Anthropic didn't lose $80B. Some complex securities tied to their stock went up in value by $72B, which they have to count as a loss, even though it's not cash out the door.
As far as Google's mark to market profit on Anthropic shares, everyone realizes that's not a sustainable source of income. Which is probably one reason why it's trading at about 15 times profits. If you back out the $99B of (unrealized) equity gains in anthropic and others, Google is trading at 25 times the last 12m earnings.
People should really look at cash flow statements instead of just earnings. Anthropic published one and their cash flow was positive for the first half of this year.
That doesn't mean all the circular financing won't be a problem, but people keep drawing the wrong conclusions from the negative earnings, which are relevant to investors but not so much to the viability of the business.
Wasn’t that also influenced by their discounted compute with SpaceX? I was under the impression the cash flow positive news was highly dependent on a lot of limited-time discounting that wouldn’t last.
What I don't understand about the circular financing is how does it not violate antitrust? All these supposed rivals own huge stakes in each other. Are they really competitors?
Keiretsu - perfectly acceptable business relationship preferences that in no way require governments to regulate their GDP growth / campaign donation black box machine.
Strange how you complain about this for circular flows when of course the GOAT of circular flows is the money system itself
govt prints money (FED) -> government -> banks -> (economy) -> tax -> government
And the second "great circle"
govt loans money (FED) (money that doesn't exist, which isn't a problem if you can print money) -> banks -> (economy) -> loan repayment -> money gets "unprinted"/destroyed
Everything about the economy is a great circle. You will also understand after a while, if you wish for the economy to remain stable, this must be the case. You can't change it without either hyperinflation and extreme "capital flight" (between quotes because of course in that circumstances capital will run into gold or other physical resources), by either vastly overheating or stopping the economy.
And yes, most instances are of the overheating kind. The only case of stopping the economy was accidental (despite many warnings), in other words, yes, it was Republicans. But last time that happened, even republicans could decide to change course. Of course, only once huge damage was done.
Way more people complain about this too, if you pay attention to all the US inflation and national debt anxieties. It’s clearly unsustainable and driving interest rates up steadily.
People complain about the imbalance between economy supply and economy demand leading to inflation and debt concerns.
The complaint isn’t that the economy is “circular”, how else could it work with 3 or more people engaged in commerce? Neither of those things get fixed on different ways to manage the money supply either, it’s not as if they didn’t have national debts or inflation while on the gold standard.
people should look at dividends rather than anything else; but the people who matter at these scales are just dick measuring and don't care about anything to do with the actual economics of the system.
The tech blowout had little to do with Anthropic's filing.
The numbers from multiple companies show a high CapEx investment in a product that has yet to be proven as profitable as the very things it is hurting (i.e. ads). End of story.
Didnt it start with Korean stocks first? It feels like a wave, it hits there first then the US tech stocks. Korea index has stabilized for a few days now, but hasn't recovered what it lost.
It doesn’t help Google to create an AI-powered business which turns $1B in profit annually if it results in them losing a search/ads business which turns $5B in profit annually.
The CapEx spend for AI not only makes AI itself more expensive (and thus less profitable), it’s now driving everything else in technology to be more expensive (and thus less profitable).
AI is a profitability tax on the entire tech sector and it remains unclear if the profit AI will deliver is going to be worth that.
I would say they should slow down on build-out to balance supplier/labor availability with available cash flows, but I suspect all the Big Tech companies are worried about falling behind the other and being put in the position to need to rent out compute.
> Last year, for instance, Anthropic lost $80 billion, and Amazon had negative $42 billion free cash flow. The entire big tech complex, it seems, has moved from minting cash to burning it. And investors are, well, not panicking exactly, but wondering if the bubble is ending
Is this really the quality of such newsletters? I’m not asking rhetorically because I’d like to also have trustable sources to understand the underlying reality. I actually spent time understanding this part and the 80B dollar loss thing is completely misrepresented here (also went viral in other media).
"The shift in politics is even starker. In the 2010s and early 2020s, big tech was well-liked by most people. But AI is absolutely loathed by the public. These companies have never faced real public dissatisfaction, they all imagine themselves to be the good guys, with the credibility of having created magical search engines and smartphones. But that era is gone. They are now akin to the bankers on Wall Street in 2008, and politicians are winning elections by saying they hate AI as much as the voters do."
Yeah I see this too. That we're not innovating any more also doesn't help make our industry look good
You can't claim that the tech industry isn't innovating. You can say that innovation effort has shifted away from many things that still need it. The issue I have is that the companies and products are so large and complex that they are extremely difficult to compete with.
I'm in agreement with the general point but was big tech well liked in the early 2020s?
Facebook scandals had exploded already, Google had already long abandoned "don't be evil", nobody ever liked Microsoft, and I think sentiment towards Apple is somewhat unchanged.
