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.
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.
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.
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.
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.
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.
> 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.
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.
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.
> 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.
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.
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'.
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.
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.
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."
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.
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.
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 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.
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
>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.
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.
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 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.
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'.
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.
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.
> 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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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).
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.
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.
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.
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.
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.
"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"
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.
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.
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.
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.
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.
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.
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?
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).
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."
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
> 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 $600 annually for something AI can help them do instead"
AI recently told me that my oven was broken because a part that doesn't exist on the oven I own was malfunctioning. A bunch of people poking around with electronics, motors, etc. because they think their AI chatbot can fix anything and everything is going to lead to injuries, deaths, and most assuredly more money in the long haul.
leaky faucet fix is already supported by gemini on google search lol, this usecase doesn't need 100$ anthropic model. And if you think google will be bleeding on gemini you're just dead wrong
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.
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?
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...
> 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.
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.
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.
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?
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.
> 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
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.
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.
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.
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
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].
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.
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.
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.
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).
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).
> 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.
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.
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?
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 $500b/year of IT and programming to replace.
People are using it to do contract negotiation without a lawyer, argue with their doctors over health matters, complain to teachers about their methods, etc. On the flip side, lawyers are using it in supplement to paralegals, doctors transcribing patient notes with it, and teachers are using it to generate worksheets. It's being used fairly widely already
That's true, I do all of that, but I'm using the free Claude version. It's been more than enough to handle the few home renovation projects I'm currently working on.
That's quite a leap to assume there's a ton of money to be made with the casual users sending perhaps a couple of messages a day to real an email and draft a response.
Maybe, but most people aren't paying for their chatbots at all, yet alone the 100$+ 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.
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.
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?
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.
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)?
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.
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
> 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.
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.)
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).
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.
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.
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.
>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.
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.
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.
> 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.
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."
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.
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.
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.
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?
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."
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.
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).
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.
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.
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.
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.
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.
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.
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.
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).
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.
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.
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
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).
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.
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.
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
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.
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.
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.
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.
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.
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"
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.
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".
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
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.
"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.
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."
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.
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.
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.
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.
“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.
Ant generates $2.08 in revenue for every $1 spent on compute which is up from just $0.40 in Q1 2025.the payback period for compute is just insane, likely less than a year!
I'm not really in that camp, but I'm still in the camp of "will they survive long-term if good enough open models trickles down to commodity hardware" (in a way the opposite camp perhaps?).
Sun made bank 25 years ago because their servers was needed for websites, today we run larger workloads on 5$ 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.
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.
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?
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.
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 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?
Being sarcastic here. The usual argument everyone brings up "inference is extremely profitable, checkmate AI skeptics!" while dismissing the black hole that is training.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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...
> 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.
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.
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.
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.
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?
> 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?
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.
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...
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?
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.
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 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.
> 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
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
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 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.
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.
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.
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?
"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.
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.
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.
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.
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.
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.
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
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.
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 was too young to appreciate (denotative, not connotative) the dotcom crash. I will have my popcorn ready this time - for whichever direction it goes.
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.
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'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 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 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?
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.
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.
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.
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
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.
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?
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
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.
> 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?
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.
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.
> 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".
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?
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.
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.
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 cancelable within 90 days after a non-cancelable period ending in March 2027.
SpaceX was the only one mentioned as cancelable. These are listed under "Infrastructure Service Arrangements" on page 170.
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.
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.
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.
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.
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.
> 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.
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.
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
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.
> 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
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.
Homelabbers pooling would be a very nice thing to do and I would definitely consider joining in.
This is a great analysis
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.
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.
Ah, the True Scotsman of 'hobby labs'.
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'.
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.
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...
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.
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."
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 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.
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.
I think GP's thesis is that selling only to the US government would preserve their moat by preventing distillation.
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 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.
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
>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.
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.
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.
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.
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'.
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.
>> 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.
>Is it going to be a utility like water or electricity and the cheapest offer will prevail
This
> 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.
> 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.
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.
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.
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.
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.
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?
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
"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.
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.
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.
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.
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.
I work in one of sp5 and I use chinese models :-D
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.
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
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.
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.
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.
The big big difference is that you dont pay directly for google. Paying per token is more akin to going grocery shopping.
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.
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.
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.
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
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).
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.
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.
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 $200 million a month, well, maybe it's worth buying a bunch of hardware and stick it in a basement somewhere, and you won't upload all your secrets to your future competitor to boot. If US labs didn't care about the competition from Chinese models they wouldn't lobby so hard for banning the evil, unaligned, super dangerous communist models that want to steal our freedoms and make our gas expensive.
Ultra-cheap models like Deepseek are also very nice if you need to burn billions and billions of tokens.
LLMs are not a luxury brand that individuals buy. Companies are always looking to save money. And their enterprise consumers are all developing their own models, so idk where you are getting this "analogy" from.
When the chinese or any other party releases a model that is Opus 5.5 level, there might be a shift to other providers as especially people in the EU are trying to get rid of their dependency on american stuff.
Your opinions do not reflect the market and the motivations of its participants.
