Ok, let's say they are even. It doesn't make sense to me that you think OpenAI is in a bubble but Anthropic isn't.

OpenAI, just a few weeks ago, claimed they actually have more revenue than Anthropic based the same accounting rules. Since then, Codex seems to be roaring because OpenAI has more compute capacity. OpenAI also has the majority market on consumers, which they're just beginning to monetize.

How is OpenAI levered? They bought more compute earlier and are now reaping the benefits while Anthropic's growth is slowed by the lack of compute.

You call Anthropic disciplined - I call it a mistake to not have bet on more compute.

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JumpCrisscross 4 hours ago | parent [-]

> How is OpenAI levered? They bought more compute earlier and are now reaping the benefits while Anthropic's growth is slowed by the lack of compute

These are orthogonal points.

OpenAI is levered because it has signed commitments to compute. Those are obligations it has to pay regardless of whether it hits revenue targets. A revenue slowdown hurts Anthropic. It could kill OpenAI.

Leverage makes good deals into great deals. If OpenAI hits its revenue targets, levering will have been smart. There is a genuine debate around whether OpenAI’s leverage was a good bet. I think it isn’t. You think it is. That doesn’t change that OpenAI is levered, and that this makes it existentially sensitive to demand variation on the downside (and better exposed on the upside).

To conclude, Anthropic and OpenAI could both be over or undervalued. But only OpenAI can truly be in a bubble.

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kasey_junk 3 hours ago | parent | next [-]

Leverage might also be a requirement for the product if you don’t already have compute. Anthropics lack of compute is strangling it before our eyes.

I agree that OpenAI is more levered but a bubble can be caused by over exuberance in equity as well. And Anthropic has that in spades.

	▲	JumpCrisscross 2 hours ago \| parent [-]
		> Leverage might also be a requirement for the product if you don’t already have compute. Anthropics lack of compute is strangling it before our eyes Two sides of the same coin. A leveraged farmer buys tractors up front and can sow more land. That pays in a boom. The one who bootstrapped is “strangled” by being unable to go after land until they have cash. If demand falters, however, the second farmer—worst case—has idle tractors. The first owes payments he can no longer make. Bringing it back to AI, Anthropic seems to show you don’t need massive leverage to at least compete. They did it with equity. It isn’t bootstrapping, like the example above, but it’s closer to that than the full tilt OpenAI has gone on. Knowing what we know now, Anthropic came in underlevered. They should have borrowed a bit. Given OpenAI is missing sales targets [1], it seems they are probably overlevered. They have similar revenues and valuations. Put together, that makes OpenAI more bubble-esque. > a bubble can be caused by over exuberance in equity as well. And Anthropic has that in spades Agree. But putting aside idiots who may have levered their Anthropic equity, overvalued equity means you get to fight another day after a crash. [1] https://www.wsj.com/tech/ai/openai-misses-key-revenue-user-t...

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aurareturn 3 hours ago | parent | prev [-]

So your whole argument is that OpenAI is in a bubble because their bet on more compute won't payoff, but it's paying off now.

But Anthropic is not in a bubble, despite being valued the same as OpenAI, because they were more careful with compute, which they're paying a heavy price for now having to dumb down Claude Code.

So what do you think OpenAI should be valued at if they're in a bubble now?

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JumpCrisscross 2 hours ago | parent [-]

> your whole argument is that OpenAI is in a bubble because their bet on more compute won't payoff, but it's paying off now

I’m saying OpenAI are levered. If they’re levered and overvalued, they’re a bubble. If they aren’t overvalued, which is to say if they can beat their 2.3x target, i.e. $60+ billion in ARR, they played it savvily.

> But Anthropic is not in a bubble, despite being valued the same as OpenAI, because they were more careful with compute

Anthropic were more careful with debt and debt-like obligations.

> what do you think OpenAI should be valued at if they're in a bubble now?

You’re still conflating orthogonal points.

I think AI should be valued around a growth-adjusted revenue multiple [1] of 4 to 7x. (For context, tech was 2-4x 2015 to 2017, 4-7x 2018-2019, 6.7x in 2021, 3x in 2023, and has now settled back to around 5x for most companies.)

Using $30bn ARR for Anthropic (300% growth) and $25bn for OpenAI (130% growth), both based on the companies’ own projections—Anthropic’s 1,400% growth YoY makes historical figures a bit silly—we get $360 to $630bn for Anthropic and $130bn to $230bn for OpenAI.

I’d put a wide error bar on those figures. Which means I can’t reject their current valuations. Which is why I’m not arguing about who is and isn’t overvalued. The critical observation is Anthropic at $360bn is bruised but survives. OpenAI, even at $230bn and potentially much higher, is basically bankrupt. That is the difference between being overvalued and bubbled.

[1] PEG, but E is R

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aurareturn an hour ago | parent [-]

Anthropic is going 1,400% YoY but OpenAI is not anywhere close. Their models are close in capabilities and now Anthropic is choking on the lack of compute. Claude Code doesn't have any secret sauce that Codex doesn't.

I fully expect OpenAI to grow faster the rest of the year due to higher compute capacity.

	▲	JumpCrisscross 34 minutes ago \| parent [-]
		> I fully expect OpenAI to grow faster the rest of the year due to higher compute capacity Sure. OpenAI needs to be doing $200bn in ARR by 2028 (versus company guidance of under $100bn) to make a PRG of 7x. Nobody thinks that's going to happen, which means its–and Anthropic's, though as we've seen to a lesser degree–are based entirely on multiple expansion. If that multiple assumption is sustained, everyone wins. If it isn't, OpenAI goes bankrupt while Anthropic limps home. If you're still not seeing the difference between growth and overvaluation, on one hand, and the binary consequnces of leverage, on the other hand, and why one is intrinsically linked to bubbles popping (versus deflating), I can try to think of an analogy.