of integrating AI with 3rd party systems and I don't see that anyone has truly cracked that yet.
I talk to our risk lead and he was also weirdly oblivious as well. The whole company is dependent on them not going down the shitter. Surely that's a tangible risk?
I'm indifferent either way myself. It's just shocking the amount of ignorance.
It's the cryptobro craze but for AI. It's tiresome, I don't have AI fatigue, I love using Claude, I have aibro fatigue. I'll lump in the people all in on AI, and that includes anyone who hates it vehemently because they just have to sour conversations.
Yeah. AIbros and AI companies are SHOCKED that AI and datacenters are unpopular.
But guys, if your companies weren't run by psycopaths and weren't promoted by assholes who appear to be the exact same guys behind the NFT craze, (this is the future of creative expression! Don't like it? Your a luddite. Cope.) and weren't predicting horrible nightmare scenarios based on their tech maaaaaaybe people would like AI and be more interested in using it?
I personally see that generative AI is a very powerful and useful technology but I hate everyone involved in it and do not want to see them succeed because they're icky people.
Its like if the nazis had discovered how to harness atomic energy before anyone else. Fuck that.
The world is using 300T token a day. Barely anyone is using AI. This number would grow 30x. If there is anything, Google, OpenAI, Anthropic are undervalued by a great deal.
Cost per token is going to tank; it's a race to the bottom. The frontier model providers have no moat between each other and eventually even the open weight models will be "good enough" for almost every purpose.
Right now the market is expecting something a lot more than "sells a lot of tokens" out of these things to justify their valuation.
There’s no business in tokens. Zero. The only business is selling compute and Anthropic rented all its compute.
Structurally there in a terrible position on what’s unfolding now with the completely collapse of model valuations. With truly “open” models gaining more and more momentum models are basically worth nothing and “token” prices are collapsing to the cost of compute. That doesn’t leave anything on the table for the Anthropic and Open AI’s of the world.
It last zero network effects and barely any economies of scale. It's a good product without a moat which will get replaced by any company with their own compute and cheaper energy.
I think the only way out for Anthropic is to buy a few neoclouds as they go under, but even then it's a coin flip as to if they survive the next 3 years.
The market is a cold beast and doesn’t care. If things hit the fan it will happily take ownership Opus 5.5 in bankruptcy court and slit everything else out on the street.
If people paid a profitable price for Opus 5.5 it would not be the best product in the world and would not be slotted into so many things where it's benefiting from ubiquity. That circle needs squaring. There will be an Opus 5.5 that's a 10th of the price in a few months.
If everyone is using AI the ROI could just keeping up with everyone else. If anything Intelligence is now becoming a tax or the cost to use the toll road.
ROI in the space is not complicated, their revenue is already insane. You just drive down costs with fixed capex (GPUs), that will continue to pay out over 5-10 years. These are growing pains, they need to make it past the GPU scarcity/ramp up phase.
The CFOs he is talking about are the enterprises who are spending big money on the tokens ; they are not seeing RoI ; not hyperscalers or frontier labs
Yep, i can't disclose specific numbers but we went from $X/month/person budgets to $X-100/month recently, and this is a pretty big company with ~5000 people. From what I can tell the pursestrings are only tightening further too, too little actual real-world benefit for the obscene spend
Correct. The people that control the pot of money these labs ultimately need to survive seem increasingly unconvinced that giving these labs money is a good idea. At least at the levels the labs need to not go bankrupt.
Reports indicate GPUs are increasingly being put on shelves in warehouses. There’s a scarcity of power and data centers to host them, but data increasingly suggests the world has an over supply of chips at the moment.
Like most “scarcity” scenarios things flip from under supply to massive oversupply real quick. Remember during COVID when lumber got stupidly expensive and then almost overnight folks couldn’t give wood away.
By reading the comments I wonder if perhaps OAI & ANT are not going to be “model” companies and they are going to be the ones innovating in many fronts and cashing in for the benefits of those advancements…
What I’m trying to say here is, what if, they are staying closed strategically so they keep their most advanced models close to their chest until they make an incredible discovery. Say they cure cancer. In this case, they are taking that IP collaborating with big pharma and cashing in on the upside of such discovery.
So, what if on top of being just another enterprise and consumer product that accelerates the way we all work and live, it also becomes this factory of breakthroughs and that’s where open source models can’t compete with them.