Competition is the only reason you can pay 100$ a month for like 4000$ worth of API credits.
Consumer AI is going to be paid with privacy, not money. CFOs don't pay 2k iPhones for their employees.
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.
"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"
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.
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.
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?
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.
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.
>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.
>claude code
The same one that leaked itself a few months ago?
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.
> 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.
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?
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).
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."
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.
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.
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.
> Today's prices are the ceiling.
Why? I don't see any reason for that to be the case.
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?
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 reduced my claude expenditure in 80% using other models.
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?
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?
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.
What is Claude doing as a product that other similar companies aren't also doing, or can't easily catch up on?
Fully integrated business management system.
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.
brand development
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.
AI spend is slowing: https://ramp.com/data/ai-index-oct-2026
What's your source to the contrary?
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.
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.
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.
or Google / Apple, mobile devices are the primary platform for many people
I'm too old to fall for the 'ole "introductory pricing" game hah
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.
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.
>"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
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.
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 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
>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?
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...
> 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.
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.
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"
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.
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.
>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.
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.
>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.
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.
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.
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
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?
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.
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...
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.
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.
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.
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 $10B per year to run. You get your money back fast if the demand is there? And you can project being able to replace with better GPUs in the future without having to borrow for all of it.
But it is extremely difficult to believe that Anthropic is not projecting that all of its customers will ultimately use their service to the extent that their outlier customers do right now. They probably won't be projecting that their customers will find the need or ways to use them less.
And also, "no customer is more than 10% of our revenue" means that one customer is. If that customer is Microsoft (can it be? I honestly don't know) then things get tricky, because Microsoft clearly want an unmetered, on-device AI future.
Coreweave is down 50% with all reports pointing to bankruptcy.
Yeah. But I suspect this is about the difficulty in actually getting data centres built, more than it is that demand is radically overstated (which I suspect it is).
For kicks - lets take the optimistic side here (because the whole thread will be reading pessimistic). What if they are under built and this growth continues to go parabolic. We then still have supply constraints and pent up demand for frontier model and you have a company thats currently at 1-1.5 T and levels up to 4-5 T.
I'm not saying I think thats what is going to happen, but it really isn't a stretch to think that this keeps running given that it hasn't really hit anywhere near as broad as we think it has (being HN community based).
> Anthropic thinks it is.
Does that have to be true? I thought IPOs were about selling the company.
Never mind the fact that companies do not think and this is like saying "My lemonade stand thinks it's going to have good sales this quarter."
The average human spends 100$ per month in food.
Broadcom isn't a name I'd have expected to see next to the other three.
> 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.
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.
Your usage and spending is an outlier in the current market. Anthropic's numbers are only plausible if you become typical of AI users.
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.
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.
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?
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 $500b/year of IT and programming to replace.
People are using it to do contract negotiation without a lawyer, argue with their doctors over health matters, complain to teachers about their methods, etc. On the flip side, lawyers are using it in supplement to paralegals, doctors transcribing patient notes with it, and teachers are using it to generate worksheets. It's being used fairly widely already
That's true, I do all of that, but I'm using the free Claude version. It's been more than enough to handle the few home renovation projects I'm currently working on.
That's quite a leap to assume there's a ton of money to be made with the casual users sending perhaps a couple of messages a day to real an email and draft a response.
The money is not on the casual users, the money is on the lawyers and accountants, and consulting specialists that have actual business use cases.
If you are spending 50 - 60 grand a year on a paralegal will you balk at another 5 or 10 that will allow them to do double the work?
Maybe, but most people aren't paying for their chatbots at all, yet alone the 100$+ 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.
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.
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.
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?
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.
That doesn’t seem ridiculous at all. Replacing clerical and knowledge workers is a vastly larger market than iPhones.
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.
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?
It is a business losing $80B a half on $18B in revenue. This is a trash business.
> 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
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.
Those are just standard disclaimers.
> 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)?
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.
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!!!
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
> 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.
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.)
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?
3% is the target. 3% of colonists fought in the US revolutionary war. You need a majority to support you, and 3% to fight.
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.
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.
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.
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.
>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..
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.
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.
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.
Would you release AGI to the general populous if you had it internally is the opposing question.
> 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.
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."
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?
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
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.
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.
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!
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?
If Anthropic has an "omnipotent genie" why would they sell it to other people?
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
If you weren’t investing you were going to be poor even without AI.
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."
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 :(
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?
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.
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.
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.
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
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.
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.
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.
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.
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).
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.
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.
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.
[delayed]
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.
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
"Yahoo! is the best search engine, and I cant imagine anyone making anything better."
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.
> 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).
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.
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"
> 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
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.
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.
and are much much smaller than they were at IPO
EBITDA profitable is not a substantial vote of confidence.
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.
except, I didn't need WeWork to get work done, I use claude like crack to get work done.
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.
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.
"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 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.
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.
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.
>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"
I think it's bollocks too but I don't think a forecast can be truth or a lie
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.
Consider that many do not believe they were lying.
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.
curious on when a company can lie legally? asking for a friend
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.
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?
Nothing is respected by this criminal company.
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 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.
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 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.
