They don't just need healthy margins, they need to make back almost a trillion dollars in a couple of years. Comparing that to elastic search and redis doesn't make much sense.

Hyperscalers work because it actually has value compared to free offerings and because of the absolutely massive cost of switching providers.

Similar with Windows and macOS. Extremely high cost of switching to something different, if possible at all.

Same with office. Extremely high cost of switching due to compatibility issues and retraining of staff.

Your post primarily shows: It's all about lock-in. So far, it doesn't look like LLMs have any of that. So I don't think your points are valid here at all.

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shaewest a day ago | parent | next [-]

The companies don't necessarily need to make back $1T, the investors do, and those investors don't require $1T in profit to do so, they need an asset worth $1T.

Considering leaks suggest Anthropic's ARR would be $47B, that'd be a 20x valuation, but it wouldn't shock me if Anthropic doubles their revenue in the next year or two, in which a 10x revenue could easily support a $1T valuation, and boom there's your ROI, but considering they've raised $135B total, and their ARR is 30% of that, I'd consider that a pretty good ROI, especially if growth continues.

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a day ago | parent | next [-]

[deleted]

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altmanaltman a day ago | parent | prev [-]

Wait what? Why are you measuring valuation as 20x revenue here? If its a public stock (which is what anthropic plans to be soon), it doesn't matter. Otherwise spacex's valuation should be... 18.67 billion x 20 by your logic but its current valuation is over 2 trillion dollars right now.

ARR literally doesn't mean much in terms of how these companies are valued by investors and it will mean little when it goes public. And yeah 10x their revenue in a year sure but they will also likely 10x their costs if they want to keep scaling

	▲	shaewest a day ago \| parent [-]
		I was arguing a 20x ARR valuation based on a simple 'potential' justification for $1T. If I was to go further into that, I'd say that Anthropic has grown from $9B ARR Dec 2025, to $47B at their Series H. I'd say that Anthropic is still a growth stock, so their $1T valuation is based on expected ARR/growth over the next year, and if we assume a double in ARR (justified by their supply constraints as proof of demand), that's 10x Valuation to revenue. We could consider valuing by P/E, but they're in a growth stage so that's a waste of time, hence why investors focus on growth, and hence ARR growth is hugely important. If they managed $100B ARR, the same P/E as other top software companies by marketcap, they'd fit in that lineup. If Anthropic was to hit $100B ARR, they be in similar ratios of ARR:Valuation to Meta, MSFT, Apple, etc. If you assume per token price reduces, and 'per intelligence' prices to reduce, which bullish investors would, you'd also assume a good margin over time, (which rumours appear to support for Anthropic).

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w29UiIm2Xz a day ago | parent | prev | next [-]

If AI replaces labor, that's a trillion dollars of labor. About one-fifteenth of annual labor/wage earnings.

	▲	AuthAuth a day ago \| parent \| next [-]
		the value of labor will collapse so we cant use current earning figures. China will be able to spend to undermine it even more.
	▲	deaton 14 hours ago \| parent \| prev [-]
		If AI replaces labor, there will be no money to make back

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alightsoul a day ago | parent | prev [-]

Not convinced about office. Plenty have switched to gsuite. Plenty of people have switched to MacOS and android away from windows.