4 ms·

The R&D expenditure seems reasonable, and the revenue numbers seem realistic. I have no trouble believing they can be profitable by 2030 or much sooner. What I

The R&D expenditure seems reasonable, and the revenue numbers seem realistic. I have no trouble believing they can be profitable by 2030 or much sooner. What I don't get is how you get from $30B in revenue to a nearly $1T valuation, but that seems almost level-headed compared to SpaceX, and it's not like any of the big tech companies' valuations make much sense in the context of their revenue.

philistine 4mo ago
> What I don't get is how you get from $30B in revenue to a nearly $1T valuation There is something that has fundamentally changed (or broken, depending on your perspective) with the valuation of American tech companies. They've always traded at a premium, but the pandemic and the encroachment of the monopolists has turned the earth sour.
- ghtbircshotbe 4mo ago
  I don't know if that's completely true. Google, Apple, Amazon, Nvidia etc are somewhat expensive, but not ridiculously so based on earnings and growth. Tesla, spacex and openai are in a different universe, though I honestly can't say wtf is going on with them
riffraff 4mo ago
You see, in this _new economy_ you can't rely on old metrics to judge value. At least that's what I remember from the 00s.
danielmarkbruce 4mo ago
It's easy actually. If it grows a lot, with decent margins. Grow 30B at 40% pa for 10 years and you arrive at around $850B in revenue, assume 25% operating margins, that's slightly over 200B of operating income, and it all makes a lot of sense. You can debate the assumptions, but it isn't witchcraft. The math is simple.
- anshumankmr 4mo ago
  I think what PEOPLE are saying IT is very difficult to sustain that level of growth.
  - moi2388 4mo ago
    Of course it is. But stocks aren’t a measure of current profitability. It’s a bet on future profits. How many serious, large AI players are there? Google, OpenAI, Anthropic, and who else exactly? At least one of them will probably win. And winning here means billing almost all companies for AI and automation, consumers, perhaps robotics and research.. and that potential earning is massive. So yes, I will pay 10 times the worth for the stock now, but paying 1000 per stock for a chance of owning all that future profit is not that outrageous.
    - necovek 4mo ago
      I believe a more likely outcome is that neither one of them outright "wins", and they get joined by other players like xAI, DeepSeek, Qwen, Mystral, Llama even... That should make it hard to bank in on future growth with any single AI company: what I believe is happening is investors jumping in on the short term gains train.
- niemandhier 4mo ago
  I think the reasoning should be the other way around: If you limit yourself to simple math, than you get this result. Assuming linear growth into a market with competition and an unclear ability to absorb that growth is a gamble.
somenameforme 4mo ago
The market is pricing in the potential for future revolutionary shifts which seem fairly likely. For instance if there ends up being substantial labor disruption due to LLMs then the economy as we know it is going to end up being reshaped in ways that are difficult to imagine beyond the fact that the LLM providers would likely play a critical role in it. Similarly, SpaceX has already brought the cost of getting things to space down by a couple of orders of magnitude, and Starship is rapidly progressing with the potential to bring them down a couple more. The aspirational goals there are being able to get things to space on the order of $10-$20/kg. That would dramatically reshape not only space but even transport as we know it, very likely in a way analogous to how the ability to quickly send a 0 or 1 signal long distances for cheap reshaped the world in ways that would be essentially impossible to predict prior to its happening. I'm bearish on the LLM revolution and bullish on the space one, which generally seems to also be the market consensus.
- JMiao 4mo ago
  i am not ready for our weyland-yutani overlords
- freakynit 4mo ago
  """For instance if there ends up being substantial labor disruption due to LLMs" "" .. who are they gonna sell to if people don't even have money to buy? We live in circular economy... everyone's dependent on someone or the other... you take one leg out of this, and the whole thing stops. UBI won't work either because it will lead to runaway inflation and extreme levels of invasive control over people's lives and what they can and cannot do. I hope no one here is naive enough to believe that AI would actually be used for general welfare of people.
  - doctor_phil 4mo ago
    > UBI won't work either because it will lead to [...] extreme levels of invasive control over people's lives and what they can and cannot do I've never heard this before. I thought UBI would be very freeing and without much control. If it is universal then there needs to be no control of who gets it or not. What am I missing?
deleted 4mo ago
[deleted]

philistine 4mo ago

> What I don't get is how you get from $30B in revenue to a nearly $1T valuation There is something that has fundamentally changed (or broken, depending on your perspective) with the valuation of American tech companies. They've always traded at a premium, but the pandemic and the encroachment of the monopolists has turned the earth sour.

