I often find myself thinking “is/was there a better business than google search ads?” A majority of users on the internets eyeballs with insane margins/low capx. While search seems cannibalized by chats, is the outcome just a fundamentally worse business? Can you get better than cheap infra serving ads to a majority of the Internet with an essential monopoly?
It makes me feel a bit cynical to say this: but the strength of advertising as a business smacks to me of the general inequality we find ourselves in.
I’d love to live in a world where creating something of real value to average humans outweighs what advertising has been appraised at - which id describe primarily as offering value to businesses looking to acquire customers. Yes, there is some value offered to those customers by an efficient advertising system, but the lions share of value lives with the businesses here.
I’d look to the brief postwar period where inequality was a bit lower as a great example of an era where massive value was captured by those who invented and produced new goods and services improving the lives of everyday people.
I think advertising has soared in valuation over the last few decades because society and technology have evolved to a point where it is viable for many people to own small businesses with a handful of employees, if any. That has led to an explosion in the number of businesses, mostly concentrated in a few sectors (e.g. fast food), and to differentiate oneself in a crowded market you need ads.
Yeah I’d be interested to read more about the reflection of inequality but I kind of chalked it up to how cheap it is to create and distribute an effective ad on the Internet. Never in history has it ever been so easy or cheap to show someone relatively well targeted ad.
I'm generally anti-advertising but I find Google search advertising to be the least objectionable form of advertising because it can be entirely relevant to what you're searching for.
If I search for "how do I fix a shower that won't drain?" then you will get a mix of results that will include articles, Youtube videos, etc. But also links to plumbers in your area seem entirely relevant to that query, no? I find it strange how many of the most militant anti-advertising purists ignore this completely.
As for creating things of value, there's a problem: housing has become the best performing asset in many developed economies and it is fundamentally parasitic and destructive. As an example, the Reserve Bank of New Zealand analytically created the best-performing portoflio and it was... 100% housing [1].
Demand for housing in many places is inelastic. It enjoys huge tax benefits. And you can leverage it better than most asset classes. Plus it's become a political goal of many governments to have ever-increasing house prices.
So if you want to build a factory that makes widgets that you want to sell, that involves a lot of risks. Why would you when you get a better, easier and safer return from just buying more housing?
If you want a healthier, more equitable economy you absolutely have to decommodify housing. There's simply no other way.
I feel even a "high junk" rating for debt issued by an LLM company is far too generous. A bond rated "BB" by S&P would be typical of the safest of the junk bonds. Historically, such bonds have about a 10% risk of default over 10 years: https://investmentgrade.com/bond-ratings/
While I'm willing to believe that Anthropic common stock might somehow be a reasonable investment because it might go "to the moon", it seems obvious that this is a high-risk bet. This is shaping up to be a winner-take-all industry. Does anyone really think there is a 90% chance that Anthropic will be that winner?
If you thought there really was only a 10% chance that they'd fail to be in business in a decade, why wouldn't you just buy their common stock and hope for a 100x return? How do the rating agencies justify this degree of confidence in Anthropic's ability to repay these debts? Or do I somehow misunderstand what these ratings mean?
Think about it. Google's latest Gemini AI is just behind Anthropic's best offering -- or, in fact, it may be slightly superior. Google also has dozens of other mature, cash-cow businesses, massive infrastructure, their own hardware accelerators, an army of smart technical staff... and leadership that, for all its faults, isn't a literal cult.
Anthropic has a top-tier LLM among other top-tier LLMs. Claude is great, but not unique. Anthropic has effectively no other assets, many genuine liabilities, a downright bizarre wet-lab venture, and leadership that's... well...
So, the way I see it, either Google is massively undervalued, or Anthropic's IPO is massively overvalued. Am I somehow off base here?
All that seeming advantage, and yet Google are perpetual laggards in the AI race. In enterprise, where the money is, they're third behind Anthropic and OpenAI, despite what should have been a colossal incumbency advantage.
