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.
01:12:21 · Doug O'Laughlin, John Coogan, Ivan Zhang, Joey Brookhart
[01:12:21] S6: The odd part is just the ninety days. The fact that SpaceX can like essentially whip it back, You Yeah. [01:12:26] S1: Yeah. What what about the overall compute strategy and diversity across the neo clouds? Obviously, Anthropic has really big contracts with Broadcom and the hyperscalers. But for some of those neo clouds, there was a lot of rumbling with Elon about the, know, neo clouds over the weekend. Like, how does this s one change the calculus around just neo cloud economics? What a good Neo Cloud looks like. You obviously have ClusterMax to understand the capabilities of the Cloud, but it feels like the financing side is also increasingly as important as the capabilities. [01:13:06] S9: Joey? [01:13:07] S8: Yeah. I mean, you have a good backer and a good backstop, so whether that be a hyperscaler for NeoCloud or an AI lab, I think Anthropic has shown today AI inference is a really great business. Even running the training is extremely profitable. So compute margins are excellent. If them and chip company or hyperscaler are backstopping a Neo Cloud and they have operational excellence in how they operate those new clusters, it's, you know, Clouds are still very good businesses that have increasing monetization tailwinds behind them. [01:13:38] S1: Are you starting to see this, like the long rumored neo lab to neo cloud pivot happen yet? Either of you, I guess. Doug?