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Google funds Anthropic | v Anthropic promises to rent Google's TPUs | v Google guarantees the infrastructure needed t

Google funds Anthropic | v Anthropic promises to rent Google's TPUs | v Google guarantees the infrastructure needed to fulfil Anthropic's promise | v Wall Street lends against Google's guarantee | v Borrowed money buys Google-designed TPUs | v The TPU purchases "prove" demand for Google TPUs | v Anthropic's compute capacity and valuation rise | v Google's investment in Anthropic rises in value | v Higher valuations justify still more financing | +--------------------------------------+ | v DO IT AGAIN

tristanj 2mo ago
Anthropic has 80%+ margins on inference. Google has 30%+ margins on compute. Both parties have discovered a literal money printer. The payback period is <2 years. At those unit economics, anyone not borrowing aggressively here to create more money printers is a moron.
- stackskipton 2mo ago
  >Anthropic has 80%+ margins on inference. That's like saying my delivery company is profitable because with current gas prices, my margin is 80%. Yea, what about all money you spent to get there? You still profitable then?
  - tristanj 2mo ago
    Yes, actually. Anthropic has gross margins of 40%+, hit $75B ARR last month, and (as of this quarter) is profitable.
    - stackskipton 2mo ago
      As Ed Zitron pointed out, that "quarter" of profitability is EBITDA profitability and comes with plenty of creative accounting. When they do it for a year, we can say "They have found profitability"
      - tristanj 2mo ago
        Why are you citing old news? Zitron wrote that months ago when Anthropic was reported to have ~30B ARR. Anthropic now has more than double that, at even higher margins. There's no doubt at this point that Anthropic is profitable.
        stackskipton 2mo ago
        Because again, we haven't seen further reports. As always, we are debating financials on a company that doesn't have to disclose them regularly.
        tristanj 2mo ago
        We most certainly have: https://www.morningstar.com/stocks/anthropics-gross-margin-is-most-important-number-tech https://www.morningstar.com/stocks/anthropics-gross-margin-i... The companies are growing so rapidly that citing their financials from several months ago is practically worthless.
        disgruntledphd2 2mo ago
        > We most certainly have: https://www.morningstar.com/stocks/anthropics-gross-margin-i https://www.morningstar.com/stocks/anthropics-gross-margin-i... This is all un-audited speculation. Even audited financials often have massive weirdness, but unaudited revenue/margin numbers are basically garbage. > The companies are growing so rapidly that citing their financials from several months ago is practically worthless. I wish I lived in a world where this was true. Unless their inference margins are fat enough to pay for training and employees (including SBC) then their historical financials are really important. Again, I could be wrong here but without the S-1 nobody really knows (unless they work for Anthropic, in which case they should really not be commenting in this thread).
    - etempleton 2mo ago
      You have to assume that they aren’t being too creative with their accounting, which Anthropic and Open AI most certainly are.
    - etempleton 2mo ago
      Until they are public and they release full financials using standard accounting practices, I would take what they say with a grain of salt. SpaceX also painted a pretty rosey picture of their financials, but when they filed for IPO it became clear they were doing some real cherry picking and in actuality they were losing a ton of money. If they really were doing so well they would file publicly and be rushing to IPO. I guarantee they are losing billions per quarter. You can say they make money on inference, but that is irrelevant. That doesn't include all of their overhead and indirect costs let alone model training.
- etempleton 2mo ago
  Why do they both need to keep borrowing so much money if the margins are so fat?
  - tristanj 2mo ago
    Demand for compute is growing 10x year-over-year, faster than inference profits can fund expansion. At 80% margin the payback period is 1.25 years. Cash flow can't keep pace with that scale.
- disgruntledphd2 2mo ago
  > Anthropic has 80%+ margins on inference. If you read the interviews where Dario said this closely, you'll find that he's talking in hypothethicals. We will have to wait for the S-1 to get audited figures, until then, only insiders have any idea (and only the accountants can be sure).
  - tristanj 2mo ago
    That point is irrelevant because the number comes from SemiAnalysis, not Dario's interview: > SemiAnalysis estimates that Anthropic's overall gross margin has rebounded from negative 94% in 2024 to the mid-60% range, with the gross margin of its API business exceeding 80%. https://www.tradingkey.com/analysis/stocks/us-stocks/262018103-semianalysis-anthropic-opanai-ai-ipo-tradingkey https://www.tradingkey.com/analysis/stocks/us-stocks/2620181... Given Anthropic is charging $50 per million output tokens on Fable, those high margins are very believable.
    - disgruntledphd2 2mo ago
      Look, that's an estimate (by a presumably biased observer). I don't really have a horse in this race, new large tech companies are fine by me, even if only to reduce the power of the current ones. However, I find these numbers incredibly hard to believe, and most likely deceptive, given that they recently (like March) started making enterprises pay API rates, so even if they were profitable (and if they paid from Fable training from this post cost money) I would be sceptical that this will continue, given all the competition in this space. tl;dr let's all wait for the S1 (it will presumably be soon, unless SpaceX declines get them to postpone).