Tech at least in my eyes peaked around 2018-19. That also coincided with the first more mainstream public-aware introduction of vision and NLP systems into tech products. A few years later it all went downhill for the tech companies.
In 2014 I moved from London to SF to start a big tech job. In my first day there I accidentally wondered into a massive rally, I asked one of the participants what it was about and they said they were protesting all these foreign tech workers coming to SF. It felt a bit weird to end up in the middle of an ‘anti-me’ rally - especially one so passionate and energetic. A few protesters pressed me on where I was from and what I do, I lied and told them I was an investment banker. They told me that they suppose that was ok. I specifically told them that because not long ago it was finance being the target of protests and I curious to see if they had somehow moved on - if this was a principled stance or if it was being astroturfed.
These protests ended up getting pretty violent, people were throwing rocks through bus windows, throwing up on cars.
Don’t worry I didn’t stay long. I loved the Bay Area but did not like SF all that much.
I believe some of the busses were occupied when they were attacked and the lack of injuries was largely due to good fortune. I could believe a claim that this was done by false flag agitators intent on undermining the protests.
was that change organic, though? every single shitrag went berserk about AI once the so-called journalists had realized they were about to lose their jobs to it.
I think there is a massive selection criteria bias, AI has been a batshit insane productivity boost for me but I’ve been so busy with it that I’ve generally stopped posting online - I only do so now because I’m out of quota. I no longer see any point in arguing with people - I’ve got better things to do, like argue with AI. I used to scour the Earth looking for smart people to talk to and now I don’t even have to leave my apartment.
People are being led around by the nose. Cui bono? 2000 years and most people still can't manage to ask that question reflexively. AI hate is a parochial narrative being pushed by people who stand to lose influence. Examined objectively, there are reasons to be cautious when adopting AI tools but a knee-jerk rejection of everything AI is a purely irrational response that has been drilled into people through repetition, conformity and media influence.
Tech companies were never the "good guys" any more than they are the "bad guys" now. Those are just colored filters thrown in front of the lime light to shift your perception. As soon as tech or AI works to their benefit then suddenly they'll be the good guys again and no one will care they were the bad guys before. People just go where the algo leads them, believe what their influencers believe, think what their peers think.
People hate AI because culture is being turned into slop in front of our very eyes. There's clear evidence that people collectively reject:
1. AI games
2. AI Art
3. AI Music
4. AI literature in most forms, except for factual text like search
Or at least, they won't pay money for it
AI hatred isn't being pushed by people with a narrative. I can't use AI for my game, because it'll sell £0 if I do. That's the net result of millions of other people telling me that they despise AI and won't purchase my product if it contains any AI, and I'm just making a business decision
Also google and some other big tech companies were widely loved for a while. Microsoft/gates managed to entirely rehabilitate their image at one point, and google was seen as one of the good guys. Those days died with the cambridge analytica scandal, and there's no evidence its coming back
And why do those millions of other people have that opinion? Have they arrived at it of their own accord?
Yes, you can create garbage with AI tools. You can create garbage using Blender, Unreal Engine, Unity, GIMP, Ableton, iMovie and Word as well and there are mountains of garbage created with those tools that nobody pays for or likes. If you have some talent and put the same effort into creating art with AI that you do with a digital paint program then it won't be garbage. AI isn't a magic wand that you can wave around and get perfect results, it can save you time just like using an image editor saves you a lot of time compared to drawing and painting by hand but it won't do all of the work for you. It's a tool and a poor craftsman that blames his tools for his failure.
My point exactly that big tech was loved for a while and then hated and then loved again and hated again. Have they truly changed that much that often or is it your perception that has changed?
Anthropic didn't lose $80B. Some complex securities tied to their stock went up in value by $72B, which they have to count as a loss, even though it's not cash out the door.
As far as Google's mark to market profit on Anthropic shares, everyone realizes that's not a sustainable source of income. Which is probably one reason why it's trading at about 15 times profits. If you back out the $99B of (unrealized) equity gains in anthropic and others, Google is trading at 25 times the last 12m earnings.
People should really look at cash flow statements instead of just earnings. Anthropic published one and their cash flow was positive for the first half of this year.
That doesn't mean all the circular financing won't be a problem, but people keep drawing the wrong conclusions from the negative earnings, which are relevant to investors but not so much to the viability of the business.
Wasn’t that also influenced by their discounted compute with SpaceX? I was under the impression the cash flow positive news was highly dependent on a lot of limited-time discounting that wouldn’t last.
The data published in their S1 says they took a $693M operational loss in the first half of this year.
Re: positive Cashflow
Was that the one where they removed a bunch of big positions to make it positive (was it training cost, I forgot)?
What I don't understand about the circular financing is how does it not violate antitrust? All these supposed rivals own huge stakes in each other. Are they really competitors?
Zaibatsu - Clearly antitrust.
