I'm not convinced that 2026 was peak of the AI hype cycle.
Arguments are being made that, with the midterms over and 2028 just around the corner, a less sympathetic administration would create significant headwinds, adjusting the valuation of Anthropic and OpenAI down.
What we don't know are what Anthropic and OpenAI have planned and in the works.
A large population of extremely skilled and talented people are being laid off by their employers to make space for AI investments. It's likely a significant number of them will start their own business with AI.
AI is also gaining a much wider audience and acceptance. It's likely over the next few years, AI demand will grow, not stagnate.
That said, IPOs are usually liquidity events for LPs and for something really disruptive and unpredictable as AI, I won't be engaging in their IPOs. Only time will tell if this was a good decision, or bad.
The major counterpoint here is commoditization; you may have the market growing and models becoming cheaper at the same time. And we don't even have to look to Chinese models for that, as OpenAI has been adjusting its pricing already. For profitability, Anthropic still seems to be pretty dependent on its current price levels.
That said, I'm also somewhat skeptical that there is even much room for growth left unless somebody finds a new, important, and token-hungry use case.
Anthropic's original $2T valuation implies they are going to almost 100X their revenue.
I am highly confident that Anthropic will 100X their token sales volume. I am also confident that token prices will continue dropping through the floor due to competition. So to 100X their revenue they will have to 1000X or 10000X their token sales. That seems a stretch.
Somewhat ironically it would appear most CEOs believe the only jobs AI is replacing are developers since they built an app last weekend. Every CEO is saying why do we have so many devs and why are we paying them so much⌠so devs blew up the market for devs but beyond that there doesnât seem to be much impact.
It certainly isn't the peak of the AI hype cycle. Eventually something will surpass LLMs and the hype will start all over again. Will it really be the final invention this time? Place your bets!
Only popular with companies that want to make a quick buck and tech people (hey! that's me!).
You really don't know what we have here, do you? Let me illustrate what you can do with Qwen3.8@q4 locally with about 2TB of storage and a small cloud server to host a website.
Locally you scrape and process every elected official and start tracking what they're doing, what they're promising, and what they're not doing. You build embeddings and make them all geotagged in a database and just start with the largest cities.
The website provides public facing search. User drops in a zipcode, city, state, specific rep's name and gets what's relevant to their results.
All of this is to say, we literally have the technology to hold accountable our representatives and then show everyone objectively who's doing good and bad for their constituents.
It wont take much to solve the problem of bad representation after these last two years. The hard part is literally making sure people going to a polling station can immediately know who the heck the 10 - 30 different people are they're voting for, and track them efficiently within their own specific parameters.
Regulation is coming for more than just the inference providers.
Tulips, Railroads, and the Internet also didn't go away when the financial bubble around them burst. That doesn't mean there wasn't a massive market correction in response to the over-investment.
> Tulips, Railroads, and the Internet also didn't go away when the financial bubble around them burst. That doesn't mean there wasn't a massive market correction in response to the over-investment.
Your Railroads and the Internet parallels are so very apt. We certainly are very productive even in 2026 off those but almost no one remembers how many large behemoths were wiped out in the U.S. because of them.
Yes, it does seem to me that the AI of 2026 will be like the Railroads and the Internet - fundamentally transformative technology that changes how things are done into the future but there will be blood in the short term, which is why I would not be participating in the IPOs directly
There's a beautiful tulip garden just down the street from me, and an outdoor weekly market where tulip bulbs are sold. Tulips are very much still around, I assure you.
I don't mean went extinct. I mean the idea that tulips could be an asset class is now laughable, which is not true of the other two. The impact of the tulip industry on GDP is utterly imperceptible.
Yes, that's my entire point. There was also a railroad hype cycle and an internet hype cycle that took in massive amounts of overinvestment, and all three things remained as regular things in the economy with bigger or smaller roles after the hype cycles ended.
As high as $1.1T. Where is the supposed growth going to come from?
Claude has been pushed by force and coercive marketing into most software organizations and many open source projects. In 2026 the companies buying the narrative were exuberant and told employees to tokenmaxx.
This will stop in 2027 because companies will find out that nothing has improved. Nothing at all. They'll evaluate the expenditures.
So the market is saturated and usage is going down. Anthropic should be valued at $200 billion at best.