tristanj 2mo ago

Anthropic has 80%+ margins on inference. Google has 30%+ margins on compute. Both parties have discovered a literal money printer. The payback period is <2 years. At those unit economics, anyone not borrowing aggressively here to create more money printers is a moron.

stackskipton 2mo ago
>Anthropic has 80%+ margins on inference. That's like saying my delivery company is profitable because with current gas prices, my margin is 80%. Yea, what about all money you spent to get there? You still profitable then?
- tristanj 2mo ago
  Yes, actually. Anthropic has gross margins of 40%+, hit $75B ARR last month, and (as of this quarter) is profitable.
  - stackskipton 2mo ago
    As Ed Zitron pointed out, that "quarter" of profitability is EBITDA profitability and comes with plenty of creative accounting. When they do it for a year, we can say "They have found profitability"
    - tristanj 2mo ago
      Why are you citing old news? Zitron wrote that months ago when Anthropic was reported to have ~30B ARR. Anthropic now has more than double that, at even higher margins. There's no doubt at this point that Anthropic is profitable.
      - stackskipton 2mo ago
        Because again, we haven't seen further reports. As always, we are debating financials on a company that doesn't have to disclose them regularly.
        tristanj 2mo ago
        We most certainly have: https://www.morningstar.com/stocks/anthropics-gross-margin-is-most-important-number-tech https://www.morningstar.com/stocks/anthropics-gross-margin-i... The companies are growing so rapidly that citing their financials from several months ago is practically worthless.
        disgruntledphd2 2mo ago
        > We most certainly have: https://www.morningstar.com/stocks/anthropics-gross-margin-i https://www.morningstar.com/stocks/anthropics-gross-margin-i... This is all un-audited speculation. Even audited financials often have massive weirdness, but unaudited revenue/margin numbers are basically garbage. > The companies are growing so rapidly that citing their financials from several months ago is practically worthless. I wish I lived in a world where this was true. Unless their inference margins are fat enough to pay for training and employees (including SBC) then their historical financials are really important. Again, I could be wrong here but without the S-1 nobody really knows (unless they work for Anthropic, in which case they should really not be commenting in this thread).
  - etempleton 2mo ago
    You have to assume that they aren’t being too creative with their accounting, which Anthropic and Open AI most certainly are.
  - etempleton 2mo ago
    Until they are public and they release full financials using standard accounting practices, I would take what they say with a grain of salt. SpaceX also painted a pretty rosey picture of their financials, but when they filed for IPO it became clear they were doing some real cherry picking and in actuality they were losing a ton of money. If they really were doing so well they would file publicly and be rushing to IPO. I guarantee they are losing billions per quarter. You can say they make money on inference, but that is irrelevant. That doesn't include all of their overhead and indirect costs let alone model training.
etempleton 2mo ago
Why do they both need to keep borrowing so much money if the margins are so fat?
- tristanj 2mo ago
  Demand for compute is growing 10x year-over-year, faster than inference profits can fund expansion. At 80% margin the payback period is 1.25 years. Cash flow can't keep pace with that scale.
disgruntledphd2 2mo ago
> Anthropic has 80%+ margins on inference. If you read the interviews where Dario said this closely, you'll find that he's talking in hypothethicals. We will have to wait for the S-1 to get audited figures, until then, only insiders have any idea (and only the accountants can be sure).
- tristanj 2mo ago
  That point is irrelevant because the number comes from SemiAnalysis, not Dario's interview: > SemiAnalysis estimates that Anthropic's overall gross margin has rebounded from negative 94% in 2024 to the mid-60% range, with the gross margin of its API business exceeding 80%. https://www.tradingkey.com/analysis/stocks/us-stocks/262018103-semianalysis-anthropic-opanai-ai-ipo-tradingkey https://www.tradingkey.com/analysis/stocks/us-stocks/2620181... Given Anthropic is charging $50 per million output tokens on Fable, those high margins are very believable.
  - disgruntledphd2 2mo ago
    Look, that's an estimate (by a presumably biased observer). I don't really have a horse in this race, new large tech companies are fine by me, even if only to reduce the power of the current ones. However, I find these numbers incredibly hard to believe, and most likely deceptive, given that they recently (like March) started making enterprises pay API rates, so even if they were profitable (and if they paid from Fable training from this post cost money) I would be sceptical that this will continue, given all the competition in this space. tl;dr let's all wait for the S1 (it will presumably be soon, unless SpaceX declines get them to postpone).