Anthropic's S-1 shows revenue up about 1300% in the first half, from $1.2bn to $16.3bn, and Josh Brown says the SEC filing makes those figures credible.
Ed Elson sees the $800bn in compute purchase agreements, including over $160bn with Broadcom, as the central risk, while Josh Brown calls the $80.7bn loss an accounting artefact.
Josh Brown says the AI selloff is pathetic if it is a bubble, citing 65.6% tech earnings growth and Nvidia at a forward P/E of 15, and expects OpenAI to go public in the first quarter.
Anthropic's S-1 shows AI growth outrunning the bubble fears
Anthropic's S-1 turned the AI bubble debate into a question about one company's balance sheet. Revenue grew about thirteenfold in half a year and the company holds over $112bn in cash, yet hundreds of billions in compute commitments sit off the income statement. Josh Brown argues AI stocks rest on real earnings growth, so any bubble here is a pathetic one.
Takeaways
Anthropic's revenue growth is huge and now verified. First-half revenue rose about 1300%, from $1.2bn to $16.3bn, and Brown says an SEC filing makes the figures credible. Growth slowed to 40% to 50% in the third quarter, but Brown says stickiness and a moat against better models matter more.
Compute commitments are the central risk, says Elson. Anthropic has about $800bn of compute purchase agreements not yet on its income statement, led by more than $160bn with Broadcom and $120bn with SpaceX. It plans to pay in cash, and Elson warns of bankruptcy if costs outrun revenue.
Brown calls the headline loss an accounting artefact. He dismisses the $80.7bn headline loss, noting the first-half operating loss shrank to $693m from $2.1bn and cash stood at $112.4bn on June 30. Citing John Malone and Jeff Bezos, he argues scale beats near-term profit in a land grab.
Galloway sees a possible $2tn giant. He says Anthropic could be the world's most valuable company within three to four years, reaching a $200bn revenue run rate by 2027 or 2028. A $2tn valuation would be about 44 times projected free cash flow of $45bn. Brown doubts the moat.
If this is a bubble, it's pathetic. Brown points to a 65.6% tech earnings growth estimate for the current quarter and Nvidia at 15 times forward earnings, calling it at most an earnings bubble. Elson still expects a correction, as CoreWeave and Nebius have each fallen more than 30% in a month.
Neocloud stress favours the largest companies. Musk warns more than 200 neoclouds could face failures and consolidation as debt markets pull back. Brown asks how big cloud providers lose if neoclouds cannot borrow below 15%, and says the S&P 500 rests on 50 or 60 companies that benefit when the economy struggles.
Netflix should lean into premium programming. Brown, who bought at 100 before it fell to 63, calls the viewing-time comparison with YouTube misleading and wants more shows like East of Eden. Galloway suggests Netflix acquire independent podcasts.
What comes next for AI listings and markets
Brown expects OpenAI to go public in the first quarter and says enthusiasm around Anthropic's listing will peak as it goes public.
He suggests Anthropic could raise $100bn in a private round instead of listing right away.
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On this episode 4
Show 1
Galloway says momentum favours Anthropic over ChatGPT and Gemini, while Brown says Claude Enterprise is further along.
Brown sees stocks rising into year end, citing an 89% historical chance the year's high comes in December when the S&P 500 is up double digits at midyear.