Posted by meetpateltech 9/2/2025
I am very curious about the GAAP numbers here.
Unreasonable doesn’t even start to capture it. Anthropic being worth 10% of Alphabet is beyond insane.
Investors are forward looking, and market conditions can change abruptly. If Anthropic actually displaces Google, it's amazingly cheap at 10% of Alphabet's market cap. (Ironically, I even knew that NVidia was displacing Intel at the time I invested, but figured that the magnitude of the transition couldn't possibly be worth the price differential. News flash: companies can go to zero, and be completely replaced by others, and when that happens their market caps just swap.)
Anthropic have several similiar competitors with actual real distribution and tech. Ones that can go 10x are underdogs like Google before IPO or Amazon, or Shopify etc. Anthropic current stock is beyond that. Investors no longer give any big opp. to public. They gain it via private funding
Right now nobody wants to be the first to offer advertising in LLM services, but LLM conversation history provides a wealth of data for ad targeting. And in more permissive jurisdictions you can have the LLM deliver ads organically in the conversation or just shift the opinions and biases of the model through a short mention in the system message
As I said, insane. And that’s not even considering the 10 to 15% shares of Anthropic actually owned by Alphabet.
Basically, 5x-ing revenue in 8 months off of a billion dollars starting revenue is insane. Growing this quickly at this scale breaks every traditional valuation metric.
(And no - this doesn't include margins or COGS).
So 10% of valuation for 1.5% of revenue, which grew 5x in last 6 months. Doesn't seem as unrealistic as you put it, if it has good gross margin which some expects to be 60%.
Also Google was valued at $350B when it had $5B revenue.[1]
[1]: https://companiesmarketcap.com/alphabet-google/marketcap/
You may not agree with the market's estimation of that, but comparing just present revenue isn't really the right comparison.
How much was google revenue in 2003? It was 1.5 billions (2.6 in today's USD)
Not saying the price is justified, but the comparison is not very fair.
Somebody above said that Anthropic might reach $9 billion ARR by the end of this year.
If AI is winner take all, then the value is effectively infinite. Obviously insane, but maybe it's winner take most?
I know you aren't asserting this but rather just putting the argument out there, but to me at least it's interesting comparing a company that has vendor lock-in and monopoly or duopoly status in various markets vs one that doesn't.
I'd argue that Google's products themselves haven't been their moat for decades -- their moat is "default search engine status" in the tiny number of Browsers That Matter (Arguably just Chrome and Mobile Safari), being entrenched as the main display ad network, duopoly status as an OS vendor (Android), and monopoly status on OS vendor for low-end education laptops (ChromeOS). If somehow those were all suddenly eliminated, I think Google would be orders of magnitude less valuable.
Convincing billions of users to make a new account and do all their e-mail on a new domain? A new YouTube channel with all new subscribers? Migrate all their google drive and AdSense accounts to another company, etc?
This is trivially simple and creates no moat?
I could see two or three percent, but this seems like a pretty big stretch. Then again, I'm not a VC.
Machine ice became competitive in India and Australia in the 1850s, but it took until the start of World War 1 (1914) for artificial ice production to surpass natural in America. And the industry only disappeared when every household could buy a refrigerator.
Self-driving doesn't have to scale globally to be economically viable as a technology. It could already be viable at $400k in HCOL areas with perfect weather (i.e. California, Austin, and other places they operate).
From a technical perspective, they manage to attract top talent - Google / OpenAI lose a lot of good people to Anthropic. This is important since there are few people who can transform a business (e.g., the guy who built Claude Code). Being attractive for top talent means you're more likely stumble upon them.
Edit: After looking it up, normal P/Sales ratios are on the order of about 1. They vary from like .2 to 8 depending on industry.
Its not internally consistent, at all.
I do think this is important. Many of the best researchers are also religious AGIists and Anthropic is the most welcoming to them. This is a field where the competence of researchers really matters.
We're in a VC bubble; any project that mentions AI gets tons of money.
also if your founder has to use dozens of buzzwords when asked to describe what their app does and that still doesn't even explain it, its obviously just bs.
"Arcarae’s mission is to help humanity remember and unlock the power each individual holds within themself so they can bring into reality their unique, authentic expression of self without fear or compromise.
Our research endeavors are designed to support this mission via computationally modeling higher-order cognition and subjective internal world models."
lol
What do you mean lol? Isn't that awesome? Feel free to share if you think that isn't awesome. I personally don't think there is enough information here to tell if that is awesome or satire, but it is interesting how usually things like this are considered awesome, but this particular one is deemed satire.