They're also inexorably poisoning their own brand and squeezing their primary revenue source with AI Overviews. Truly a masterstroke of value destruction. Search revenue growth has slowed three quarters running, even as query volume hit a five-year high.
As for their hardware and infrastructure advantages, those are indeed making them money, because they're selling and renting the chips to Anthropic.
I dunno. I've been a fan of Google for years. Maybe they'll successfully pivot to being a hardware company. They're too slow and hamstrung by internal politics to make compelling LLM products.
I genuinely prefer OpenAI models for coding and building in general. My observation: GPT models are generally better at following the system prompt, tool use, and skill use.
I use Paseo and there is a noticeable difference when GPT-6.1 Sol is driving the orchestrator vs Opus/Sonnet 5.5 driving the orchestrator. Anthropic models ignore the shared system prompt to use the Paseo tools for sub-agents and prefer to use its own native sub-agents. It ignores the skills mentioned in the system prompt, but will use them if I explicitly tell it to in a user prompt or I extra emphasize the instruction in an XML fenced block in the system prompt or CLAUDE.md like <BOOTSTRAP_MUST_EXECUTE_AT_START>
Sometimes, I feel like I have to explicitly prompt Anthropic models to behave the way I want it to (even with system prompts in place with the EXACT instruction). Sometimes it even feels like it's disregarding CLAUDE.md. To me, this makes me feel like it is the less compliant of the two because I constantly have to steer it manually. Anthropic models also feels like they prefer to go lone-wolf. I want my orchestrator to use the other subs (configured with different platforms and models) to evaluate a design; Opus really wants to lone-wolf and solo everything.
That said, I prefer Anthropic models generally only when the task is more open ended and exploratory. The Anthropic models' "mind of their own" benefits here; GPT models tend to be too agreeable; and too eager to agree with any change in direction. But for actual coding once a direction/plan is in place, I would much rather delegate it to GPT (more likely to draw on the harness for context, skills, instructions, and tools -> more consistency).
Anthropic's 1m context window default and shorter cache TTL are also not great in agentic flows where an agent could become idle and then re-activated. Burns tokens very quickly. I have it tuned down to 300k across all models (recommend doing this for multi-agent coding).
The way I use Opus is basically adhering to its training/emergent behavior. Anything else is always worse in some way. Using default harness, mostly letting it do what it wants the way it wants to (as much as possible anyway) and making it work for my own flow.
For sure it's annoying building up so much knowledge about a single product that changes every 6m anyway, but what can you do.
Gemini 4-Argon is very good at coding. I prefer Opus 5.5 -- in large part because I've grown accustomed to Claude Code -- but Argon is undeniably strong.
4-Carbon is, per benchmarks, said to be superior to Opus 5.5 at coding.
At general tasks -- search, medical, interfacing with maps and mail, planning, etc. -- the Google models are already superior.
I also see Google winning this in the end. They have absolutely crazy behavioral data and can exploit much more effectively. Meta is also up there, but Google has production hardware as well as clouds, etc.
Its either AGI, or a robbery beyond behavioral data and the whole internet that can make the AI labs win. I dont even know what such a robbery would look like, would perhaps be just making the most advanced hacking tool and then holding the rest of the world and banks hostage.
Reading tea leaves, the market believes that whomever is first to AGI will reap all the benefits, leaving nothing to the runners-up. In this view, even a tiny edge in model quality is decisive.
AGI has been prominent in pop culture since at least 1968 with 2001: A Space Odyssey. There is a place in our heads for it. And really I think that's just the modern version of anthropomorphic spirits: angels, devils, gods, etc. It gives AGI a feeling of inevitablility.
Of course, things like jetpacks and flying cars also have had that feeling. As well as Stephenson's metaverse.
I think the current state-of-the-art models are already AGI, by the kind of definitions of AGI that people had a couple decades ago. I could be wrong but I kind of feel like people have started using the term "AGI" to mean "artificial superhuman intelligence".
* results may vary depending on your specific definition of AGI.