When you sell people 6 quarters for $1 they tend to buy a lot. Useage is a poor metric here given the capital intensive nature of this business. What matters is can they do this in a way that makes money to the degree that justifies the valuation, and there they have not yet demonstrated this is possible.
The internal metric that they are using is they get $2 for every $1 in inference. So, if you discount model development costs, they are selling the tokens for more than it costs them to generate a token. And this is before they start integrating their advertisment networks into the model. They see something as high as $8-11 per $1 of inference once purchasing and advertisments are incorporated.
The âbut adsâ logic fails basic sense checks. There isnât enough ad money to go around to make up the gaps. With the big ad players like Google, Meta, and Amazon all shutting Anthropic out of their ecosystem thereâs very little evidence that Anthropic can steal away enough of that as revenue to save itself.
In the âbut theyâll slow down training and so will become more profitableâ thinking is in big trouble given the pace of open models. Theyâll then be even less competitive with free options and so even less reason to buy from Anthropic.
I introduced it at our admittedly small company not because of coercive marketing or force of any kind. I did it because rolling new stuff out takes days instead of months. Not only that but we can make products above our previous level.
Unsafe, comprehension debt, vibecoding, slop? Have you seen actual lowly developersâ code? AI is a vast, vast improvement on all relevant axes if you ask me.
If you think this is going to slow down I have no idea what to tell you.
can someone explain to me the point of the 'initial valuation', considering ultimately the price will settle lated thorugh trading to perceived value anyway ?
The initial buyers of the shares sold by Anthropic are institutional investors (mostly). That matching process is done by an investment bank they hire.
The trading price you see on the screen is - shortly afterwards the shares become publicly tradable on the exchange (or on all US equities exchanges, for US stocks). So in effect, the price shooting up on the public markets is actually bad for the company in that they might have left money on the table.
Sort of. IPOs are always undervalued because the entire block of shares gets purchased by the investment bank at the banks decided IPO price but then bears the risk of selling them at or above that price.
Validation is all about assets and future earning potential. Anthropicâs core assets are a model which is shown every day now to be only marginally better than something thatâs free. So that asset appears to have very little value. Their future earning potential depends on folks not figuring out they can get a good-enough result for free, only paying for compute. And Anthropic doesnât own compute, they rent it.
So the whole valuation is based on the idea that folks will happily pay this company a huge markup for inference over the actual cost of compute for a model whose valuation is rapidly tending to zero. Hence why potential investors are starting to freak out.
> Anthropic sells intelligence, and the most intelligent intelligence.
Most intelligent is a stretch, we don't know how the Chinese architectures would fare if they had the same compute availability as Anthropic and other US labs.
If we extrapolate and consider that they are behind due to artificial export restrictions, once they figure out how to build their own GPUs in a cost-effective/scaled-up way then the American labs' claim of having the best intelligence is at an enormous risk.
They already do a great job being resource constrained, imagine once this constraint is gone!
I mainly doubt the moat, not necessarily the usefulness. Why will customers stay with anthropic? Many cheaper models seem to catch up within 6-12 months, and thereâs also other flagship providers that keep pace and compete on cost (oai, Google). Why should I believe that anthropicâs revenue is going to stay consistent, and not evaporate to other competitors?
It keeps dropping. Was 2T, then 1.5T last week, now looking like they might be lucky to get 1T.
I wouldnât be surprised if Anthropic delays the IPO in hopes this will all magically sort itself out but as every day passes it looks like they should have gone public this summer when things were still on the up.
Realistically the company is worth in the hundreds of billions but if it goes below 1.1T or so existing investors will need to start booking losses and that will trigger a shitstorm of other issues downstream.
This is all becoming a textbook case of folks know these assets arenât worth what folks want them to be, but they can keep the game going so long as nobody actually marks the asset at its actual realistic valuation.
So thatâs the game underway now. How low can they go without blowing up the whole AI ecosystem. If the valuations here drop next the AI bonds and private loans start to fail en-mass and the whole thing that built up this house of cards starts falling apart in reverse. Get ready for a bumpy ride folks.
potential buyers are discussing about a $1.2 trillion to $1.3 trillion valuation range for the company, according to people familiar with the matter. Some are weighing a value as low as $1.1 trillion
OAI is in the middle of another funding round at $1.25T. If Anthropic with allegedly better financials can't get above $1.1T then why would anyone buy OAI at $1.25T
Well theyâre struggling to raise cash via new rounds, having slashed both the raise amount and valuation themselves. So in that situation they may go bust before having a chance to go public.