ghtbircshotbe 4mo ago
I don't know if that's completely true. Google, Apple, Amazon, Nvidia etc are somewhat expensive, but not ridiculously so based on earnings and growth. Tesla, spacex and openai are in a different universe, though I honestly can't say wtf is going on with them

riffraff 4mo ago

You see, in this _new economy_ you can't rely on old metrics to judge value. At least that's what I remember from the 00s.

danielmarkbruce 4mo ago

It's easy actually. If it grows a lot, with decent margins. Grow 30B at 40% pa for 10 years and you arrive at around $850B in revenue, assume 25% operating margins, that's slightly over 200B of operating income, and it all makes a lot of sense. You can debate the assumptions, but it isn't witchcraft. The math is simple.

anshumankmr 4mo ago
I think what PEOPLE are saying IT is very difficult to sustain that level of growth.
- moi2388 4mo ago
  Of course it is. But stocks aren’t a measure of current profitability. It’s a bet on future profits. How many serious, large AI players are there? Google, OpenAI, Anthropic, and who else exactly? At least one of them will probably win. And winning here means billing almost all companies for AI and automation, consumers, perhaps robotics and research.. and that potential earning is massive. So yes, I will pay 10 times the worth for the stock now, but paying 1000 per stock for a chance of owning all that future profit is not that outrageous.
  - necovek 4mo ago
    I believe a more likely outcome is that neither one of them outright "wins", and they get joined by other players like xAI, DeepSeek, Qwen, Mystral, Llama even... That should make it hard to bank in on future growth with any single AI company: what I believe is happening is investors jumping in on the short term gains train.
niemandhier 4mo ago
I think the reasoning should be the other way around: If you limit yourself to simple math, than you get this result. Assuming linear growth into a market with competition and an unclear ability to absorb that growth is a gamble.

somenameforme 4mo ago

The market is pricing in the potential for future revolutionary shifts which seem fairly likely. For instance if there ends up being substantial labor disruption due to LLMs then the economy as we know it is going to end up being reshaped in ways that are difficult to imagine beyond the fact that the LLM providers would likely play a critical role in it. Similarly, SpaceX has already brought the cost of getting things to space down by a couple of orders of magnitude, and Starship is rapidly progressing with the potential to bring them down a couple more. The aspirational goals there are being able to get things to space on the order of $10-$20/kg. That would dramatically reshape not only space but even transport as we know it, very likely in a way analogous to how the ability to quickly send a 0 or 1 signal long distances for cheap reshaped the world in ways that would be essentially impossible to predict prior to its happening. I'm bearish on the LLM revolution and bullish on the space one, which generally seems to also be the market consensus.

JMiao 4mo ago
i am not ready for our weyland-yutani overlords
freakynit 4mo ago
"""For instance if there ends up being substantial labor disruption due to LLMs" "" .. who are they gonna sell to if people don't even have money to buy? We live in circular economy... everyone's dependent on someone or the other... you take one leg out of this, and the whole thing stops. UBI won't work either because it will lead to runaway inflation and extreme levels of invasive control over people's lives and what they can and cannot do. I hope no one here is naive enough to believe that AI would actually be used for general welfare of people.
- doctor_phil 4mo ago
  > UBI won't work either because it will lead to [...] extreme levels of invasive control over people's lives and what they can and cannot do I've never heard this before. I thought UBI would be very freeing and without much control. If it is universal then there needs to be no control of who gets it or not. What am I missing?

deleted 4mo ago

[deleted]