I like the way Kevin Roose put it: if you were to bring Astra or Opus 5.5 back to 2017 and show it to the leading AI researchers at the time and ask them if it were a form of AGI what would they say? The goal posts shift too fast to keep up with. Some people still worried about it counting Rs in strawberry as the models are making progress in frontier math and physics.
> I cant believe that the market still thinks LLMs are ever going to result in AGI.
"Still"? I mean if someone believed that LLMs would result in AGI, why would he change his opinion? Did something happen? I mean the progress generally exceeded expectations so far so your P(AGI) should increase, not decrease. This rant doesn't apply if you did not believe that LLM can result in AGI from the beginning of course.
"Did something happen?" you really think nothing that happened in the last two years could lead to anyone changing their opinion about whether LLMs will lead to AGI?
Well they're for sure going to result in something a desperate marketing team is going to call AGI and through persistence through all the laughter will result in a new term being coined like ActualAGI so people can refer
to it as separate from "AGI Class Models."
I'm somewhat inclined to give it to them at this point, I mean it's artificial, general in the sense that it can complete tasks it wasn't programmed for, and intelligent enough I guess. I mean if there was a planet with creatures at the level of LLMs we'd probably call it intelligent life—used
in that way we're not really implying the creatures are particularly smart. It's as much simulated disembodied intelligence as you could reasonably hope for. I wouldn't at all expect that simulated intelligence: the computer algorithm would have any relation to actual intelligence except at the minimum superficial level
needed to complete tasks. With AGI out of the way we would at least have to be more specific on what the sci-fi dream actually entails. The computer from Star Trek is certainly intelligent but you would never say it has a brain or anything close to it.
It's so fascinating that people think that AGI will be winner-take-all. If anything the Chinese labs have shown us is that being first is almost a handicap as everyone can quickly learn from your released models and distil into open weights quite easily. If the competitive environment continues to exist how it is today, there doesn't seem like a trillion dollar market for anyone.
> Reading tea leaves, the market believes that whomever is first to AGI will reap all the benefits, leaving nothing to the runners-up.
If "the market" believes this, I'd love for "the market" to explain to me how they think this works in practice.
Like if Anthropic hits AGI on Monday, what stops Google or OpenAI from hitting AGI on Tuesday?
There is no substantial difference in capabilities between any of these models, they are all doing the tiniest little leapfrogs over each other from release to release.
Even if the market thinks this leads to AGI, there is no reason to believe any secret magic exists that makes one of them reach AGI without the rest hitting AGI nearly immediately after.
Sergey has gone a bit culty. But yeah. There are no moats that can keep out everyone who has built and operated data centers before the AI bubble. For these players, overspending, up to a point, is a defensive move.
The cult definitely has some Jonestown overtones: the singularity is coming so things so mundane as a bond rating are of no concern. One way or the other.
The thing is - Google is fucking terrible. Gemini has nice benchmark but it's unusable, try it. There's a reason why their market share in AI is so small.
I believe Google is the most likely to survive the bubble bursting. They have significant cash flow from other sources and have likely insulated themselves by using SPVs for a lot of their debt. It's true that they've invested a lot of their own cash but they've also rented a lot of GPUs from SpaceX and elsewhere and I think that's probably a good idea.
Additionally, Google is very good at building and managing data centers (including their own networking hardware) and they even have alternatives to NVidia through their longstanding TPU hardware. It can't compete with NVidia's best offerings for sure but it gives them a path to independence.
I believe SpaceX will be merged with Tesla at some point when things turn south. OpenAI? I don't know what their future is. These mega-IPOs just seem like desperate attempts to cash out before it all comes crashing down.
The real problem is that there is no moat. Chinese labs have seen to that. And I believe that it's the policy of the Chinese government that nobody, especially a US tech company, ends up "owning" or "winning" the AI race.
And on the hardware front, China is building their own alternatives as they've been forced to develop EUV/DUV lithography from scratch [1].