What a movie. Act like religious whackjobs (A) who want to consume the world. In secret you have a bag of world-changing causes. The setback in the middle of the plot is the supercomputer answering something mundane to a serious question. Everyone feels defeated. But one underling is chatting with his pal subagent 3495. And he mentions the mundane answer. Then the subagent makes a critical connection; the answer is not mundane, it just needs a proper interpretation. Then they send the answer out (15 minutes later) cancer is cured. They use the patents to pay off the debts and then give them away to the public. The CEO moves to a shed on Más a Tierra with a talking parrot companion.
I don’t think the cure for cancer will be the result of the prompt “tell me the cure for cancer. Make no mistakes.” But instead applying real AI and ML supercharged by recent advancements to identify genetic mutations that could possibly cure cancer or other diseases.
Anthropic's S-1 (IPO doc) says they will spend >$0.5T. Where is that money going to come from? The gap between the frontier and the open models isn't large enough to generate anything like that in operating profits. Debt markets are getting tapped out with AI debt. We are about to find out how much stomach equity investors have remaining. The fact that they might have trouble servicing their current and expected future debt comes as no surprise.
An IPO is where the investors cash out to spend money on something else. It’s where the founders and early employees get rich enough to start chasing other interests, or just retire outright.
My understanding is that the underwriting bank and early investors and institutional investors win first, then founders, after that early employees. Usually offloaded onto the robinhood crowd who excitedly buys in.
According to this analysis of Anthropic's S-1, the founders own about 10% of the company, which at $2T valuation would mean they each make about $28B. The employees collectively own about 15% which results in some staggering math - thousands of employees making ~$100M each, even those hired as recently as last year.
It's also often also part of the employee retention plan. If you discover your boss has lied to you shortly after an IPO or a merger, then odds are good they were trying to hold onto you by any means necessary until their bonus was paid out.
I've had several people I trusted destroy our relationship this way over the years.
That certainly comes with the territory. However, being a public company offers a lot of opportunity for the company - easier access to capital, to enterprise/government contracts, and attracting talent that want less risky compensation.
There's also a pretty big morale hit for the people who fall below the remuneration cutoff of peers they are almost as good as or feel they are better than. I've seen a few different people lose almost all of their fucks because some dweeb is buying fancy cars and they're still paying their mortgage every month.
That makes sense, anthropic is in a rapidly changing market. Revenue could crater if a better model is released by a competitor. AI demand could fall behind. Doesn't seem like that will happen, but its definitely not investment-grade debt worthy either.
Even if Anthropic invents a godlike frontier model that can do anything, it feels like they won't have a moat for very long before competitors like DeepSeek offer something almost as good for a fraction of the price.
If AGI is created, then it will be used by someone else to create a cheaper AGI, making the finances of the person who borrowed trillions to create it in question.
An extremely hypothetical experiment but what if this is some sort of MAD (Mutually Assured Destruction) and in our timeline, we have accepted it with AI.
Deepseek can do MAD on Anthropic and release open weights model (which means that they might not earn the most or basically burn millions/billions to then give us all essentially the same thing and we would all be on equal footing, oh they also released their inference engine right now.)
This might explain why the stock market got into an bubble and is fearing itself right now.
Mutually Assured Commoditization. (Credit where it's due I pasted my comment to Chatgpt and it gave me this term ironically and it seems to fit well to the comment that I am writing, I might write a blog about it someday.)
Demand is currently not sustainable because they - ant and OAI - refuse to raise prices.
Infact they’re going to end up in price competition unless they field an army of ‘FDE’ who go to every large firm and reorganise the operations around their models and displace labour.
I was under the impression this was only on the consumer side? I have heard of contracts expiring and them wanting a lot more money now (forcing from generously subsidized enterprise seat plans to all API usage). Specifically Anthropic in this case.
Amazon didn’t borrow anywhere near this much. They also had the sales tax loophole that let them outprice the competition and take their market share for over a decade.
Right, OK, but then that's the interesting or newsworthy claim, not the company's ratings status --- junk status for companies that later went on to become among the most successful in the entire marketplace is not unprecedented.
Meh rookie numbers you give me $250B too and keep doing that every year I will generate revenue $125B revenue easy. I only have to sell a dollar for 50 cents .
Same Amazon to develop AWS to profitable business spent only 30B in all capex (including e-commerce) over 12 years between 2003-15 .
As someone who uses Claude Code daily for work, I fail to see how they lack a real product. It provides tangible value on a day-to-day basis, something my workplace is happy to pay for.
The more interesting questions aren’t about whether they have a real product (they do). It’s whether they can defend that product from competitors, such that their future revenues can justify the massive investments made.
The consumer product is losing them money and the possibly profitable enterprise product (API) is a smaller % of revenue and in an increasingly competitive niche. The constant disingenuous baiting and switching between the two whenever convenient is very tiresome.
