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?

▲

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

▲

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 33 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.