Same thing I was going to type! I think theyâre just testing these to see the reaction. Like a reverse auction while OpenAI watches in terror.
I want to see this go out at $800b. I do not believe even $1T will be supported by public markets unless they shrink the float â but that also comes with its own risks.
I'm not convinced that 2026 was peak of the AI hype cycle.
Arguments are being made that, with the midterms over and 2028 just around the corner, a less sympathetic administration would create significant headwinds, adjusting the valuation of Anthropic and OpenAI down.
What we don't know are what Anthropic and OpenAI have planned and in the works.
A large population of extremely skilled and talented people are being laid off by their employers to make space for AI investments. It's likely a significant number of them will start their own business with AI.
AI is also gaining a much wider audience and acceptance. It's likely over the next few years, AI demand will grow, not stagnate.
That said, IPOs are usually liquidity events for LPs and for something really disruptive and unpredictable as AI, I won't be engaging in their IPOs. Only time will tell if this was a good decision, or bad.
At a minimum we should continue to see smarter and more efficient models in 2027.
If datacenter production sees significant headwind then itâs very bad for ANT. Securing compute is listed as one of their major risks to the SEC.
The major counterpoint here is commoditization; you may have the market growing and models becoming cheaper at the same time. And we don't even have to look to Chinese models for that, as OpenAI has been adjusting its pricing already. For profitability, Anthropic still seems to be pretty dependent on its current price levels.
That said, I'm also somewhat skeptical that there is even much room for growth left unless somebody finds a new, important, and token-hungry use case.
Anthropic's original $2T valuation implies they are going to almost 100X their revenue.
I am highly confident that Anthropic will 100X their token sales volume. I am also confident that token prices will continue dropping through the floor due to competition. So to 100X their revenue they will have to 1000X or 10000X their token sales. That seems a stretch.
> A large population of extremely skilled and talented people are being laid off by their employers to make space for AI investments.
Outside of programming and a couple of other sectors Iâm not sure that is true. It isnât visible in the unemployment figures.
> Outside of programming and a couple of other sectors Iâm not sure that is true. It isnât visible in the unemployment figures.
The unemployment figures is mostly a political projection, like CPI.
In 2026 everything fron sewage to chickens to oil to education is now tied to AI. The entire economy is now, for good or bad tied to AI.
What most people either didn't notice or understand is that the U.S. was entering a recession and would have been in one if it hadn't been AI
Somewhat ironically it would appear most CEOs believe the only jobs AI is replacing are developers since they built an app last weekend. Every CEO is saying why do we have so many devs and why are we paying them so much⌠so devs blew up the market for devs but beyond that there doesnât seem to be much impact.
It certainly isn't the peak of the AI hype cycle. Eventually something will surpass LLMs and the hype will start all over again. Will it really be the final invention this time? Place your bets!
Only popular with companies that want to make a quick buck and tech people (hey! that's me!).
You really don't know what we have here, do you? Let me illustrate what you can do with Qwen3.8@q4 locally with about 2TB of storage and a small cloud server to host a website.
Locally you scrape and process every elected official and start tracking what they're doing, what they're promising, and what they're not doing. You build embeddings and make them all geotagged in a database and just start with the largest cities.
The website provides public facing search. User drops in a zipcode, city, state, specific rep's name and gets what's relevant to their results.
All of this is to say, we literally have the technology to hold accountable our representatives and then show everyone objectively who's doing good and bad for their constituents.
It wont take much to solve the problem of bad representation after these last two years. The hard part is literally making sure people going to a polling station can immediately know who the heck the 10 - 30 different people are they're voting for, and track them efficiently within their own specific parameters.
Regulation is coming for more than just the inference providers.
Got a website for this? A politician leaderboard sounds like it could do some good, even with Goodhartâs law.
Tulips, Railroads, and the Internet also didn't go away when the financial bubble around them burst. That doesn't mean there wasn't a massive market correction in response to the over-investment.