Perhaps I am just blind to consumer markets, but it is not self evident for me, at least. When I think of successful consumer products, I think of stuff like Coca Cola, the light bulb, the CD, acrylic paint. Are you saying that Claude is as successful consumer products as the Ford model T, and Nike sneakers? I am not buying it.
It would make sense that they'd be considered high risk borrowers.
But that won't stop them from issuing bonds or more convertible notes as they have and the market may or may not bite.
It does add pressure to their IPO proceedings being as high as possible as their funding mechanism tho. But reduces pressure on them if shares crash a bit after that, still high risk borrowers.
"Hey Mr. Inference Provider, you can sell tokens for $0.03 that cost you $0.02, to PRC end users who are too poor to use Claude or don't like that it refuses their use case, which is spam, scams and cheating on homework.
Or, you can trade $0.03 of tokens that cost you $0.02 for $1.00 in ANTHROPIC SHARES, which makes the thing that everyone uses for like, math discoveries and curing cancer."
Average Hacker News commenter (not you): "Nooooooo it's not profitable Anthropic is going to crater nobody will take their convertible notes"
No offense to them, but in general, investment grade companies should have a stable future and not have easily-switchable, competing products that cost a fraction as much to use come out regularly. This is almost laughable that I have to say this.
If they can't raise capital then yes that will have a huge impact on a company that's a massive tower of financial engineering as coreweave have been learning.
Same thing as with SpaceX. If there is that much of an equity buffer, it should be investment grade.
That it isn't means that the bond market doesn't trust the valuations at all.
Many companies IPO'd in the late 1990s and did not exist 10 years later.
Let's say that the house of cards crashes down and takes the market with it who will shutdown, survive or have no choice but to get acquired for a 90% discount.
Some will be just alive long enough for the early investors to pull out enough before the market crashes.
And who will be the Amazon and grow 2500x over the next 30 years?
Now, I'm not saying that's going to happen -- but if you take analogies from the dot-com era and assume they're going to play out in the same way, you can't just cherry-pick the bad ones.
Amazon had valuation of $60M at their first venture round, and it took them 19 years to 3500x it to $200B.
Anthropic had valuation of $550M at their first venture round, and assuming it IPOs at roughly $2T, it will take them 5 years to give this 3500x return to their initial investors.
Companies IPO much later now because the laws changed. They used to be forced to IPO much earlier because employees shareholders pushed them over the threshold for # or private shareholders.
So you're absolutely correct about the comparison.
That said, I bet whatever happens over the next 20 years goes beyond what any of us can imagine. I wouldn't be surprised if the winners of this paradigm are worth hundreds of trillions. Sounds ridiculous until you look backwards and valuation a and consider this is an exponential curve and time is compressing.
None of the current vintage of IPOs are going to 2500x in our lifetimes (inflation adjusted at least..). The VC to IPO process is totally different now.
Companies are staying private longer, raising many orders of magnitude more private funding, and IPOing straight into "top 10 biggest companies in history" size.
If you IPO at $1.5T you are already equivalent to ~1.5% of World GDP.
Thus is just for scale, as comparing GDP vs a company market cap doesn't make total sense since GDP is 1 year economic activity and market caps represent discounted future cashflows of future economic activity...
Let's say Anthropic IPOs at $1.5T and grows even 1000x over 20 years, it would be worth $1.5P (petabillion?). If it had a 20x earnings multiple like google this would imply Net Income of $75T. Mag7 total Net Income for 2025 was $500B or $0.5B.
World GDP is $125T, and has grown less than 5%/year before/thru/after DotCom. So lets say in 20 years its $250B and Anthropic is capturing 30% of world GDP in earnings (not revenue, that would be even higher)!!
You can cherry pick the bad ones if the point you want to make is that it's risky. Nobody is saying Anthropic is definitely going to 0, just that there is a risk.
But from an economics perspective OAI/Antropic are more similar to Amazon than to Pets.com. Pets.com always had a heavily negative COGS - they were in the business of selling $20 bills for $15. On the flip side, Anthropic appears to be positive on COGS, and OAI could get positive by cutting limits on free and $20 plans. OAI/Anthropic are negative on the books mostly because of massive R&D expenses. This compares well to Amazon circa 1999, which was positive on COGS but negative overall due to massive buildout R&D costs.
Note that I'm not saying OAI/Anthropic are destined for success - because the rate of change combined with competition with cheap Chinese models is pretty novel in the business case history. But I am saying that pessimistic dot-com-boom comparisons don't seem to be all that deep.