Keiretsu - perfectly acceptable business relationship preferences that in no way require governments to regulate their GDP growth / campaign donation black box machine.
The entire economy relies on circular flows. That’s why we look at something called “net profit”.
This made me chuckle, thanks.
[dead]
Well rules stopped mattering to BigCo many hears ago
Strange how you complain about this for circular flows when of course the GOAT of circular flows is the money system itself
govt prints money (FED) -> government -> banks -> (economy) -> tax -> government
And the second "great circle"
govt loans money (FED) (money that doesn't exist, which isn't a problem if you can print money) -> banks -> (economy) -> loan repayment -> money gets "unprinted"/destroyed
Everything about the economy is a great circle. You will also understand after a while, if you wish for the economy to remain stable, this must be the case. You can't change it without either hyperinflation and extreme "capital flight" (between quotes because of course in that circumstances capital will run into gold or other physical resources), by either vastly overheating or stopping the economy.
And yes, most instances are of the overheating kind. The only case of stopping the economy was accidental (despite many warnings), in other words, yes, it was Republicans. But last time that happened, even republicans could decide to change course. Of course, only once huge damage was done.
Way more people complain about this too, if you pay attention to all the US inflation and national debt anxieties. It’s clearly unsustainable and driving interest rates up steadily.
People complain about the imbalance between economy supply and economy demand leading to inflation and debt concerns.
The complaint isn’t that the economy is “circular”, how else could it work with 3 or more people engaged in commerce? Neither of those things get fixed on different ways to manage the money supply either, it’s not as if they didn’t have national debts or inflation while on the gold standard.
Government doesn't print money. FED is a private institution.
Every FED governor is appointed by POTUS.
people should look at dividends rather than anything else; but the people who matter at these scales are just dick measuring and don't care about anything to do with the actual economics of the system.
The tech blowout had little to do with Anthropic's filing.
The numbers from multiple companies show a high CapEx investment in a product that has yet to be proven as profitable as the very things it is hurting (i.e. ads). End of story.
Didnt it start with Korean stocks first? It feels like a wave, it hits there first then the US tech stocks. Korea index has stabilized for a few days now, but hasn't recovered what it lost.
The filing showed that it was profitable. The biggest expenses were because the stock valuation of Anthropic went really high.
I asked this to ChatGPT “if anthropics valuation didn’t rise and stayed at 200B what would their profit be on q2”
The answer is around 1B of profit.
The comment wasn't about binary profitability.
It doesn’t help Google to create an AI-powered business which turns $1B in profit annually if it results in them losing a search/ads business which turns $5B in profit annually.
The CapEx spend for AI not only makes AI itself more expensive (and thus less profitable), it’s now driving everything else in technology to be more expensive (and thus less profitable).
AI is a profitability tax on the entire tech sector and it remains unclear if the profit AI will deliver is going to be worth that.
I would say they should slow down on build-out to balance supplier/labor availability with available cash flows, but I suspect all the Big Tech companies are worried about falling behind the other and being put in the position to need to rent out compute.
[dead]
It's just the beginning. The real collapse will happen right after midterm.
Why? Genuinely interested.
If they're referring to the recent tumble, I wouldn't suggest anthropic incited that
coreweave did
i'm sure ant didn't help, but thanks for the fire sale i guess
Boy, people sure do love turning data points into stories.
in many ways, its the very thing that makes us people
did he even renormalize the dataset on the S-1 fill size?
I tried to give this article an honest read but
> Last year, for instance, Anthropic lost $80 billion, and Amazon had negative $42 billion free cash flow. The entire big tech complex, it seems, has moved from minting cash to burning it. And investors are, well, not panicking exactly, but wondering if the bubble is ending
Is this really the quality of such newsletters? I’m not asking rhetorically because I’d like to also have trustable sources to understand the underlying reality. I actually spent time understanding this part and the 80B dollar loss thing is completely misrepresented here (also went viral in other media).
"The shift in politics is even starker. In the 2010s and early 2020s, big tech was well-liked by most people. But AI is absolutely loathed by the public. These companies have never faced real public dissatisfaction, they all imagine themselves to be the good guys, with the credibility of having created magical search engines and smartphones. But that era is gone. They are now akin to the bankers on Wall Street in 2008, and politicians are winning elections by saying they hate AI as much as the voters do."
Yeah I see this too. That we're not innovating any more also doesn't help make our industry look good
You can't claim that the tech industry isn't innovating. You can say that innovation effort has shifted away from many things that still need it. The issue I have is that the companies and products are so large and complex that they are extremely difficult to compete with.
It's not just that we're not innovating on good new products. We're innovating new ways to break the law and exploit human psychology.
Blockchain/NFT hype did a ton of damage to tech's credibility, as well as Uber before it (along with the many Uber for X apps).
I'm in agreement with the general point but was big tech well liked in the early 2020s?