>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."
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.
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.
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.
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.
So they wrote their S-1 with Claude?
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.
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?
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?
> underpromise and overdeliver
Uhh, they can’t say that or they’re calling it an intentional underestimate which obviates their claimed caution right?
Google did the same thing 20 or so years ago when they IPOed. They didn't phrase it this way, but they did this.
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
I think the joke is that E. Holmes probably used variants of this cliche.
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.
This is exactly what I meant. Weird that you're being downvoted.
“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
Ant generates $2.08 in revenue for every $1 spent on compute which is up from just $0.40 in Q1 2025.the payback period for compute is just insane, likely less than a year!
I wonder how the "It's all heavily subsidized!" people are going to spin this.
I'm not really in that camp, but I'm still in the camp of "will they survive long-term if good enough open models trickles down to commodity hardware" (in a way the opposite camp perhaps?).
Sun made bank 25 years ago because their servers was needed for websites, today we run larger workloads on 5$ 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.
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.
> 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.
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.
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.
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
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?
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 still the case. Subscriptions are heavily subsidized
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?
Are they doing the standard SV thing of pretending employee stock comp is free?
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?
Profit is not relevant
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.
They’ll just keep saying it is. That’s what they’ve done so far with DS
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.
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.
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?
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.
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.
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.
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.
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.
Including training?
Yes, this includes training and internal company usage.
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 $72 billion will further dilute the stock price when the debt turns into stock.
It is pump and dump in action.
I don't think you understand what you quoted. The reason for that loss is because their valuation skyrocketed. If I promise you 1% of my million dollar house, and then the price of my house grows 100x. On paper, I now owe you .99 million more dollars than I owed you before, but that doesn't mean I lost cash.
This is not what "AI psychosis" colloquially refers to. Few people have any firm opinions about the nature of cost accounting on LLM products.
They are getting high off their own supply.
Feels like being asked to invest in IBM just as other manufacturers started releasing the first PC compatible machines.
Immediate term Anthropic, OpenAI rule the roost. But this is a very new technology and open models are already looking good. They’ll only get better. Is it realistic to think Anthropic will stay ahead of them enough to justify the valuation they’re asking for?
People have been saying the openweight models would collapse anthropic's revenue since the deepseek moment in January of 2025. They've stayed ahead in model intelligence and increased revenue by a lot since then.
Not saying it couldn't happen in the future, but we've got to be circumspect about that narrative after almost 2 years of it, no?
How much of that revenue is usage from hosting partners (AMZN, M$, 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?
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.
End goal for both companies is probably to be absorbed by infrastructure companies
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.
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.
Think of that dependency tree -- those 5 customers have how many customers on their stack?
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.
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.
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
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...
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.
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?
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 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?
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.
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.
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.
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.
Yep...
Yes, they have been saying that for a while: https://www.wsj.com/tech/ai/anthropic-expected-to-tell-inves...
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.
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...
That link isn't working for me.
fixed. https://x.com/billylo/status/2114730642881544285?s=20
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.
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?
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.
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
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.
Not so wild when you add two zeros to hardware-related liabilities...
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.
> 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
Anthropic is committed to $780-810 billion of mostly non-cancelable compute, payable "regardless of actual usage."
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
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'm just happy they aren't calling it "Super intelligence" in this document.
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.
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?
$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.
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.
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.
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"
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 "—"
For something that's written in MS Word, that's fairly common. It's only on websites where it's uncommon to see
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...
Had me chuckling out loud at my toilet break
That seems low
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...
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?
This is it, we're at the summit. It's only downhill from here.
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.
"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...
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.
> no lockout if you aren't employed anymore
But, I imagine, no stock either?
Why? Whatever's vested is yours.
shameless plug, get a properly paginated PDF here: https://enopdf.com/tools/edgar-to-pdf/?url=https%3A%2F%2Fwww...
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.
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.
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.
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.
Google is the only one that can withstand a global financial crisis.
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.
OpenAI have an incredibly inconvenient "one billion free users" shackle attached to their leg that they need to fix first.
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.
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.
I'm tired boss.
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?
Does this make it less likely that Anthropic will push for regulations?
AI = Artificial Income
The word "Oracle" isn't present in the document.
They didn't use AI to write the prospectus...
~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.
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
$ANT ticker, it would have been funnier if it was $CLAUD
Finally we can stop with their psyops?
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)?
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
This make me wonder how did XAI reach so much revenue so fast!
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.
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.
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.
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.
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.
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?
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.
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.
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 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.
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
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?
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.
Can I get dividends as tokens?
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.
Is becoming a public company going to help or harm their mission of delivering safe AI?
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.
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.
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
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.
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.
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.
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
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
Waiting for the Ed Z. post, will be an interesting bit of spectacle to see.
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?
'AI' still fails the alignment grannybench.
Yup. gorgetbench, grannybench, and tebufranksalso bench are all completely unsaturated.
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
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.
> 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?
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.
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
The return to shareholders path is difficult and will only raise prices and enshittify things.
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.
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
Lets burn it down to the ground!
> 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/
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?
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.
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.
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.
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.