"they are way more expensive to the company than people buying metered tokens" is true, but that doesn't mean they're a massive loss as you imply. It could be that plans are effectively breakeven but tokens are highly profitable.
But this is further to the point that the economics are more Amazon than Pets.com. If the plans are losers, great, when they need to be profitable they kill the plans and focus on metered tokens.
> OAI/Anthropic are negative on the books mostly because of massive R&D expenses. This compares well to Amazon circa 1999, which was positive on COGS but negative overall due to massive buildout R&D costs.
Isn’t the difference that ai labs can’t stop the R&D spend? They have to continue training new models.
There's a bunch of arguments you could make there, varying from "yes, to stay ahead of the competition" to "yes, but it'll get a lot cheaper" to "no, things will plateau eventually". All those are datapoints that IMO this isn't a great analogue to the dotcom boom.
> And who will be the Amazon and grow 2500x over the next 30 years?
Almost certainly nobody if you're tracking post-IPO growth.
And not because there won't be survivors/winners when the next crash comes (there probably will be) but because of the market changes (in the wake of legislation like the JOBS act) that result in these companies having their significant growth periods prior to IPO instead of after it.
IPOs used to be a launch pad to growth, now they are just a way for private investors to finally cash out when the company is already close to peak valuation.
A) they’re all getting acquired by these IPO seeking ones
B) nobody is IPOing at $400 million like Amazon did except SPAC share dilution scams, that you have to be willing to pick up at $30 million a year later
C) private secondary markets solve that, for some and are pretty great
D) tokenized synthetic and SPV backed private secondary markets in crypto ecosystems like Hyperliquid give you that exposure too, so now everyone can replicate the 90s
Anthropic won't let people make video games. They are on the wrong side of history.
They are so going to get disrupted. Chinese open weights models will have no such limitations, and there's no way we'll let Anthropic outlaw or ban them. (And even if they did, they can't police the whole world.)
There is no moat. Anthropic should be playing nice, not trying to create a god while holding engineers under their thumb. We will route around it.
People got upset that Anthropic added rejection rules for people saying "Make Pokemon in Elden Ring" . You can still make games, as long as you aren't telling Claude to recreate a specific, IP-protected game.
> Wall Street banks earlier this week closed the North Star deal, which provides the financing for Anthropic to lease 1.5 gigawatts of Google’s semiconductors.
This line is certainly eyebrow-raising to the educated layman.
Apparently it means that anthropic is leasing a Google data center whose constituent servers draw 1.5 GW of power running representative workloads.
It's interesting you imagine nine shares would suffice for a large site like HN. No, the link doesn't work for me. Honestly, this kind of "sharing" seems a bit disingenuous at this point.
He is the article:
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Blackstone told investors Anthropic may not receive an investment-grade rating immediately after going public, a reversal from its previous guidance that would complicate the AI lab’s ability to finance its massive spending.
The private capital giant told investors in Anthropic’s latest $63bn chip financing deal that the start-up is expected to receive a “high” junk rating from major credit rating agencies after its initial public offering, according to people familiar with the matter.
Blackstone is acting as an anchor investor on the deal, known as “Project North Star”, and is working with banks that stumped up financing on selling the debt on to other investors.
Anthropic filed to go public on Monday, setting up what could be the largest listing of all time next month. The AI lab’s prospectus sketched out its “bold but sane” plans to spend more than $800bn on computing infrastructure between now and 2045.
While Blackstone had told its investment partners in recent months that it was expecting an investment-grade rating for Anthropic before year-end, it has recently signalled that a rating in the double B range or above is more likely given the guidance it has received from major credit agencies, the people said.
Such a designation would limit the pool of capital that Anthropic could tap because many insurance and pension funds are restricted from taking large positions in junk-rated borrowers. As a result, the company might need to continue to rely on its suppliers with high credit ratings to support its debt-raising efforts.
US tech stocks slid to session lows on Friday following the FT’s report on Anthropic’s rating, with the Nasdaq 100 down 3.7 per cent in afternoon trading. Markets were sharply lower prior to the report after earnings from Amazon and Intel worsened fears about the sustainability of the AI boom.
“It’s all about access to credit, it really matters . . . if [Anthropic] isn’t investment grade, the cost of credit goes higher, that’s not good for anyone,” said a US tech-focused portfolio manager.
“It’s a bloodbath out there,” they added, referring to the sell-off in stocks.
