01:07:09 · Joey Brookhart, John Coogan, Jordi Hays
[01:07:09] S8: That were, you know, pretty interesting. So happy to dive But into [01:07:13] S1: overall, is this a beat? Because it feels like there was like a question. We can get into like the overall health of the AI trade but in general there's like a oh, like, oh, there might be something wrong and it seems like everything was on track. Everything sort of mapped to what was leaked earlier. Things look good across the board. I think [01:07:33] S0: it's like a vibe. It's a vibe speed. That's what I would say. I think people were expecting that there was gonna be like one thing that everyone focused like like the vibes had shifted [01:07:44] S1: The market. [01:07:44] S0: Such a negative way like maybe two or three weeks ago where people are oh yeah, you really want to do a $2,000,000,000,000 IPO While rates are up or Yeah. When you're not, when you're decelerating, like this makes no sense. And now people look at this and they're like, okay, this is like pretty [01:07:59] S1: Incredible business. [01:08:00] S8: Yeah. This was one of probably the best scaling to a trillion dollar plus valuation in the history of capitalism. Yeah. To burn 10,000,000,000 to get to this valuation is insane. To be this level of profitable this early and at this scale [01:08:12] S1: Yeah. [01:08:14] S8: It is, you know, amazing. [01:08:15] S1: Okay. So Doug, incredible capital efficiency. Is this a violation of the AI is similar to the railroad build out concept?
01:08:15 · John Coogan, Doug O'Laughlin, Jordi Hays
[01:08:15] S1: Okay. So Doug, incredible capital efficiency. Is this a violation of the AI is similar to the railroad build out concept? [01:08:27] S6: Yeah. I think so. I think it is actually an incredible narrative violation for that. Yeah. I think... I mean, it isn't... Let's put it this way. It's profitable. Right? I think the capital efficiency is mostly because they made a lot of money too. Sure. That, I think is the slight narrative violation. But, you know, that's like looking backwards. I definitely think looking forwards, you see several $100,000,000,000 compute and I would say that that's still really in line with the railroad analogy. [01:08:53] S1: So Sure. [01:08:54] S6: I think the the railroads are still... There's still railroads, baby. [01:08:57] S0: But No. But but it's like it's like you have like a company that is spending on railroad services. But it's Yes. But it's like this company is not... At least right now, doesn't look like that a manufacturer... Like, they're not laying the track. It's like...
01:08:57 · Jordi Hays, Doug O'Laughlin
[01:08:57] S0: But No. But but it's like it's like you have like a company that is spending on railroad services. But it's Yes. But it's like this company is not... At least right now, doesn't look like that a manufacturer... Like, they're not laying the track. It's like... [01:09:10] S6: Yeah. They're not laying the track. And like... So so pretty much the OG, I guess, the steel companies were were... If we're gonna be using railroad analogies, the steel companies, you know, all got invented essentially to make railroad tracks. So I think that that's kind of the... Maybe that's the analogy we're looking for, but I don't know. I think it's really clean. There's no other way to put it. Like, this was an extremely clean beat. Like, you don't really have a much to nit nitpick, but I think maybe the concern is, like, a lot of people have been talking about, like, lowered expectations in q four. Mhmm. They didn't put the September ARR, right, because everyone knows that was like a total debacle. But they obviously have an an open spot for the October ARR and and they wouldn't have it open if they didn't think it was good.
01:09:10 · Doug O'Laughlin, John Coogan
[01:09:10] S6: Yeah. They're not laying the track. And like... So so pretty much the OG, I guess, the steel companies were were... If we're gonna be using railroad analogies, the steel companies, you know, all got invented essentially to make railroad tracks. So I think that that's kind of the... Maybe that's the analogy we're looking for, but I don't know. I think it's really clean. There's no other way to put it. Like, this was an extremely clean beat. Like, you don't really have a much to nit nitpick, but I think maybe the concern is, like, a lot of people have been talking about, like, lowered expectations in q four. Mhmm. They didn't put the September ARR, right, because everyone knows that was like a total debacle. But they obviously have an an open spot for the October ARR and and they wouldn't have it open if they didn't think it was good. [01:09:52] S1: Yeah. That makes sense. What about the compute obligations? Like, it's sort of a big number, not really relative to the valuation even, but yes, like 600 something billion is a huge number. But it's over a long period of time. Like it felt very important to restate and reinforce that this doesn't it's not this year, it's not next year. It's you know, some of these contracts go into 2033. Some of them go into 2036. What is the extra context around the flexibility to move that... Those compute commitments around around and have them hit at the right time?
01:09:52 · John Coogan, Doug O'Laughlin, Joey Brookhart
[01:09:52] S1: Yeah. That makes sense. What about the compute obligations? Like, it's sort of a big number, not really relative to the valuation even, but yes, like 600 something billion is a huge number. But it's over a long period of time. Like it felt very important to restate and reinforce that this doesn't it's not this year, it's not next year. It's you know, some of these contracts go into 2033. Some of them go into 2036. What is the extra context around the flexibility to move that... Those compute commitments around around and have them hit at the right time? [01:10:34] S6: Yeah. I I'm gonna have one... I'm gonna have go... Joey go next because, like, he's, you know, he's mister number. He's like mister Bucky at some analysis. Yeah. But I think more than anything else, they told you at the very beginning, we will... We want to under promise and over deliver. Like, they sent... Like like, it's very rare in s one. In, like, the last paragraph, it's like, no. No. No. We're gonna be really conservative. We promise we will underpromise and overdeliver. So, yeah, that's that's kind of my vibe is that I think the the $100,000,000,000 a year probably works. I mean, it's a little north of $100,000,000,000, I think, if you, like, naively, annually smooth it out. But Mhmm. I think it probably works. Joey, what do you think? [01:11:11] S8: Yeah. Think with some of the increased compute costs and then even probably averages closer to seven or eight years, it's not as many gigawatts as it looks, you know, from a 600,000,000,000 perspective. [01:11:22] S1: Yeah.
01:11:22 · John Coogan, Joey Brookhart, Jordi Hays, Doug O'Laughlin
[01:11:22] S1: Yeah. [01:11:22] S8: And they, you know, they'll be adding a lot more of those compute commitments, I'm sure. [01:11:26] S1: Sure. Sure. But but after IPO, after quarterly earnings, after continued profitability, something that can underwrite it, maybe getting... [01:11:34] S0: Get me up to speed on how the original SpaceX compute deal actually works because if I remember correctly, it was like they were getting access to a lot of compute but able to sort of like forego payments against that for some amount of time, which I imagine was hitting in second half of the year, like the payments really coming online relative to how much compute they were accessing. Is that the right way to think about it? [01:12:01] S6: I don't recall that specific... Yeah. [01:12:03] S8: We we saw it a little bit in SpaceX earnings last week [01:12:06] S1: Yeah. [01:12:06] S8: Start to come through. [01:12:07] S1: Sure. [01:12:08] S8: So it was... I I think it was pretty normalized for for both companies. We saw it, you know, in both the compute margin numbers at Anthropic, Q3 versus Q2, and in SpaceX earnings. [01:12:18] S1: Yeah. About... Oh, sorry. Sorry. [01:12:21] S6: The odd part is just the ninety days. The fact that SpaceX can like essentially whip it back, You Yeah.