Its impressive how sceptical people are given this! Never in history have we seen anything that just barely compares to AI in terms of revenue growth https://t.co/89SXeNZY5X
OK, this looks more like proper capitulation
WHY ON EARTH ARE WE TALKING ABOUT THE DEFAULT RISK OF ANTHROPIC? A prediction market is taking real money on an Anthropic bankruptcy by 2028. Look at the balance sheet before you take the other side. Anthropic holds $112bn of cash and cash equivalents plus $19bn of short-term investments, $132bn in all. That is the third-largest pile in corporate America, behind Berkshire and Alphabet, ahead of Amazon, SpaceX, Meta and Microsoft. Two things about that cash that nobody has priced. First, it earns. $132bn at a 4% bill yield is roughly $5bn a year of interest income, and that is before anyone counts a token of revenue. The company turned an operating profit of $974m in Q2. Add the yield on the cash and the cash-flow-positive story is not even close; it was already there, and the income on the pile was never part of the calculation. Second, the burn. Over its entire lifetime Anthropic has burned under $13bn of cash, less than a tenth of what it holds today, and the worst year was 2025. So let me make the burn timeline, in a risk scenario, for the people on the other side of that contract. At the Q2 run-rate the pile does not fall at all. At $25bn a year, twice the worst year so far, the cash lasts to 2031. At $50bn a year, four times the worst year, it lasts to 2029. At $100bn a year, the entire compute bill with zero revenue, it lasts past 2027. And in all of this, we haven't even considered that they are about to raise even MORE cash.. The credit/default risk panic around AI is absolutely hysterical.
Who cares? They have already seen the liquidity impact now. Free cash flows will look great in 2029. You don’t go bankrupt on a non cash line…
Every single GPU bought since 2021 has far outrun its depreciation cost, and it remains the case by miles. And yet, it’s the only thing I hear all the time: “Whatabout the depreciation risks?”
When I see people charting the CDS of Microsoft and Amazon, I unfollow. Do you guys seriously think they will bankrupt themselves on AI?
Remember not to mistake a leverage event for a change of fundamentals. The biggest onslaught I can remember among Macro HFs through my career. This shall (too) pass https://t.co/3hD7jaWZGX
META was the first harbinger The big ones are NOT going to scale down on CapEx
This looks like a fade to me. Key battle ground