Why Anthropic's filing crushed tech stocks
thebignewsletter.com
thebignewsletter.com
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.
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.
Keiretsu - perfectly acceptable business relationship preferences that in no way require governments to regulate their GDP growth / campaign donation black box machine.
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.
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.
Was that the one where they removed a bunch of big positions to make it positive (was it training cost, I forgot)?
They are cash flow positive, $3.4 billion in H1.
That means they're making money.
https://en.wikipedia.org/wiki/Convertible_bond
I don't understand the accounting aspects, and they seemed very weird to me, when I tried to read about was happening with Anthropic. Basically: the rules says the convertible debt has to be valued at the predicted IPO price—because that's the value of the thing (Anthropic stock) Anthropic will be obligated to pay. At the point they re-calculated this debt, the valuation went up drastically, so the rules say that counts as a very large quarterly "loss". But: on the other side of the scale, the increase in predicted IPO price does not count as a quarterly "profit"—even though they should cancel out. Even though the increase in share price exactly cancels the size of the debt they're paying back—the debt denominated as a fixed number of shares.
These complex securities they took a mark on only exist as a way for them to access compute at deep deep discount by issuing suppliers lottery tickets.
Post IPO when they don’t have lottery tickets to issue as easily the numbers should be interesting.
Going a bit meta, I'm curious why we don't observe a faster convergence of opinions here. I assume that HN users are well-versed in AI tech, and the current generation of LLMs will happily break down the relevant information in Form S-1. Nevertheless, we see a chaotic storm of opinions, with wildly varying S/N ratios.
Is it a limit of current LLMs, or is the bottleneck perhaps human nature?
If I drive a taxi making $200/day and need $150/day of gas.. but convince Shell to take a convertible note instead of $150.. Do I make a) $200/day profit, b) $50/day profit, or c) $200/day - (change_in_value[convertible_note]) in profit?
Some are arguing that C is somehow fake, but its obviously more real than A!
Another big component of the $80B loss was $3B in stock-based compensation. This line item is very expense-like (“instead of paying your drivers in cash, give them shares of your taxi company”), and Anthropic also adjusts it away when reporting their adjusted net income. Without this adjustment, their non-GAAP operating income was negative in 2026 1H.
Overall, I feel like a man in the parable of The Elephant in the Dark while writing this. Not only is my sight limited, but this elephant (Anthropic) is dancing wildly!
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.
My simplistic narrative, based mostly on the timing of market I observed, agrees with yours: the tech selloff was sparked by Google's earnings report. Mostly the fact that Google's Search cash cow seems to be getting cannibalized by its less profitable AI overviews, compounded by their cash flow turning negative due to their insane CapEx bill, which is only going to keep going up. And then Amazon reported a similar plight.
Hilariously, this even affected MSFT, which actually had a good quarter while being the only hyperscaler with positive cash flow, initially sending the stock to record highs. And then Google's earnings report hits and drags everything down. Satya must have been pretty annoyed.
coreweave did
i'm sure ant didn't help, but thanks for the fire sale i guess
Yeah I see this too. That we're not innovating any more also doesn't help make our industry look good
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).
It felt like I was helping the bad guys, and my conscience couldn't deal with that.
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.
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.
There definitely has been a broad change in public perception of big tech and the future that it is taking us toward.
This is not the gotcha you think it is.
These protests ended up getting pretty violent, people were throwing rocks through bus windows, throwing up on cars.
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.
Violence: the use of physical force so as to injure, abuse, damage, or destroy.
Hope that helps!
First, ChatGPT has been the most downloaded app for two years straight, the idea that AI is loathed by the general public is pure delusion, propped up by manipulated surveys and people living in a bluesky bubble.
Second, Big tech wasn't well liked by the early 2020s, that ended in the early 2010s when the NYT editorial board took a top down decision to cover big tech negatively.
Third, the idea that they were innovating before but aren't now is insane. AI is the biggest innovation in tech since the transistor and possibly the only true innovation since the GUI.
Additionally, I'm not sure how you square NYT coverage being more critical of generally worse behavior as "top down" without a citation, care to point at anything to substantiate that statement?
Innovative, in some part sure. But lately the running jokes have become "Uber, but for $X", which hints at imaginative stagnation. AI has been the largest shake up in a decade (or more), but it is hard for Average Joe to grasp what is changing.
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.
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
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?
Do you not see any difference between creating garbage in these ways?
People have created low-quality things since the dawn of humanity, using all sorts of tools, professional and not. However, before AI, making most types of garbage still required some human work, it wasn't infinitely scalable. And what was automatable ended up being so horrible that most people could easily dismiss it on the spot, or for them to even be filtered out algorithmically. On the internet, it wasn't perfect, but the signal-to-noise ratio was still at a level where you reliably discern the signal part.
AI changed this. Even a beginner can set one up to run almost fully unattended - and while what comes out won't be good, it also won't be immediately apparent as such, especially to the general public. More and more I find myself being fooled by a website link, a YouTube video thumbnail or a paragraph in an article. AI lets people create garbage that can impersonate real effort decently well, and they've used that to great extents. As we speak, thousands of agents are working day and night to pump every online platform with their 'content', without a single person in the world to care about what they put out. They're taking over and removing any good signal we had, everything becomes diluted with trash on a scale we have never seen. People notice that. Many are clueless about AI, and social influence plays a role, but they're not being misled and have their opinions manipulated. They wouldn't enjoy most of this content regardless.