I just don't see how OpenAI, Anthropic and SpaceX survive. Then again, Tesla shouldn't survive either but here we are. As they say, the market can remain irrational longer than you can remain solvent.
All orbital data networks are competing against terrestrial wireless, which is much cheaper and faster to expand, and it doesn't deorbit itself in five years because it's run out of maneuvering fuel. Selling space technology into a shrinking TAM takes bravado, or in the case of Amazon, it takes having a business that can carry you if the bet doesn't pay off.
The TAM eventually boils down to whatever floats or flies over the oceans, military customers, and places where the wireless network operator is too feckless to provide coverage to your cottage at the end of 2 miles of driveway.
2. Broadband: $1.6T TAM, split roughly 50-50 between fixed and mobile broadband; and
3. Space: $370B TAM.
In 2025, this resulted in revenue of $18.67B and a loss of $2.6B. Those aren't trillion dollar company numbers.
Now TAM is a bit of a fake number but how it's used and the relative values can reveal useful information.
The first is that space launches do not remotely justify the valuation. It's just not a massive market.
The second is that the company is burning moeny like there's no tomorrow on AI.
Lastly, getting back to your point, I believe that mobile broadband is an interesting opportunity but how big is an open question. You'll still need to comply with regulators in every country you offer service, just like all the mobile telcos do, and I don't know if it's cheaper to build and maintain ground-based towers vs Starlink satellites that have a projected lifespan of 5-6 years. Also, how many do you need? Coverage over Siberia is of limited value. Dense population centers are your primary source of customers.
I believe SpaceX would be a significantly better company if it had stuck to space launches and Starlink. It would be worth a lot less but AI might kill it through all the debt. Of course, Elon needed to do that to rescue his own disastrous Twitter than xAI "investments".
Mind share is the true moat. It doesn't matter if your product is not special if when someone thinks "frontier" and "agentic development" they still think of Claude. They don't think Antigravity or Gemini while Google has also decided to safety max themselves into failing to gain more mind share.
The moat doesn’t exist, at least for models used for coding. I switch to what is cheapest for the task at hand and while Claude was my go to at the start of the year now it’s just in the rotation. There is no friction in switching.
I disagree. I believe these LLMs have already been commoditized.
Consider the primary use case for Anthropic: coding. Well, if you're using Claude Code or some variant, you can easily use OpenRouter to simply use whatever free tokens you can get. You may not even care what LLM you're using under the hood for a given task.
That's simply not a trillion dollar moat.
Can Anthropic jack up the prices? No. There are alternatives. There are open weight models that you can run on cloud platforms and increasingly you can run them locally. Local LLMs are going to be incredibly accessible in 3-5 years. Even now you can run Flash models on something you can buy from Apple. The inference is a lot slower compared to cloud usage but that'll change.
I see the Anthropic IPO as an effort to cash out before it all comes crashing down.
You don't honestly think the software industry alone is large enough to support all the checks Anthropic has been writing, do you? Especially after software devs start to realize how much crufty rot these the agents generate while they aren't looking.
I often find myself thinking “is/was there a better business than google search ads?” A majority of users on the internets eyeballs with insane margins/low capx. While search seems cannibalized by chats, is the outcome just a fundamentally worse business? Can you get better than cheap infra serving ads to a majority of the Internet with an essential monopoly?
It makes me feel a bit cynical to say this: but the strength of advertising as a business smacks to me of the general inequality we find ourselves in.
I’d love to live in a world where creating something of real value to average humans outweighs what advertising has been appraised at - which id describe primarily as offering value to businesses looking to acquire customers. Yes, there is some value offered to those customers by an efficient advertising system, but the lions share of value lives with the businesses here.
I’d look to the brief postwar period where inequality was a bit lower as a great example of an era where massive value was captured by those who invented and produced new goods and services improving the lives of everyday people.