Wall Street banks earlier this week closed the North Star deal, which provides the financing for Anthropic to lease 1.5 gigawatts of Google’s semiconductors. More than $42bn of the senior loans is guaranteed by Broadcom, which co-develops the chips and has an investment-grade rating, while $18bn of the junior debt is backed by the AI start-up’s lease payments.
Institutional investors covet senior debt because it takes priority over junior loans in the case of a default. Broadcom’s high A-tier credit rating was an important factor in allowing Anthropic to secure the financing.
Blackstone’s funds invested in $9bn of the junior debt at a lucrative yield of more than 10 per cent, the FT previously reported. Bankers for Anthropic and rival OpenAI have also lobbied the largest rating agencies to grant the AI labs investment-grade ratings after their IPOs.
Project North Star’s $18bn junior debt, which exposes lenders more acutely to Anthropic’s credit risk, has been assigned a double B plus rating with positive outlook from Kroll Bond Rating Agency, a slight improvement from stable outlook in a similar deal known as Project “Big Sky” four months ago. It also received a double B rating from Morningstar DBRS, the people added.
The big three credit agencies — Fitch, Moody’s and S&P — which have bigger influence on companies’ borrowing costs, have not officially issued any credit ratings for Anthropic.
Anthropic, Blackstone, KBRA, Morningstar DBRS and S&P declined to comment. Fitch and Moody’s did not respond to requests for comment.
The problem is sharing it to a group of people who mostly aren't paying for it. It's a good way to get a thread that's just people reacting to the title, which drives HN toward just being a discussion board instead of a place to find good content.
Most news articles are not worth paying for. From leaving out details to serving an agenda; a lot of news has lost it's credibility. WSJ is a good example. It had really great long articles backed by real research before it was bought by Murdock.
Anthropic is in the worst position of the AI labs. As far as investors and "the market" are concerned, the only AI that matters is the one built into your phone, car, your TV, your smart home and appliances. Anthropic has none of that share. It's all Google, Apple, and OpenAI powering Siri.
Personally, I don't think that tracks. If you are measuring "share" as share of vibes or "AI adoption" sure, but having AI in a phone, TV, smart home, etc doesn't make anyone any significant money. Hyperscaling isn't happening because there is an insatiable demand for retail AI usage. People are subscription'd out. A significant portion of people don't want AI in a lot of these things, another portion don't think they need it, and the ones that are eager to adopt it can use AI to bootstrap AI tools they use through a token router. You will have some revenue from retail AI but that isn't surprising considering I quite often have to provide tech support to people to help them cancel their subscription to a calculator app they've been paying $20 a month for.
That's very true but unfortunately Anthropic have locked in contracts for so much compute that they absolutely need to expand beyond the corporations currently paying them.
Realistically they need to 3x their revenue to pay for their compute. While that's plausible, I'm not convinced that it can all come from developers. Many many developers are already using Claude. I think they need consumer, or some other market too.
Personally I view it like this - did ant and OAI push the industry forward yup? Will they fail as businesses though? Yup. Why? Business economics - as long as cost efficient Chinese replica’s exist it’s fine. Unless the us govt artificially makes the frontier market large then I see no chance of a large enough market that sustains current valuations.
More intelligence alone != more progress. And more intelligence in the context of business != more productivity that shows up in financial performance.
> These new capabilities are powered by the next generation of Apple Foundation Models, custom-built in collaboration with Google and its Gemini models for deeply integrated Apple Intelligence experiences.
There are some similarities between Anthropic (or OpenAI) and WeWork. Obviously the large difference is software but there is a whole lot of leasing hardware going on (neither frontier lab owns any infrastructure as far as I can tell), long term capital commitments, short term monthly subscriptions, no real moat for the frontier labs (or a hip office rental space), etc.
I think 2027 will be when a lot of companies revisit their AI spend and ROI. Have there been measurable business benefits reported by the media outside of programming?
Nothing solid. All the reporting I see is that numbers are measurable but not on the level many people expected, and that these systems are proving incapable of wholesale replacing employees, which clicks with my own knowledge of some large layoffs accompanied by press releases about streamlining corporate structures using AI and the outgoing employees asking “what AI?” Because they didn’t train an offshore team or document their department responsibilities before being let go.
My suspicion (and many others as well) is that AI is used as a way to cover for large corporate restructuring in the face of money no longer being available for “free” due to interest rates.
It doesn't need to be the best. It just needs to be good enough. I'm not smart enough, but if I was I'd be working on a locally ran interface engine. That's where you charge say 100$ a year. Said engine would allow you to use a large open source model locally to the point where it's good enough to rival Haiku.
If I had to guess someone is working on this
Building the iPhone-platform equivalent of this would be interesting.
