Comment by JumpCrisscross
7 hours ago
> can't answer that because it's irrational anyway
Not how a valuation argument works! If you’re claiming this shows those valuations are irrational, you should be able to point to why. Otherwise, it’s just a “my vibes are off” comment.
I am not going to do a DCF on this because the assumptions are all invented anyway. But back of the envelope:
>> What's the TAM of AI replacing millions of knowledge workers in support? Let's conservatively assume a few hundred billion.
>> How much market share does Fin capture? Let's conservatively assume 5%.
>> What's the valuation on a reasonable multiple?
5% of a few hundred billion is ~$15B of revenue. Let's assume deflated 6x revenue valiation, not the 15x these things were fetching two years ago, and you get a ~$90B company valuation (that it should grow into soon at least).
And it sold for $3.5b
So the price is telling you the real revenue is nearer 300m than $15b, which puts the actual AI-support software market in the low single-digit billions. Not hundreds of billions
And if the TAM is real but just being captured by the incumbents: Salesforce's own Agentforce, the supposed winner, is at $1.2B ARR. The "someone else is eating it" defense still has to point at the someone, and no income statement anywhere shows hundreds of billions of revenue
For Nvidia to be at $5T and the hundreds of billions a year of capex behind it only pencil out if that compute throws off a huge revenue stream downstream. Support is imo the cleanest test there is to demonstrate future value of AI in the real world (literally the first thing everyone said when ChatGPT 3.5 came out was that support will be eaten first). It's the most mature, most deployed, most automatable, and the exit price of its best player is...pretty small
> Let's assume deflated 6x revenue valiation
Salesforce trades at a 4x revenue multiple, FYI.
Also, taking a TAM and multiplying it by 5% to back into a revenue figure is “if we only get 1% of the market” math.
I’m not saying you’re directionally wrong. But the claims you’re making can be rigorously made. And I’d argue they’re interesting when they are.
At the end of the day, the valuation is decided by how much a buyer wants to pay, and how much a seller wants to sell.
That $3 bln number encodes all of that in a price. Not much more to rationalize. It's quite beautiful.