I think advertising has soared in valuation over the last few decades because society and technology have evolved to a point where it is viable for many people to own small businesses with a handful of employees, if any. That has led to an explosion in the number of businesses, mostly concentrated in a few sectors (e.g. fast food), and to differentiate oneself in a crowded market you need ads.
Also even small businesses can reach a global (or at least national) audience, and you can't do that with billboards and flyers in your town.
Digital ads, like it or not, are one of the only ways to reach your total/potential market.
Yeah I’d be interested to read more about the reflection of inequality but I kind of chalked it up to how cheap it is to create and distribute an effective ad on the Internet. Never in history has it ever been so easy or cheap to show someone relatively well targeted ad.
Well the good news is that we keep moving closer to a new postwar period :)
I'm generally anti-advertising but I find Google search advertising to be the least objectionable form of advertising because it can be entirely relevant to what you're searching for.
If I search for "how do I fix a shower that won't drain?" then you will get a mix of results that will include articles, Youtube videos, etc. But also links to plumbers in your area seem entirely relevant to that query, no? I find it strange how many of the most militant anti-advertising purists ignore this completely.
As for creating things of value, there's a problem: housing has become the best performing asset in many developed economies and it is fundamentally parasitic and destructive. As an example, the Reserve Bank of New Zealand analytically created the best-performing portoflio and it was... 100% housing [1].
Demand for housing in many places is inelastic. It enjoys huge tax benefits. And you can leverage it better than most asset classes. Plus it's become a political goal of many governments to have ever-increasing house prices.
So if you want to build a factory that makes widgets that you want to sell, that involves a lot of risks. Why would you when you get a better, easier and safer return from just buying more housing?
If you want a healthier, more equitable economy you absolutely have to decommodify housing. There's simply no other way.
[1]: https://www.rbnz.govt.nz/-/media/fd9fa649c29340d7b9f466ba41b...
ICYMI OP
[dupe] https://news.ycombinator.com/item?id=50307219
I feel even a "high junk" rating for debt issued by an LLM company is far too generous. A bond rated "BB" by S&P would be typical of the safest of the junk bonds. Historically, such bonds have about a 10% risk of default over 10 years: https://investmentgrade.com/bond-ratings/
While I'm willing to believe that Anthropic common stock might somehow be a reasonable investment because it might go "to the moon", it seems obvious that this is a high-risk bet. This is shaping up to be a winner-take-all industry. Does anyone really think there is a 90% chance that Anthropic will be that winner?
If you thought there really was only a 10% chance that they'd fail to be in business in a decade, why wouldn't you just buy their common stock and hope for a 100x return? How do the rating agencies justify this degree of confidence in Anthropic's ability to repay these debts? Or do I somehow misunderstand what these ratings mean?
It's a memestock.
Think about it. Google's latest Gemini AI is just behind Anthropic's best offering -- or, in fact, it may be slightly superior. Google also has dozens of other mature, cash-cow businesses, massive infrastructure, their own hardware accelerators, an army of smart technical staff... and leadership that, for all its faults, isn't a literal cult.
Anthropic has a top-tier LLM among other top-tier LLMs. Claude is great, but not unique. Anthropic has effectively no other assets, many genuine liabilities, a downright bizarre wet-lab venture, and leadership that's... well...
So, the way I see it, either Google is massively undervalued, or Anthropic's IPO is massively overvalued. Am I somehow off base here?
All that seeming advantage, and yet Google are perpetual laggards in the AI race. In enterprise, where the money is, they're third behind Anthropic and OpenAI, despite what should have been a colossal incumbency advantage. They're also inexorably poisoning their own brand and squeezing their primary revenue source with AI Overviews. Truly a masterstroke of value destruction. Search revenue growth has slowed three quarters running, even as query volume hit a five-year high. As for their hardware and infrastructure advantages, those are indeed making them money, because they're selling and renting the chips to Anthropic. I dunno. I've been a fan of Google for years. Maybe they'll successfully pivot to being a hardware company. They're too slow and hamstrung by internal politics to make compelling LLM products.