By any sane normal sense of business and financials these AI labs look terrible on paper.
Any loan would be speculative at best, and the rating would simply reflect that.
Investing in these companies is like going wild at the casino. Sure you might make a fortune but strong odds are you’re gonna lose your shirt.
-Upton Sinclair
If they're actually that confident I hope they short the stock long term with basically all their money.
Your scenario is certainly possible, that doesn’t make both predictions equally (un)likely.
I'm indifferent either way myself. It's just shocking the amount of ignorance.
But guys, if your companies weren't run by psycopaths and weren't promoted by assholes who appear to be the exact same guys behind the NFT craze, (this is the future of creative expression! Don't like it? Your a luddite. Cope.) and weren't predicting horrible nightmare scenarios based on their tech maaaaaaybe people would like AI and be more interested in using it?
I personally see that generative AI is a very powerful and useful technology but I hate everyone involved in it and do not want to see them succeed because they're icky people.
Its like if the nazis had discovered how to harness atomic energy before anyone else. Fuck that.
Right now the market is expecting something a lot more than "sells a lot of tokens" out of these things to justify their valuation.
Structurally there in a terrible position on what’s unfolding now with the completely collapse of model valuations. With truly “open” models gaining more and more momentum models are basically worth nothing and “token” prices are collapsing to the cost of compute. That doesn’t leave anything on the table for the Anthropic and Open AI’s of the world.
Is that potential source of revenue? Maybe but folks are verbally very negative on AI ads.
Is that a viable business plan for Open AI? No.
Google search ads are highly converting because they are camouflaged.
OpenAI ads are nothing of the sort!
I think the only way out for Anthropic is to buy a few neoclouds as they go under, but even then it's a coin flip as to if they survive the next 3 years.
https://www.businessinsider.com/companies-hoarding-unused-ai...
Like most “scarcity” scenarios things flip from under supply to massive oversupply real quick. Remember during COVID when lumber got stupidly expensive and then almost overnight folks couldn’t give wood away.
Point is, the number of tokens is a silly metric to proxy these companies' growth.
What I’m trying to say here is, what if, they are staying closed strategically so they keep their most advanced models close to their chest until they make an incredible discovery. Say they cure cancer. In this case, they are taking that IP collaborating with big pharma and cashing in on the upside of such discovery.
So, what if on top of being just another enterprise and consumer product that accelerates the way we all work and live, it also becomes this factory of breakthroughs and that’s where open source models can’t compete with them.
Just speculating…
But can they actually pull it off? Since the open models are kind of able to pull off the same things.
Maybe they can brute force faster, but not releasing allows another to scoop it.
Now, consider they have one, two or three generations of models being tested and toyed around before being released.
Those would be the ones used for breakthroughs.
These are averages, but still!
https://x.com/AndrewBenson/status/2115458726396310008
I've had several people I trusted destroy our relationship this way over the years.
An extremely hypothetical experiment but what if this is some sort of MAD (Mutually Assured Destruction) and in our timeline, we have accepted it with AI.
Deepseek can do MAD on Anthropic and release open weights model (which means that they might not earn the most or basically burn millions/billions to then give us all essentially the same thing and we would all be on equal footing, oh they also released their inference engine right now.)
This might explain why the stock market got into an bubble and is fearing itself right now.
Mutually Assured Commoditization. (Credit where it's due I pasted my comment to Chatgpt and it gave me this term ironically and it seems to fit well to the comment that I am writing, I might write a blog about it someday.)
Infact they’re going to end up in price competition unless they field an army of ‘FDE’ who go to every large firm and reorganise the operations around their models and displace labour.
Amazon also did not go from ~$1B revenue to $16B in one year.
Same Amazon to develop AWS to profitable business spent only 30B in all capex (including e-commerce) over 12 years between 2003-15 .
The more interesting questions aren’t about whether they have a real product (they do). It’s whether they can defend that product from competitors, such that their future revenues can justify the massive investments made.
Perhaps I am just blind to consumer markets, but it is not self evident for me, at least. When I think of successful consumer products, I think of stuff like Coca Cola, the light bulb, the CD, acrylic paint. Are you saying that Claude is as successful consumer products as the Ford model T, and Nike sneakers? I am not buying it.
But that won't stop them from issuing bonds or more convertible notes as they have and the market may or may not bite.
It does add pressure to their IPO proceedings being as high as possible as their funding mechanism tho. But reduces pressure on them if shares crash a bit after that, still high risk borrowers.
Or, you can trade $0.03 of tokens that cost you $0.02 for $1.00 in ANTHROPIC SHARES, which makes the thing that everyone uses for like, math discoveries and curing cancer."