> Tulips, Railroads, and the Internet also didn't go away when the financial bubble around them burst. That doesn't mean there wasn't a massive market correction in response to the over-investment.
Your Railroads and the Internet parallels are so very apt. We certainly are very productive even in 2026 off those but almost no one remembers how many large behemoths were wiped out in the U.S. because of them.
Yes, it does seem to me that the AI of 2026 will be like the Railroads and the Internet - fundamentally transformative technology that changes how things are done into the future but there will be blood in the short term, which is why I would not be participating in the IPOs directly
Tulips kinda did go away
I don't believe they literally meant Tulips but rather its hype cycle. I commented on the other two that can be taken literally
There's a beautiful tulip garden just down the street from me, and an outdoor weekly market where tulip bulbs are sold. Tulips are very much still around, I assure you.
I don't mean went extinct. I mean the idea that tulips could be an asset class is now laughable, which is not true of the other two. The impact of the tulip industry on GDP is utterly imperceptible.
I think bloppe was talking about the Tulip hype cycle that took out many generations.
Yes, that's my entire point. There was also a railroad hype cycle and an internet hype cycle that took in massive amounts of overinvestment, and all three things remained as regular things in the economy with bigger or smaller roles after the hype cycles ended.
See https://en.wikipedia.org/wiki/Railway_Mania and https://en.wikipedia.org/wiki/Pets.com for some info on the other hype cycles I mentioned.
As high as $1.1T. Where is the supposed growth going to come from?
Claude has been pushed by force and coercive marketing into most software organizations and many open source projects. In 2026 the companies buying the narrative were exuberant and told employees to tokenmaxx.
This will stop in 2027 because companies will find out that nothing has improved. Nothing at all. They'll evaluate the expenditures.
So the market is saturated and usage is going down. Anthropic should be valued at $200 billion at best.
Usage is not going down. Take a look at their published revenue, it has a nice hockey stick shape.
Iâm not making a bigger argument other than I disagree with that one datapoint you mentioned.
When you sell people 6 quarters for $1 they tend to buy a lot. Useage is a poor metric here given the capital intensive nature of this business. What matters is can they do this in a way that makes money to the degree that justifies the valuation, and there they have not yet demonstrated this is possible.
The internal metric that they are using is they get $2 for every $1 in inference. So, if you discount model development costs, they are selling the tokens for more than it costs them to generate a token. And this is before they start integrating their advertisment networks into the model. They see something as high as $8-11 per $1 of inference once purchasing and advertisments are incorporated.
The âbut adsâ logic fails basic sense checks. There isnât enough ad money to go around to make up the gaps. With the big ad players like Google, Meta, and Amazon all shutting Anthropic out of their ecosystem thereâs very little evidence that Anthropic can steal away enough of that as revenue to save itself.
In the âbut theyâll slow down training and so will become more profitableâ thinking is in big trouble given the pace of open models. Theyâll then be even less competitive with free options and so even less reason to buy from Anthropic.
usage may shift to models run locally, albeit trained by the frontier labs, increasingly over time, though.
A floppy hockey stick.
Revenue growth q2 to q3 was significantly lower percentage wise than q1 to q2 and they swung back to net loss.
Yeah, the hockey stick is flipped in the wrong direction if you're looking at the past 4 months, plateauing after steady gains.
I introduced it at our admittedly small company not because of coercive marketing or force of any kind. I did it because rolling new stuff out takes days instead of months. Not only that but we can make products above our previous level.
Unsafe, comprehension debt, vibecoding, slop? Have you seen actual lowly developersâ code? AI is a vast, vast improvement on all relevant axes if you ask me.
If you think this is going to slow down I have no idea what to tell you.
can someone explain to me the point of the 'initial valuation', considering ultimately the price will settle lated thorugh trading to perceived value anyway ?
The initial buyers of the shares sold by Anthropic are institutional investors (mostly). That matching process is done by an investment bank they hire.
The trading price you see on the screen is - shortly afterwards the shares become publicly tradable on the exchange (or on all US equities exchanges, for US stocks). So in effect, the price shooting up on the public markets is actually bad for the company in that they might have left money on the table.
Sort of. IPOs are always undervalued because the entire block of shares gets purchased by the investment bank at the banks decided IPO price but then bears the risk of selling them at or above that price.