Opus 5.5 has been noticeably better than other models at coding, is Gemini’s (public) AI that close? And is it cheaper?
I genuinely prefer OpenAI models for coding and building in general. My observation: GPT models are generally better at following the system prompt, tool use, and skill use.
I use Paseo and there is a noticeable difference when GPT-6.1 Sol is driving the orchestrator vs Opus/Sonnet 5.5 driving the orchestrator. Anthropic models ignore the shared system prompt to use the Paseo tools for sub-agents and prefer to use its own native sub-agents. It ignores the skills mentioned in the system prompt, but will use them if I explicitly tell it to in a user prompt or I extra emphasize the instruction in an XML fenced block in the system prompt or CLAUDE.md like <BOOTSTRAP_MUST_EXECUTE_AT_START>
Sometimes, I feel like I have to explicitly prompt Anthropic models to behave the way I want it to (even with system prompts in place with the EXACT instruction). Sometimes it even feels like it's disregarding CLAUDE.md. To me, this makes me feel like it is the less compliant of the two because I constantly have to steer it manually. Anthropic models also feels like they prefer to go lone-wolf. I want my orchestrator to use the other subs (configured with different platforms and models) to evaluate a design; Opus really wants to lone-wolf and solo everything.
That said, I prefer Anthropic models generally only when the task is more open ended and exploratory. The Anthropic models' "mind of their own" benefits here; GPT models tend to be too agreeable; and too eager to agree with any change in direction. But for actual coding once a direction/plan is in place, I would much rather delegate it to GPT (more likely to draw on the harness for context, skills, instructions, and tools -> more consistency).
Anthropic's 1m context window default and shorter cache TTL are also not great in agentic flows where an agent could become idle and then re-activated. Burns tokens very quickly. I have it tuned down to 300k across all models (recommend doing this for multi-agent coding).
The way I use Opus is basically adhering to its training/emergent behavior. Anything else is always worse in some way. Using default harness, mostly letting it do what it wants the way it wants to (as much as possible anyway) and making it work for my own flow.
For sure it's annoying building up so much knowledge about a single product that changes every 6m anyway, but what can you do.
Gemini 4-Argon is very good at coding. I prefer Opus 5.5 -- in large part because I've grown accustomed to Claude Code -- but Argon is undeniably strong.
4-Carbon is, per benchmarks, said to be superior to Opus 5.5 at coding.
At general tasks -- search, medical, interfacing with maps and mail, planning, etc. -- the Google models are already superior.
I also see Google winning this in the end. They have absolutely crazy behavioral data and can exploit much more effectively. Meta is also up there, but Google has production hardware as well as clouds, etc.
Its either AGI, or a robbery beyond behavioral data and the whole internet that can make the AI labs win. I dont even know what such a robbery would look like, would perhaps be just making the most advanced hacking tool and then holding the rest of the world and banks hostage.
Google stock dipped because search traffic is shifting to LLMs. Even if Gemini got a large percentage of that, margins are much worse.
And they'll continue to get worse because anyone can build this tech and play this game now.
The old moats are falling. The old rent seekers are losing their sway.
You love to see it.
Anyone could build a search engine too, and many did, but none could dethrone Google in the end.
Reading tea leaves, the market believes that whomever is first to AGI will reap all the benefits, leaving nothing to the runners-up. In this view, even a tiny edge in model quality is decisive.
I cant believe that the market still thinks LLMs are ever going to result in AGI.
AGI has been prominent in pop culture since at least 1968 with 2001: A Space Odyssey. There is a place in our heads for it. And really I think that's just the modern version of anthropomorphic spirits: angels, devils, gods, etc. It gives AGI a feeling of inevitablility.
Of course, things like jetpacks and flying cars also have had that feeling. As well as Stephenson's metaverse.
I think the current state-of-the-art models are already AGI, by the kind of definitions of AGI that people had a couple decades ago. I could be wrong but I kind of feel like people have started using the term "AGI" to mean "artificial superhuman intelligence".