Average Hacker News commenter (not you): "Nooooooo it's not profitable Anthropic is going to crater nobody will take their convertible notes"
Let's say that the house of cards crashes down and takes the market with it who will shutdown, survive or have no choice but to get acquired for a 90% discount.
Some will be just alive long enough for the early investors to pull out enough before the market crashes.
Now, I'm not saying that's going to happen -- but if you take analogies from the dot-com era and assume they're going to play out in the same way, you can't just cherry-pick the bad ones.
Anthropic had valuation of $550M at their first venture round, and assuming it IPOs at roughly $2T, it will take them 5 years to give this 3500x return to their initial investors.
So you're absolutely correct about the comparison.
That said, I bet whatever happens over the next 20 years goes beyond what any of us can imagine. I wouldn't be surprised if the winners of this paradigm are worth hundreds of trillions. Sounds ridiculous until you look backwards and valuation a and consider this is an exponential curve and time is compressing.
And the winners may be not be the obvious choice.
Companies are staying private longer, raising many orders of magnitude more private funding, and IPOing straight into "top 10 biggest companies in history" size.
If you IPO at $1.5T you are already equivalent to ~1.5% of World GDP.
Thus is just for scale, as comparing GDP vs a company market cap doesn't make total sense since GDP is 1 year economic activity and market caps represent discounted future cashflows of future economic activity...
Let's say Anthropic IPOs at $1.5T and grows even 1000x over 20 years, it would be worth $1.5P (petabillion?). If it had a 20x earnings multiple like google this would imply Net Income of $75T. Mag7 total Net Income for 2025 was $500B or $0.5B.
World GDP is $125T, and has grown less than 5%/year before/thru/after DotCom. So lets say in 20 years its $250B and Anthropic is capturing 30% of world GDP in earnings (not revenue, that would be even higher)!!
So the math doesn't math.
Note that I'm not saying OAI/Anthropic are destined for success - because the rate of change combined with competition with cheap Chinese models is pretty novel in the business case history. But I am saying that pessimistic dot-com-boom comparisons don't seem to be all that deep.
But this is further to the point that the economics are more Amazon than Pets.com. If the plans are losers, great, when they need to be profitable they kill the plans and focus on metered tokens.
Isn’t the difference that ai labs can’t stop the R&D spend? They have to continue training new models.
Almost certainly nobody if you're tracking post-IPO growth.
And not because there won't be survivors/winners when the next crash comes (there probably will be) but because of the market changes (in the wake of legislation like the JOBS act) that result in these companies having their significant growth periods prior to IPO instead of after it.
IPOs used to be a launch pad to growth, now they are just a way for private investors to finally cash out when the company is already close to peak valuation.
B) nobody is IPOing at $400 million like Amazon did except SPAC share dilution scams, that you have to be willing to pick up at $30 million a year later
C) private secondary markets solve that, for some and are pretty great
D) tokenized synthetic and SPV backed private secondary markets in crypto ecosystems like Hyperliquid give you that exposure too, so now everyone can replicate the 90s
Exactly You can't wait to IPO until you're already one of the 10 biggest companies ever AND also grow 2500x post-IPO.
Retail is now exit liquidity for Big VC.
They are so going to get disrupted. Chinese open weights models will have no such limitations, and there's no way we'll let Anthropic outlaw or ban them. (And even if they did, they can't police the whole world.)
There is no moat. Anthropic should be playing nice, not trying to create a god while holding engineers under their thumb. We will route around it.
If the people can't access god, then we are living under a dictatorship with aims to enslave us.
Wait, what?
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enjoy!
This line is certainly eyebrow-raising to the educated layman.
Apparently it means that anthropic is leasing a Google data center whose constituent servers draw 1.5 GW of power running representative workloads.
Blackstone told investors Anthropic may not receive an investment-grade rating immediately after going public, a reversal from its previous guidance that would complicate the AI lab’s ability to finance its massive spending.
The private capital giant told investors in Anthropic’s latest $63bn chip financing deal that the start-up is expected to receive a “high” junk rating from major credit rating agencies after its initial public offering, according to people familiar with the matter.
Blackstone is acting as an anchor investor on the deal, known as “Project North Star”, and is working with banks that stumped up financing on selling the debt on to other investors.
Anthropic filed to go public on Monday, setting up what could be the largest listing of all time next month. The AI lab’s prospectus sketched out its “bold but sane” plans to spend more than $800bn on computing infrastructure between now and 2045.
