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Comment by nkurz | Hacker News Reader

I feel even a "high junk" rating for debt issued by an LLM company is far too generous. A bond rated "BB" by S&P would be typical of the safest of the junk bonds. Historically, such bonds have about a 10% risk of default over 10 years: https://investmentgrade.com/bond-ratings/

While I'm willing to believe that Anthropic common stock might somehow be a reasonable investment because it might go "to the moon", it seems obvious that this is a high-risk bet. This is shaping up to be a winner-take-all industry. Does anyone really think there is a 90% chance that Anthropic will be that winner?

If you thought there really was only a 10% chance that they'd fail to be in business in a decade, why wouldn't you just buy their common stock and hope for a 100x return? How do the rating agencies justify this degree of confidence in Anthropic's ability to repay these debts? Or do I somehow misunderstand what these ratings mean?

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Unlikely Anthropic able to repay. Take a look at their cost of production. GPU data centers which need huge capex and depreciate to near zero roughly every 3 years (though they try to trust-me-bro to 6). Even if you ignore the cost as gifted by Uncle Sam, they still runs into huge electrical consumption. You can't code away electricity. You can force buy or raid oil, but that wouldn't convert to electricity when reaching American shore. Then you look over at China given out free frontier models and dirt cheap electricity about 1/4 of Americna lowest rate. And China plans to half that rate in coming 5 years. And as chip advanced with more RAM, it is just a matter of time majority of AI compute happened in mobile devices. At that rate, Anthropic purely based in USA or EU or even regional countries simply can't compete for exclusive 30T market. The only way Anthropic can compete is raid a small country with arms like VOC and build their nuke plants, (maybe with Bill Thorium plant) to produce AI. And let's not forget that is American company. 2026 exposed to terrorists a very high impact and easy target. Good luck.

> This is shaping up to be a winner-take-all industry

How so? So far we have a few models of nearly the same capabilities and a slew of models 6-12 months behind.

I think the big players are basing their projections on taking over a majority of the market. The only way they are going to turn a profit is if they scale to something larger than would be possible for multiple players.

Also, there is the idea that the first company to be able to successfully turn their on technology toward self-improvement is going to get such a quick boost that no one else can catch up before they take over the market.

But I could be wrong. Do you see a stable situation with multiple players at the scale they are betting on achieving?

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