What does the product do?
I think this is like ChatGPT, but it generates "inner monologue" in the background, and the "inner monologue" is then added to the context, and this "addresses" "sycophancy, attention deficits, and inconsistent prioritization"
When their sales have nosedived, new products have flopped, their CEO is the most disliked man in America, and their self driving still requires someone in the car at all times?
Tesla is a GameStop level meme stock.
Step 2: achieve AGI.
Step 3: ?
Step 4: transcend money.
Impressive in the valuation, terrifying in the fact that they need to keep raising and these valuations might not prove justifiable
However, I remembered when Youtube was young. It was burning money every month on bandwidth.
After selling out to Google, it took another decade to turned profit. But it did. And it achieved its end game. As the winner, it took all of the video hosting market. And Google reaped the entirety of that win.
This AI race is playing out the same way. The winner has the ability to disrupt several FAANGs and FAANG neighbors (eg. Adobe). And that’s 1-2 trillion dollar market, combined.
I often think about that when trying to evaluate forward looking tech. Even though 99% of the time logic like that proves to be correct, it's also true that most of the time the winners in a race did that exactly because they defined some piece of the standard framework of logic that everybody else played by. Uber is similar - they shouldn't exist, they basically broke the law in most countries they moved into, brazenly violated all kinds of barriers that kept taxi industry completely entrenched for decades. But now they are dominating in most of these countries.
"Uber is similar - they shouldn't exist, they basically broke the law in most countries they moved into, brazenly violated all kinds of barriers that kept taxi industry completely entrenched for decades"
And here's a simple way to demonstrate my point - backed by VC - Uber accelerated its growth and got to the point it was so widely adopted nobody could stop them from operating.
Between OpenAI, Anthropic, Google, Facebook, xai, Microsoft, Mistral, Alibaba, DeepSeek, z.ai, Falcon, and many others, AI feels a lot more competitive.
Remember, every technology you use today followed this pattern, with winners emerging that absolutely did go on to be extremely profitable for decades.
Most of us remember the .com era. But in the early 1900s there was literally hundreds of automotive startups (actual car companies, and tens of thousands of supplier startups) in the metro-detroit area: https://en.wikipedia.org/wiki/List_of_defunct_automobile_man...
Some of these went on to be absolutely fantastic investments, most didn't. All VCs and people who invest in venture know this pattern.
Everybody involved knows exactly the high risk level of the bets they are making. This is not "dumb" money detached from reality, and the pension funds with a 3% allocation to venture are going to be just fine if all these companies implode, this is just uncorrelated diversification for them. The point of these VC funds is to lose most of the time and win big very rarely.
There will be crashes, and more bubbles in the future. Humans will human. Everything is fine.
Too many normies betting their life savings without understanding this risk in prior bubbles, so we regulated away the ability for non-institutional investors to take venture risk at all.
Some institutions try to achieve this by launching their own cryptocurrencies, but by and large, the market isn't biting.
Sure, but in my view, I think we are on the downtrend now and this line of thinking has been taken way too far.
And it's cash from asset managers. Its not 10Bn worth of compute time from Microsoft or Google.
Much like any other investment. What do you think makes this more speculative than any other investment?
That new money is different from the new money the central bank creates to push interest rates down. That later one the US has been destroying. But both do many of the same things (but not all).
Think about it this way: if money were just created to fund the deficit why would we have a debt? That's double-counting. You can invalidate your hypothesis very easily: the M2 money supply is about half the size of the debt. It's not possible to square that circle unless deficit spending was re-pledging existing money.
The Fed doesn't have nearly as much control as folks think.
The Fed directly created money during QE and they are directly destroying it during QT. There's a net add, but that's mostly because the economy is growing, which creates new demand for money as expressed by demand for debt.
The money supply staying fixed or shrinking is a non-goal anyways. It's irrelevant. What matters is inflation as measured from the change in actual prices.
The conversation always goes like this.
You: "The government is lying about inflation!"
Me: "Ok, what rate do you think it's actually been?"
You: "10%!"
Me: "So you're telling me inflation over the last 30 years was 1700%? So prices are now 17X higher than in 1995? You sure?"
Then we look up historical prices like this.
https://www.tasteofhome.com/collection/this-is-what-grocerie...
In 1995 ground beef was $1.49/lb.
Bread was $.89/loaf.
Eggs were $0.92/doz.
Milk was $2.50/gal.
idk if you're shopping at Erewhon but where I shop ground beef isn't $25/lb, bread isn't $15/loaf, eggs, well, you got me there lol, and milk isn't $42.50/gal.