The price those that buy the IPO get before it starts trading publicly.
E.g. SpaceX is currently trading below its IPO price. If you became a shareholder by buying at IPO and held your have lost money as of today.
The price will settle, but it has to start somewhere.
Well obviously Anthropic as the one offering the shares would care about how much they sell them for.
They made a typo, it's more like $11B
Some benchmarks to compare against:
Apple: 5 T
Google: 3.5 T
Meta: 1.55 T
Microsoft: 3.97 T
Berkshire Hathaway: 1.2 T
Eli Lilly: 1.28 T
Tesla: 1.38 T
Walmart: 1 T
Spotify: 125 billion
Anthropic sells intelligence, and the most intelligent intelligence.
Honestly crazy that weâre doubting 1T, even with all the capital issues behind it.
Validation is all about assets and future earning potential. Anthropicâs core assets are a model which is shown every day now to be only marginally better than something thatâs free. So that asset appears to have very little value. Their future earning potential depends on folks not figuring out they can get a good-enough result for free, only paying for compute. And Anthropic doesnât own compute, they rent it.
So the whole valuation is based on the idea that folks will happily pay this company a huge markup for inference over the actual cost of compute for a model whose valuation is rapidly tending to zero. Hence why potential investors are starting to freak out.
> Anthropic sells intelligence, and the most intelligent intelligence.
Most intelligent is a stretch, we don't know how the Chinese architectures would fare if they had the same compute availability as Anthropic and other US labs.
If we extrapolate and consider that they are behind due to artificial export restrictions, once they figure out how to build their own GPUs in a cost-effective/scaled-up way then the American labs' claim of having the best intelligence is at an enormous risk.
They already do a great job being resource constrained, imagine once this constraint is gone!
I mainly doubt the moat, not necessarily the usefulness. Why will customers stay with anthropic? Many cheaper models seem to catch up within 6-12 months, and thereâs also other flagship providers that keep pace and compete on cost (oai, Google). Why should I believe that anthropicâs revenue is going to stay consistent, and not evaporate to other competitors?
This is a very competitive market. You can't command fat margins in a very competitive market.
Huh? If a Chinese open weights model comes out that is nearly as good, the valuation drops to very little.
Related:
Major Investors Are Skeptical Anthropic IPO Can Achieve $1.5T Valuation
https://news.ycombinator.com/item?id=50386597
It keeps dropping. Was 2T, then 1.5T last week, now looking like they might be lucky to get 1T.
I wouldnât be surprised if Anthropic delays the IPO in hopes this will all magically sort itself out but as every day passes it looks like they should have gone public this summer when things were still on the up.
Realistically the company is worth in the hundreds of billions but if it goes below 1.1T or so existing investors will need to start booking losses and that will trigger a shitstorm of other issues downstream.
This is all becoming a textbook case of folks know these assets arenât worth what folks want them to be, but they can keep the game going so long as nobody actually marks the asset at its actual realistic valuation.
So thatâs the game underway now. How low can they go without blowing up the whole AI ecosystem. If the valuations here drop next the AI bonds and private loans start to fail en-mass and the whole thing that built up this house of cards starts falling apart in reverse. Get ready for a bumpy ride folks.
Get your tickets to Layoffpalooza 2027 now!
Has already started with companies offering buyouts.
I fire U, electric boogaloo.
Gotta give it to OAI for waiting. They smelled it.
OAI is in the middle of another funding round at $1.25T. If Anthropic with allegedly better financials can't get above $1.1T then why would anyone buy OAI at $1.25T
Well theyâre struggling to raise cash via new rounds, having slashed both the raise amount and valuation themselves. So in that situation they may go bust before having a chance to go public.
Is waiting better? Surely it would be better to be early, before faith is lost? I think being late to a party as itâs deflating is the worst case
Still overvalued.
Same thing I was going to type! I think theyâre just testing these to see the reaction. Like a reverse auction while OpenAI watches in terror.
I want to see this go out at $800b. I do not believe even $1T will be supported by public markets unless they shrink the float â but that also comes with its own risks.
Iâm angling for it to go out at $250b.
At $250b it would be an acquisition target.
I think thatâd be appropriate.
But we're so close to RSI!
A lot of people have had it for decades. It really hurts.