Bloomberg Television22 min
Investor Selby on Why Anthropic's IPO Puzzles Him
Interview, Fireside Chat
- The Anthropic IPO is expected to go public imminently following an aggressive offering process, though the final valuation is projected to be south of a trillion dollars rather than at a trillion-dollar price point.
- Concerns exist that the offering could be "overly shopped" and viewed as a speculative trade similar to GameStop, potentially damaging market sentiment if the valuation falls significantly below projections.
- Financial fundamentals for Anthropic include over 80% of revenue being non-recurring, and the speaker notes confusion regarding the urgency to go public given the company holds nearly as much cash as Google.
- The business model is considered highly susceptible to competition from Chinese models, with expectations that DeepSeek will perform equally well and fast on rudimentary tasks, eroding Anthropic's total addressable market.
- Regulatory capture is anticipated to attempt to restrict Chinese models in specific sectors like defense tech, national security, and pharmaceuticals, while other AI use cases are expected to be classified as utilities where price arbitrage favors cheaper alternatives.
- Since utilities are not trillion-dollar companies, the speaker posits that the vast majority of AI use cases will not support high valuations, requiring grandiose storytelling to justify capital raises due to significant CapEx requirements for energy, data centers, and chips.
- Market sentiment faces headwinds from a potential second Trump term in the second half of the year which would likely be more volatile, alongside geopolitical tensions in the Middle East that could drive higher oil and interest rates.
- A negative narrative regarding AI data centers is expected to grow as it becomes expedient for politicians to exploit, defining the sector negatively in public discourse.
- The Nvidia stock story is predicted to worsen with a rapid cadence of new news, potentially involving scrutiny over Chinese spy allegations or political pressures related to the CEO's affiliation with Donald Trump.
- SoftBank and Oracle are identified as early warning signs for a market correction, with Oracle expected to be the first to fall due to a high debt ratio and SoftBank facing risk-on exposure from Masayoshi Son.
- The overall market is expected to be very close to a correction driven by a "momentum market" conclusion, with cracks in the AI bubble widening as the current euphoria has been building for five years.
- The anticipated market correction is expected to occur through a "death of a million cuts" rather than a single catalyst, with an underperforming Anthropic IPO playing a prominent role in a potentially massive market correction.
- Even if the lockup period expires for the Anthropic IPO, the move is not expected to be bullish, reflecting the broader skepticism about the sector's long-term valuation drivers.