* results may vary depending on your specific definition of AGI.
I like the way Kevin Roose put it: if you were to bring Astra or Opus 5.5 back to 2017 and show it to the leading AI researchers at the time and ask them if it were a form of AGI what would they say? The goal posts shift too fast to keep up with. Some people still worried about it counting Rs in strawberry as the models are making progress in frontier math and physics.
The goalposts have never shifted if you didn't shift your definition for the oligarchs and kept it stable.
If Opus could autonomously create Fable, and Fable made Mythos, and so on, it would be AGI. The fact that people need to be involved, means it isn't.
The market is not an expert and does not trust experts.
> I cant believe that the market still thinks LLMs are ever going to result in AGI.
"Still"? I mean if someone believed that LLMs would result in AGI, why would he change his opinion? Did something happen? I mean the progress generally exceeded expectations so far so your P(AGI) should increase, not decrease. This rant doesn't apply if you did not believe that LLM can result in AGI from the beginning of course.
"Did something happen?" you really think nothing that happened in the last two years could lead to anyone changing their opinion about whether LLMs will lead to AGI?
Well whatever the next thing after LLMs would be Anthropic would be in the perfect position and have the perfect expertise to train it.
Well they're for sure going to result in something a desperate marketing team is going to call AGI and through persistence through all the laughter will result in a new term being coined like ActualAGI so people can refer to it as separate from "AGI Class Models."
I'm somewhat inclined to give it to them at this point, I mean it's artificial, general in the sense that it can complete tasks it wasn't programmed for, and intelligent enough I guess. I mean if there was a planet with creatures at the level of LLMs we'd probably call it intelligent life—used in that way we're not really implying the creatures are particularly smart. It's as much simulated disembodied intelligence as you could reasonably hope for. I wouldn't at all expect that simulated intelligence: the computer algorithm would have any relation to actual intelligence except at the minimum superficial level needed to complete tasks. With AGI out of the way we would at least have to be more specific on what the sci-fi dream actually entails. The computer from Star Trek is certainly intelligent but you would never say it has a brain or anything close to it.
It's so fascinating that people think that AGI will be winner-take-all. If anything the Chinese labs have shown us is that being first is almost a handicap as everyone can quickly learn from your released models and distil into open weights quite easily. If the competitive environment continues to exist how it is today, there doesn't seem like a trillion dollar market for anyone.
> Reading tea leaves, the market believes that whomever is first to AGI will reap all the benefits, leaving nothing to the runners-up.
If "the market" believes this, I'd love for "the market" to explain to me how they think this works in practice.
Like if Anthropic hits AGI on Monday, what stops Google or OpenAI from hitting AGI on Tuesday?
There is no substantial difference in capabilities between any of these models, they are all doing the tiniest little leapfrogs over each other from release to release.
Even if the market thinks this leads to AGI, there is no reason to believe any secret magic exists that makes one of them reach AGI without the rest hitting AGI nearly immediately after.
Sergey has gone a bit culty. But yeah. There are no moats that can keep out everyone who has built and operated data centers before the AI bubble. For these players, overspending, up to a point, is a defensive move.
The cult definitely has some Jonestown overtones: the singularity is coming so things so mundane as a bond rating are of no concern. One way or the other.
The thing is - Google is fucking terrible. Gemini has nice benchmark but it's unusable, try it. There's a reason why their market share in AI is so small.
as a general rule IPOs are always overvalued...and then theres the hype which is backed by a shrinking set of the raw numbers
I believe Google is the most likely to survive the bubble bursting. They have significant cash flow from other sources and have likely insulated themselves by using SPVs for a lot of their debt. It's true that they've invested a lot of their own cash but they've also rented a lot of GPUs from SpaceX and elsewhere and I think that's probably a good idea.
Additionally, Google is very good at building and managing data centers (including their own networking hardware) and they even have alternatives to NVidia through their longstanding TPU hardware. It can't compete with NVidia's best offerings for sure but it gives them a path to independence.