An investment-grade credit rating is central to those ambitions, enabling Anthropic to borrow at lower rates to finance its AI infrastructure projects. The group has cash and equivalents of more than $112bn, and investors anticipate it could raise about $100bn more in the IPO. Sign reading "Blackstone" outside the Blackstone headquarters in New York, with pedestrians and city lights reflected in the glass. Blackstone’s funds have invested in $9bn of the junior debt at a lucrative yield of more than 10% © Angus Mordant/Bloomberg
While Blackstone had told its investment partners in recent months that it was expecting an investment-grade rating for Anthropic before year-end, it has recently signalled that a rating in the double B range or above is more likely given the guidance it has received from major credit agencies, the people said.
Such a designation would limit the pool of capital that Anthropic could tap because many insurance and pension funds are restricted from taking large positions in junk-rated borrowers. As a result, the company might need to continue to rely on its suppliers with high credit ratings to support its debt-raising efforts.
US tech stocks slid to session lows on Friday following the FT’s report on Anthropic’s rating, with the Nasdaq 100 down 3.7 per cent in afternoon trading. Markets were sharply lower prior to the report after earnings from Amazon and Intel worsened fears about the sustainability of the AI boom.
“It’s all about access to credit, it really matters . . . if [Anthropic] isn’t investment grade, the cost of credit goes higher, that’s not good for anyone,” said a US tech-focused portfolio manager.
“It’s a bloodbath out there,” they added, referring to the sell-off in stocks.
Wall Street banks earlier this week closed the North Star deal, which provides the financing for Anthropic to lease 1.5 gigawatts of Google’s semiconductors. More than $42bn of the senior loans is guaranteed by Broadcom, which co-develops the chips and has an investment-grade rating, while $18bn of the junior debt is backed by the AI start-up’s lease payments.
Institutional investors covet senior debt because it takes priority over junior loans in the case of a default. Broadcom’s high A-tier credit rating was an important factor in allowing Anthropic to secure the financing.
Blackstone’s funds invested in $9bn of the junior debt at a lucrative yield of more than 10 per cent, the FT previously reported. Bankers for Anthropic and rival OpenAI have also lobbied the largest rating agencies to grant the AI labs investment-grade ratings after their IPOs.
Project North Star’s $18bn junior debt, which exposes lenders more acutely to Anthropic’s credit risk, has been assigned a double B plus rating with positive outlook from Kroll Bond Rating Agency, a slight improvement from stable outlook in a similar deal known as Project “Big Sky” four months ago. It also received a double B rating from Morningstar DBRS, the people added.
The big three credit agencies — Fitch, Moody’s and S&P — which have bigger influence on companies’ borrowing costs, have not officially issued any credit ratings for Anthropic.
Anthropic, Blackstone, KBRA, Morningstar DBRS and S&P declined to comment. Fitch and Moody’s did not respond to requests for comment.
2. Never going to visit this site again and I am not going to make an account for it
I am however, okay with turning off the ad blocking if they’re running reasonable ads (not every other paragraph).
I'd also add: from paid online news, I also expect a moderated forum/comment section, with a human to escalate to if automatic/AI moderation fails.
No, they're not. Maybe you are?
> A significant portion of people don't want AI in a lot of these things
Not true. People love AI. Specifically Android and iPhone AI. I doubt they even know or care about Anthropic or OpenAI.
> the ones that are eager to adopt it can use AI to bootstrap AI tools they use through a token router
Absolutely microscopic share of the overall market for "AI" users. We are hobbyists.
Realistically they need to 3x their revenue to pay for their compute. While that's plausible, I'm not convinced that it can all come from developers. Many many developers are already using Claude. I think they need consumer, or some other market too.
Personally I view it like this - did ant and OAI push the industry forward yup? Will they fail as businesses though? Yup. Why? Business economics - as long as cost efficient Chinese replica’s exist it’s fine. Unless the us govt artificially makes the frontier market large then I see no chance of a large enough market that sustains current valuations.
More intelligence alone != more progress. And more intelligence in the context of business != more productivity that shows up in financial performance.
Life is more nuanced.
https://www.apple.com/newsroom/2026/09/siri-ai-a-profoundly-...
> These new capabilities are powered by the next generation of Apple Foundation Models, custom-built in collaboration with Google and its Gemini models for deeply integrated Apple Intelligence experiences.
I think 2027 will be when a lot of companies revisit their AI spend and ROI. Have there been measurable business benefits reported by the media outside of programming?
My suspicion (and many others as well) is that AI is used as a way to cover for large corporate restructuring in the face of money no longer being available for “free” due to interest rates.