In addition to the dilution of good information, they care about appearances and how AI lets you create an appearance of caring about something. The cheap food stand seemed honest when they put up an unassuming print of a simple Word document, and now seems dishonest when they put up an AI-generated mess that looks nothing like the real product and desperately tries to seem more refined than they are. Their manager was at least honest when he replied with a lazy 'k', and now he's lying about caring by dumping out a bullet point list of AI-generated text for a response that we know he himself hasn't read. It's the dream product for scammers, grifters and people who simply don't care.
Can you use AI to help create something good? Sure, but anyone doing that still needs to take their time and put care into it. Even if AI makes them faster, by the time they finish, 10TB of more slop has already been produced to drown them out, because that can be fully automated. Effectively 99.9% of AI content ends up being garbage, so of course people are going to reject it. Most probably don't want the few nuggets of gold for the ocean of waste.
If everyone hates AI output and refuses to buy anything made with it then in what way is it a threat to people who don't use AI in their work?
Are these talking points perhaps crafted to benefit a small group of people who will lose the edge they currently have to a larger number of people enabled by these new tools?
The output could be fine in itself, except people (arbitrarily, some could say) value the human production. Displacement is simply a matter of volume: the sleepless machine can churn indefinitely while people can not. The thing is too, most outputs being mass produced are of a substantially lower quality than people (and what is possible).
A problem is people are being tricked into it, or being given little choice. If 90% of companies use AI (as in, mandated from leadership), what "choice" is there? If people recognize the 10% remaining and do business with them exclusively, economics will take over and force either price hikes or the 10% to grow. It's playing chicken.
Based on what the trends seem to be, people will unknowingly keep taking in products with AI (mostly out of not understanding the choice).
As for the enclosure point which is important: People make things for their enjoyment. When people try to profit off their work, they rightfully get put off. The deal is "if you can view this for free, it isn't meant to be sold. If it is sold, I deserve to have my time compensated". AI training/scraping has violated this agreement, and funnels the money to a third party to the people who made the valuable originating art. If it was not valuable, then why not train AI on its own output? Since that appears to be a "problem", there must be something about what humans create that has value AI cannot produce itself.
>Are these talking points perhaps crafted to benefit a small group of people who will lose the edge they currently have to a larger number of people enabled by these new tools?
That flavour of conspiratorial thinking is one of the reasons for polarization. Sometimes, people prefer the human touch. This applies mostly to art and other topics lumped into "the Humanities".
Hope that clears things up for you, or at least sheds light on why people might not see things in the way you do.
This is a different argument, going into it would muddy the waters. It would devolve into a debate about how much and what type of input and individual perception. It's also been rehashed a million times since Duchamp thought to put a mass produced urinal on display as a fountain.
> most outputs being mass produced are of a substantially lower quality than people (and what is possible)
Different purposes and mass production does not eliminate the market for artisanal work, it replaces only the limited batch work done by hand previously.
> A problem is people are being tricked into it...
God help anyone who learns how the sausage is made.
> "if you can view this for free, it isn't meant to be sold. If it is sold, I deserve to have my time compensated"
This is mostly a matter for the courts but as long as the works are not being reproduced in whole unattributed or in violation of whatever license they held then it will mostly be allowed. If you look for it, you'll notice that artists "borrow" from each other constantly with no attribution and no payment to the originator. All but the grossest plagiarism goes entirely unpunished because everyone realizes that no one can stand alone. Is it different now that it is being made available as a service? Yes, there are now more legal ramifications due to an audit trail of scraping and purchases combined with the much larger output that can be measured and compared. Does it destroy the commons? No, people will use the outputs in their own work which will be published and become part of the commons just like any new style or media.
> that appears to be a "problem"
It's a solved problem. Synthetic training data is a valuable addition now. It requires a way to validate or rank it but that's not any worse than cleaning and filtering human data.
> conspiratorial thinking
An excellent smokescreen but we've been living in a soup of mass media propaganda for over a hundred years now so there's no denying that influence campaigns exist. Denying that humans act in coordinated ways to influence the opinion of others is absurd when you can get a degree in it, have it as a job title and build a trillion dollar industry on it.
On the contrary, it demonstrates an unwillingness to grapple with inconvenient problems, as does the rest of your reply.
>'s a solved problem. Synthetic training data is a valuable addition now. It requires a way to validate or rank it but that's not any worse than cleaning and filtering human data.
Untrue for artistic outputs oddly enough.
>build a trillion dollar industry on it.
Or selectively quote in the comment section to dullen the need to address issues.
Probably not the AI companies. Maybe you could say they should be better at marketing and not have a backlash. But, I think that doesn't confront what that was up against.
Maybe the angry public, but that's such a diffuse target it's somewhat useless to allocate blame to them. It's like screaming at the heavens, it won't get you anywhere.
I'd say it's social media that really deserves the blame for the whole situation, and a triple dose of it too.
One dose for continuing the mechanism for spreading shallow, surface level narratives that ignore the difference between responsible use of AI, and slop often created by AI.
The second dose for doing nothing to stop the spread of slop, in all it's forms.
A third dose for repeatedly doubling down on the mechanisms that motivates the creation of slop. "Influencer culture", your "brand", the monetization of attention, and the inlining of advertising to everything.
Who do you think is really creating the slop? It's people desperate for attention, either because they think it's necessary for a career, because of the social desire for it, or, above all, because they want to monetize it as advertising.
If you want the rot at the core, it's all there.
> 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).