Facebook scandals had exploded already, Google had already long abandoned "don't be evil", nobody ever liked Microsoft, and I think sentiment towards Apple is somewhat unchanged.
Tech at least in my eyes peaked around 2018-19. That also coincided with the first more mainstream public-aware introduction of vision and NLP systems into tech products. A few years later it all went downhill for the tech companies.
Do you not remember when they were dragged in 2015-2016? or 4 years before that when they were heroes instead?
People began disliking big tech well before this latest bout of AI.
This is true but the last few years have seen this dislike grow and spread a lot more than it was before - in my personal experience.
In 2014 I moved from London to SF to start a big tech job. In my first day there I accidentally wondered into a massive rally, I asked one of the participants what it was about and they said they were protesting all these foreign tech workers coming to SF. It felt a bit weird to end up in the middle of an ‘anti-me’ rally - especially one so passionate and energetic. A few protesters pressed me on where I was from and what I do, I lied and told them I was an investment banker. They told me that they suppose that was ok. I specifically told them that because not long ago it was finance being the target of protests and I curious to see if they had somehow moved on - if this was a principled stance or if it was being astroturfed.
These protests ended up getting pretty violent, people were throwing rocks through bus windows, throwing up on cars.
hey little tip while you assimilate and learn the language - property damage is not violence
Don’t worry I didn’t stay long. I loved the Bay Area but did not like SF all that much.
I believe some of the busses were occupied when they were attacked and the lack of injuries was largely due to good fortune. I could believe a claim that this was done by false flag agitators intent on undermining the protests.
>But AI is absolutely loathed by the public.
by the public populating the echo chambers on reddit and bluesky, perhaps.
9.5 out of 10 normies use it daily now and have no negative opinions about it. the wholesome folx use it too, despite their incessant kvetching.
Most people I talk to use it because it's useful, but also hate what it means and what it is doing to the world.
There definitely has been a broad change in public perception of big tech and the future that it is taking us toward.
was that change organic, though? every single shitrag went berserk about AI once the so-called journalists had realized they were about to lose their jobs to it.
I think there is a massive selection criteria bias, AI has been a batshit insane productivity boost for me but I’ve been so busy with it that I’ve generally stopped posting online - I only do so now because I’m out of quota. I no longer see any point in arguing with people - I’ve got better things to do, like argue with AI. I used to scour the Earth looking for smart people to talk to and now I don’t even have to leave my apartment.
[dead]
I use all sorts of things I hate all the time.
This is not the gotcha you think it is.
This feeling made me leave the tech industry.
It felt like I was helping the bad guys, and my conscience couldn't deal with that.
Considering the search engine company is selling a very popular self driving taxi service, they seem to be quite credible and innovative.
[dead]
People are being led around by the nose. Cui bono? 2000 years and most people still can't manage to ask that question reflexively. AI hate is a parochial narrative being pushed by people who stand to lose influence. Examined objectively, there are reasons to be cautious when adopting AI tools but a knee-jerk rejection of everything AI is a purely irrational response that has been drilled into people through repetition, conformity and media influence.
Tech companies were never the "good guys" any more than they are the "bad guys" now. Those are just colored filters thrown in front of the lime light to shift your perception. As soon as tech or AI works to their benefit then suddenly they'll be the good guys again and no one will care they were the bad guys before. People just go where the algo leads them, believe what their influencers believe, think what their peers think.
People hate AI because culture is being turned into slop in front of our very eyes. There's clear evidence that people collectively reject:
1. AI games
2. AI Art
3. AI Music
4. AI literature in most forms, except for factual text like search
Or at least, they won't pay money for it
AI hatred isn't being pushed by people with a narrative. I can't use AI for my game, because it'll sell £0 if I do. That's the net result of millions of other people telling me that they despise AI and won't purchase my product if it contains any AI, and I'm just making a business decision
Also google and some other big tech companies were widely loved for a while. Microsoft/gates managed to entirely rehabilitate their image at one point, and google was seen as one of the good guys. Those days died with the cambridge analytica scandal, and there's no evidence its coming back
And why do those millions of other people have that opinion? Have they arrived at it of their own accord?
Yes, you can create garbage with AI tools. You can create garbage using Blender, Unreal Engine, Unity, GIMP, Ableton, iMovie and Word as well and there are mountains of garbage created with those tools that nobody pays for or likes. If you have some talent and put the same effort into creating art with AI that you do with a digital paint program then it won't be garbage. AI isn't a magic wand that you can wave around and get perfect results, it can save you time just like using an image editor saves you a lot of time compared to drawing and painting by hand but it won't do all of the work for you. It's a tool and a poor craftsman that blames his tools for his failure.
My point exactly that big tech was loved for a while and then hated and then loved again and hated again. Have they truly changed that much that often or is it your perception that has changed?