Ant will ipo, and surprise to the upside.
most people have no idea how much unket demand there is for anthropic
Also anthropic will continue to do well but it’s over for capex recipients
hearing some chatter that anthropic is now lowering down to $1tn to get this IPO done. let me explain why this doesnt matter and its actually all over-
the entire existence of this company is based on a funding model that inherently has extreme asset liability mismatch. what that means is that just like the hyperscalers are diluting their equity fund capex, there is an expectation that anthropic will also have to do the same. ie it needs strong equity to perpetuate the scheme
but if you IPO at the wrong price (and dont get a pop which increasingly appears they wont be; spacex already below) then youre now in the death spiral that crypto investors should be very familiar with: its called the reflexivity trap of the confidence game. its the "ill bid FTT at $22 all day" or the "steady lads UST is $1" game, with all its lucid horrors. and here is the key insight- the confidence game exists at the service of the creditors. if there is no credit, there is simply no equity. and there is no credit, if there is no collateral
if the credit rating agencies are not going to give IG at $2tn, they are certaintly not going a better HY rating at $1tn. and there is no world in which anthropic can exist without credit because ~$1tn of commit, much of which is noncancellable, is a straight up negative equity pledge
yet there were two scenarios in which i was willing to concede anthropic could IPO: first 1) the improbable but possible was if the hyperscalers/chips oligopoly came to rescue and plug the hole, given their incestuous nature of revenue bookings and paper gains/losses at scale. but it is clear now that the market has spoken this will lead to a mutual death, and should not be attempted. or perversely even better, they are actually better off letting anthropic go to zero so they can acquire the pieces on the cheap which is the best nash equilibrium outcome, not just for the dominant player but for society at large. second 2) the us government can nationalize the company and collude with other sovereigns (like UAE, Saudi, Japan who are basically already the checks) to force its funding as a collective bargain. this gives you trillions, which is actually the most effective backstop to restore market confidence. the first edge case does require an IPO, but the second edge case here for which i believe there is still a good chance that this is the ultimate end game- will require a failed IPO to recapitalize at a normalized price for the consortium (and dont forget that openai front ran this investor group in anticipation of this dynamic to play out as a private co last month)
i believe the market is crapping out today because the market is recognizing it will not IPO. and actually, as ive said before, this is a very good thing. i might even imagine that the market could quickly rebound on the news of its IPO being delayed because it allows #2) to play out, as not only a national, but an international bailout. the US is more likely to tolerate, even relish, the taxes of foreginers to fund our domestic companies. that is the only end game that really matters, and the end game i am going to be excited to see
we'll see if this newly revamped washington can figure it out
second derivative only declines from here
you still can make a bull case for hyperscalers as their fcf will increase
but they may also go down with rest of the market
Onur Sucu retweeted
human-in-the-loop
└ human-on-the-loop
└ human-near-the-loop
└ human-cc'd-on-the-loop
└ human-legally-liable-for-the-loop
Onur Sucu retweeted
see you in 2027
Onur Sucu retweeted
Wake up.
Every profession deemed white-collar, the middle class dream, is about to be decimated by AI, at a much faster pace than anticipated, with monstrous social consequences.
who is gonna pay for all this?
SemiAnalysis's Dylan Patel predicts OpenAI and Anthropic could reach $600–700 billion in combined revenue by December 2027--and raises the possibility of $1.5 trillion by year-end
“As far as AI’s impact on the U.S. economy, if AI revenue is only $3 trillion in 2031, then, yeah, we’ll have big problems.
“But I’m of the belief that we can get to $600 billion or $700 billion across OpenAI and Anthropic alone by December of next year.
“I’m of the opinion that you can get to $1.5 trillion, maybe even by the end of 2027, with just those two companies. So that’s the end of 2027. Then the payback is clear, right? You know, where they’re getting that from.
“Ultimately, the capacity that people are building out is matched to what they think business is coming to. There’s always going to be a mismatch, if we’re in the building phase, between how much infrastructure you’re spending on and the AI revenue, because today’s AI revenue is really based on the infrastructure you spent on in prior years.”
Onur Sucu retweeted
My best guess is that Anthropic's total "binding" infrastructure-related commitments translate into $56B of compute spend in 2027 and $86B in 2028.
Onur Sucu retweeted
Dario turned out to be right. Maybe even a little cautious. But look at the comments. All so very convinced that they knew more and better, and what an idiot he was.
so he was right. it would funny if he is right on some other things too