Prof G Markets
00:00:37 · S1, Kara Swisher, Scott Galloway, Ed Elson, Josh Brown
[00:00:37] S1: Life is too short for bad audio quality. Luckily, there is Sonos. Sonos is a full sound system that you can customize to fit your life. The new Sonos Beam Ultra soundbar brings theater quality audio to your home. Sonos Ace Ultra headphones connect to your system, so you can listen when and how you want. And Sonos Play speakers can move with you throughout your day. Every Sonos product syncs and can be controlled from your phone. So whatever you're listening to can follow you room to room, moment to moment. Visit sonos.com and build your system. Sonos. Love the sound. Feel the system. [00:01:22] S2: Megan Rapinoe here. This week on Why Are You Like This, I am talking with rapper and singer Young Miko. I love talking to her about her rise to fame, being openly queer, her love of soccer, of course, and her background as a tattoo artist. Check out the latest episode of why are you like this? Wherever you get your podcasts and on YouTube. [00:01:41] S0: Today's number, a $100. That's how much US consumers spend on restaurants per week on average. Ed, what fast food chain would I like to see in space? [00:01:51] S3: What's up? [00:01:51] S0: I'd like to see Five Guys on Uranus. [00:01:54] S4: I've [00:01:57] S0: been thinking about saying that all morning. [00:02:02] S4: Listen to [00:02:03] S0: me. Markets are bigger than us. What you have here is [00:02:05] S4: a structural change in the world Distribution. Cash is trash. Stocks look pretty attractive. Something's gonna break. Forget about it.
00:02:05 · Josh Brown, Scott Galloway, Ed Elson
[00:02:05] S4: a structural change in the world Distribution. Cash is trash. Stocks look pretty attractive. Something's gonna break. Forget about it. [00:02:12] S0: Welcome to Prof G Markets. How are you, Ed? How are you, Ed? [00:02:15] S3: I'm doing very well. Doing very [00:02:16] S4: well. [00:02:17] S0: There's something about In N Out I could have thrown in there, but I just stayed away from it. I just stayed away from it. Too much? Too far? [00:02:26] S3: Nope. On brand. On point. [00:02:28] S0: I missed you guys. You keep bringing on people smarter than me, it really bums me out. It makes me feel insecure. [00:02:37] S3: Well, we're gonna have a great time tonight. [00:02:39] S0: No comment. Oh, that's right. We're all going out. We're going to Casa Cipriano. Very fancy. I might have to wear... Put on nonathleisure wear. You [00:02:48] S3: You have to put put on your coat and tie. [00:02:49] S0: I don't wanna put on a coat and tie, but I will put on a coat. I'm excited to see everybody. I haven't seen everyone in a while. [00:02:54] S3: Me too. [00:02:54] S0: The business is rocking. I mean, markets is way down, but, anyways, very excited to see everybody. [00:02:59] S3: Excited to see you. Should we get into our episode? [00:03:02] S0: Let's get into it with our favorite.
00:03:02 · Scott Galloway, Ed Elson
[00:03:02] S0: Let's get into it with our favorite. [00:03:04] S3: This week brought one of the most anticipated s one filings in recent memory, Anthropic. Filing answered some big questions, including how quickly revenue is growing and how much the company is losing, But it also left some unanswered, including who its biggest customers actually are. And there was even more drama in the AI world to start the week. Elon Musk took aim at the neo cloud industry, warning that many of these companies could be headed for a wave of failures and consolidation. In a post, he argued that debt markets are increasingly cutting off funding for companies without substantial revenue beyond AI data centers, leaving more than 200 neo clouds vulnerable. His comments sent neo cloud stocks tumbling. That selling pressure adds to an already difficult stretch for the AI sector. CoreWeave and Nebius have both fallen more than 30% over the past month as investors reassess the risks of the AI infrastructure boom. So there is a lot to unpack here So to help us make sense of what could go wrong with the AI trade, but also what could still go right, we are joined by one of our favorite guests, the one and only Josh Brown, cofounder and CEO of Ritholtz Wealth Management. Josh, great to have you back. Always good to see you. I think we should probably just start with the thing that everyone's talking about right now, which is the Anthropic filing. We finally got to see what's going on underneath the hood. General question, your reactions to the filing, what stood out to you?
00:04:35 · Josh Brown
[00:04:35] S4: I think the revenue growth is probably the thing that stood out to me most. We all we all understood that there was massive revenue growth, and of course, there have been leaks and there have been comments from private investors. So, think directionally, we all understood that there was a lot happening there, but even I was surprised at what the actual growth is. So it's off a low base, but it's a 1300% increase for the first six months of this year versus the first six months of last year, the comparable period. So they went from 1,200,000,000 to 16,300,000,000. That's a lot of revenue for a three year old business that began life as a public benefit corporation. I mean, matter what you wanna say about the other side, you know, the losses, which I'm sure we'll get into, which I just think like it deserves a moment's reflection. This company is on pace to do something on the order north of $30,000,000,000 in its third year in existence. And I think even the bears would have to admit that's impressive. We understand there's customer concentration. We understand that. We don't fully understand how the ARR calculation works. Is it a snapshot on one day that happens to be its best day? And then they just extrapolate. Like, we all understand the different ways that that can be nitpicked and criticized, but they put it in an SEC filing. So let's just go ahead and assume that they're not complete and total Bernie Madoff liars and that that is a reasonably accurate reflection of the sales that are happening to customers. I I think it's worth reflecting on.
00:06:21 · Ed Elson, Josh Brown
[00:06:21] S3: I totally agree with you. I think that the increase in sales has been remarkable. The thing that people are saying has not been remarkable or has been a problem on the revenue side. I'm more worried about the profitability side, which we'll get into. But the... On the revenue side, some point out that in q three, the growth significantly slowed. I think it slowed to something like 40 to 50%, which sounds ridiculous because that's already a huge number. [00:06:46] S4: It has to slow. You you can't write. So, Ed, you're right. [00:06:50] S3: But investors are worried about this because the assumption, I think, for a lot of them has been that 1300% is going to continue not forever, but at least for the next several quarters, perhaps the next year or so.
00:06:50 · Ed Elson, Josh Brown
[00:06:50] S3: But investors are worried about this because the assumption, I think, for a lot of them has been that 1300% is going to continue not forever, but at least for the next several quarters, perhaps the next year or so. [00:07:03] S4: I'm gonna disagree. I don't think investors are worried about it. I think it's almost guaranteed that you can't 16x revenue twice. Like Like we understand, because if you... This is the exercise where you place a grain of rice on a chessboard and then two on the next square and then four on the third square and then eight and sixteen. We all understand that company is not going to, in its life as a public company, do 1600% growth. So I think what investors are more worried about, and maybe this is the more reasonable bear take on Anthropic and AI in general, is the stickiness of the platform and the durability of that revenue more so than the growth rate. Like let's take what you just said, 40 to 50%. If they go public and they come out and say, We think we're gonna grow 40% to 50% a year on like a CAGR of 40% to 50% for the next five years, think everybody would be okay with that kind of guidance, not that they're giving it. [00:08:10] S3: Agreed.