I believe SpaceX will be merged with Tesla at some point when things turn south. OpenAI? I don't know what their future is. These mega-IPOs just seem like desperate attempts to cash out before it all comes crashing down.
The real problem is that there is no moat. Chinese labs have seen to that. And I believe that it's the policy of the Chinese government that nobody, especially a US tech company, ends up "owning" or "winning" the AI race.
And on the hardware front, China is building their own alternatives as they've been forced to develop EUV/DUV lithography from scratch [1].
I just don't see how OpenAI, Anthropic and SpaceX survive. Then again, Tesla shouldn't survive either but here we are. As they say, the market can remain irrational longer than you can remain solvent.
[1]: https://www.reuters.com/world/china/how-china-built-its-manh...
Anthropic NFTs anyone?
It's not any worse than SPCX, so who knows?
SpaceX has Starlink which has massive margins and is growing quite quickly.
All orbital data networks are competing against terrestrial wireless, which is much cheaper and faster to expand, and it doesn't deorbit itself in five years because it's run out of maneuvering fuel. Selling space technology into a shrinking TAM takes bravado, or in the case of Amazon, it takes having a business that can carry you if the bet doesn't pay off.
The TAM eventually boils down to whatever floats or flies over the oceans, military customers, and places where the wireless network operator is too feckless to provide coverage to your cottage at the end of 2 miles of driveway.
SpaceX's S-1 listed 3 market opportunities [1]:
1. AI. $26T total addressable market ("TAM");
2. Broadband: $1.6T TAM, split roughly 50-50 between fixed and mobile broadband; and
3. Space: $370B TAM.
In 2025, this resulted in revenue of $18.67B and a loss of $2.6B. Those aren't trillion dollar company numbers.
Now TAM is a bit of a fake number but how it's used and the relative values can reveal useful information.
The first is that space launches do not remotely justify the valuation. It's just not a massive market.
The second is that the company is burning moeny like there's no tomorrow on AI.
Lastly, getting back to your point, I believe that mobile broadband is an interesting opportunity but how big is an open question. You'll still need to comply with regulators in every country you offer service, just like all the mobile telcos do, and I don't know if it's cheaper to build and maintain ground-based towers vs Starlink satellites that have a projected lifespan of 5-6 years. Also, how many do you need? Coverage over Siberia is of limited value. Dense population centers are your primary source of customers.
I believe SpaceX would be a significantly better company if it had stuck to space launches and Starlink. It would be worth a lot less but AI might kill it through all the debt. Of course, Elon needed to do that to rescue his own disastrous Twitter than xAI "investments".
[1]: https://microventures.com/dissecting-spacex-s-1
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Mind share is the true moat. It doesn't matter if your product is not special if when someone thinks "frontier" and "agentic development" they still think of Claude. They don't think Antigravity or Gemini while Google has also decided to safety max themselves into failing to gain more mind share.
The moat doesn’t exist, at least for models used for coding. I switch to what is cheapest for the task at hand and while Claude was my go to at the start of the year now it’s just in the rotation. There is no friction in switching.
I disagree. I believe these LLMs have already been commoditized.
Consider the primary use case for Anthropic: coding. Well, if you're using Claude Code or some variant, you can easily use OpenRouter to simply use whatever free tokens you can get. You may not even care what LLM you're using under the hood for a given task.
That's simply not a trillion dollar moat.
Can Anthropic jack up the prices? No. There are alternatives. There are open weight models that you can run on cloud platforms and increasingly you can run them locally. Local LLMs are going to be incredibly accessible in 3-5 years. Even now you can run Flash models on something you can buy from Apple. The inference is a lot slower compared to cloud usage but that'll change.
I see the Anthropic IPO as an effort to cash out before it all comes crashing down.
You don't honestly think the software industry alone is large enough to support all the checks Anthropic has been writing, do you? Especially after software devs start to realize how much crufty rot these the agents generate while they aren't looking.
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