Unless the conspiracy is far bigger than we think, or "they" are everywhere, whoever "they" are, I think it's safe to assume that inflation numbers have been pretty accurate.
Deficit spending doesn't create new money. Deficit spending borrows existing money from the population and institutions in exchange for a promise of future government revenues. The Fed does not participate in treasury primary auctions and does not monetize the debt as a means of funding government operations.
If you printed new money to pay for the government, you wouldn't have a debt. That's double-counting. Not to mention the debt is twice as large as the entire money supply so what you're suggesting isn't even physically possible. It would be inflationary to simply print new money to finance spending, which is exactly why it's not done.
[edit] Also the debt limit is a stupid concept that's likely unconstitutional. Congress authorizes spending, meaningful debate over paying for it by adjusting the debt limit likely falls afoul of the 14th amendment's public debt clause. But yeah I mean the debt limit goes up because the government spends more money than it takes in, so it needs to borrow more each year.
All of whom have a real world standardized thing to exchange for this already
Why do you think this discussion even needs to include the people who don’t have that standardized thing to exchange? If thats what you think
H100s will not age this well. It's not like owning old railroad tracks, it's like owning a fleet of 1992 Ford Taurus's. They'll be quickly obsolete and uneconomical in just a few years as semiconductor manufacturing continues to improve.
1) Will I (and others) be able to get a H100 (or similar) when the bubble pops, and would that lead to new innovations from the GPU poor?
2) Will China take the lead in AI as they are less "capitalistic" with the demands for outsized returns on their investment compared to US companies, and they may be more willing to continue to sink money into AI despite possible market returns?
Some will be used a lot will be written off and tossed away.
A man looks at economics. Understands nothing. Thinks it must be all fake and made up. He must be so smart for seeing it through!
Btw there's a decentish board game called Modern Art based around the pricing of art with no intrinsic value.
How? The market is the one that made the decision to invest. They are not playing musical chairs.
A company has agency; it seeks to add economic value to itself over time including changing people’s perceptions.
I don’t see how your comments have any bearing to the point I was making. What am I missing?
>>> me: Perhaps there are salient differences between art on a wall and a company.
>> you: At heart, not really. The whole point of all of this is to motivate humans to get off their butt and reduce entropy.
> me: A painting on a wall is merely an inanimate object. / A company has agency; it seeks to add economic value to itself over time including changing people’s perceptions.
The Horror! Just look at the disjointed conversational history above. It seems like some sort of drunken history episode where people aren’t paying attention to each other.
Should I assume you are trying to understand what I’m saying? It is becoming less plausible with every comment. (I’m referring to the “be charitable” part of HN guidelines.)
Additionally, there is another anti-pattern at work here: this seems like a pretty inane definitional argument. You’re claiming there’s no difference between art on a wall and a corporation entity? By what definition? What is the utility of your definition; meaning, what can you do with your definition that provides differential predictive power?
My claim: when it comes to valuation, an agent is sufficiently different from a non-agent (yes, even if it appreciates!) What is the criteria for “sufficiently different”? To explain: if you get more benefit out of a distinction than it costs you to make the distinction, it is a net benefit.
In this case about valuing things, someone who makes a living building predictive valuation models is going to distinguish wall art from corporate entities because doing so is useful for prediction.
Of course they have some things in common. This is irrelevant to the question of “is making this distinction worth it?” As long as predicting the difference between them is valuable paying attention to the distinction is valuable.
This kind of talking past each other is one of many reasons “why we can’t have nice things” such as useful discussion. Shameful.
If you propose some grand unified theory that says two things ultimately derive from the same thing, that’s fine, but if you’re going to use it for prediction you’ll have to explain how to apply it.
The laws of economics have the kind of inevitability you expect from the laws of physics. Disrespect them at your own peril.
Absolutely not- that is ridiculous.
Let's take "supply and demand" for example. Supply and demand only applies when you assume greed and capitalism. In a different social construct, the traditional supply & demand completely falls apart. But the problem is economics is presented as some sort of fact of nature. It just reinforces survival of the fittest instead of society that helps everyone.
Increasing prices because of demand is not the law of the land- it's a greed of humans that you normalize and make acceptable.
* I’m an equal opportunity critic of comments that are indistinguishable from people yelling into the void with whatever pops into their head. So yes, I’m extremely critical of this very human tendency that isn’t helpful.
[Voted down by the cash cabal! Arise! Knowledge workers of the world, you have nothing to lose but your SPARE CHANGE!]