Comment by Maxatar
1 day ago
These commitments aren't annual though, most of them amount to 10 billion a year commitments for 10 years. Put another way Anthropic has committed 52 billion dollar a year to these companies and their S-1 indicates they earn 67.2B a year in revenue.
I'm not going to predict whether Anthropic succeeds or fails, just that it's very misleading to claim that Anthropic needs to grow to $500b in revenue without making it clear that it's $500B in revenue per decade rather than $500B in revenue per year which is what most people reading such a number would assume.
To be more specific:
- 161.2B w/ Broadcom: 2026-2031
- 120.5B w/ SpaceX: 2026-2029
- 114.5B w/ Google: 2026-2033
- 110.0B w/ Amazon: 2026-2036
- 44.9B w/ Microsoft: 2026-2033
- 44.6B w/ Nscale: 2026-2033
- 41.3B w/ Lambda: 2026-2034
which is around $63.7 billion / year if spread over 10 years, but with most of it due earlier than that.
Isn't the SpaceX contract cancelable with 90 day notice? How many of the others are too?
You're right, SpaceX will be cancelable within 90 days after March 2027.
SpaceX was the only one mentioned as cancelable. These are listed under "Infrastructure Service Arrangements" on page 170.
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The question is, how're those datacenters build outs coming along? two reasons for Anthropic to cancel those contracts. A) They don't need the capacity because they have capacity elsewhere, or b) they don't need the capacity because no one is using Claude. (I guess c) they don't need the capacity because theyre running Claude more efficiently is also technically possible.) For B to happen, they've got the demand in the form of contracts, and models don't really seem like they're shrinking, though there's a lot of non-public info, Astra > insize than sol, and Opus > insize than a Sonnet. So then we're looking at situation A), and the think to look at is SpaceX has the vertical integration to be able to plonk down datacenters and get them powered with literal jet/rocket engines/turbines that they make from scratch because they're a space rocket company when no on else can. So, personally, I don't think it's that big a risk to SpaceX's revenue. Or rather, is cancelable in 90 days, but smart money is going to see those cancelations coming from a lot longer away, if you're tracking datacenter construction. (Disclaimer, I picked up some SPCX; not financial advice, etc)
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all Anthropic contracts are cancelable if the intent is to stick public shareholders with a bag
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On a side note, these are pretty hefty portions of the total revenue of these companies. 161B with Broadcom over 5 years is about 32B/year; that's fully half of their 2025 revenue. 120B with SpaceX over 3y is 40B a year, more than double their 2025 revenue and almost triple 2024. 114B with Google over 7 years is about 3% of their total revenue and about 1/4 of all Cloud revenue. 110B with Amazon is about 9% of their AWS revenue.
If Anthropic's revenue story doesn't materialize and the AI bubble bursts, these companies are in a world of hurt. It's probably not fatal for Google or Amazon but would be a major drag on the stock price (perhaps why Google has dropped from 400 to 315 over the last couple months as the AI story soured), and it could be company-ending for Broadcom or SpaceX if they end up building out infrastructure to service these commitments.
I remember before I left Google, one of the TGIF questions (which are now AI syntheses of many peoples' individual opinions) was "What happens if AI is a bubble and it bursts?" His response was "If that happens, the whole industry is in trouble." I see now what he meant.
SpaceX will just use the compute directly if they don't have buyers. They are already talking about the data center shortage as well because they can't get capacity elsewhere either. It's a weird problem to not be able to use your own data centers because you rented them out.
Between SpaceX, Starlink, Tesla, Neuralink, X, Grok, Grok Bot & Cursor there's not a demand shortage.
Grok Bot's the fastest growing product in the history of the company and the moment you use it, it's clear why. Took me about 1-2 days to realize I'd have a very hard time going back to not having it available.
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No the biggest problem will be investors will demand much higher dividends aka cash return..... how will alphabet continue to fund its projects with ever decreasing internal cash flows available after dividends? If the founders decide not to come good on this - the stock price will crash. If much of your employees compensation is stock based...? i have bad news for you
one can truly dream
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wait what, how is Broadcom worth so much with so little revenue?
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from what you've written it's more like:
- 2026: $97.08B
- 2027: $97.08B
- 2028: $97.08B
- 2029: $97.08B
- 2030: $66.96B
- 2031: $66.96B
- 2032: $40.09B
- 2033: $40.09B
- 2034: $14.59B
- 2035: $10.00B
- 2036: $10.00B
Total: $637.0B
Considering everything that is cancellable, ie. hard commitment only, it's:
- 2026: $56.79B
- 2027: $56.79B
- 2028: $56.79B
- 2029: $56.79B
- 2030: $56.79B
- 2031: $56.79B
- 2032: $29.93B
- 2033: $29.93B
- 2034: $10.00B
- 2035: $10.00B
- 2036: $10.00B
Total: $431B
If they go bankrupt, there are some more cancellations available, also from the other side – if some providers don't deliver, it can be lower as well.
That's helpful, but 2026 isn't cancelable, nor is at least half of 2027. Also, I think some of these numbers are off. Only SpaceX is cancelable but the above shows declines for years outside of the SpaceX commitment (assuming it does get cancelled, and in full).
I also left out AMD at $20B for 2027, so that would need to jump up.
Finally, the above is only counting the commitments they've already made. It's not very likely they'll only spend $10B in 2035.
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If we assume none of it is front-loaded (which seems, uhhhh unlikely) we're looking at ~$100 billion a year for the first 4 years of commitment. That's significant.
https://tinylittleoffice.com/write/#/v1/write/yZVWxTsMwEN39F...
Got the numbers on a spreadsheet. Of course this is a super simplistic version assuming equal yearly commitments.
It’s been rumored but this is a pretty huge TPU dependency. Assuming Broadcom + Google is TPU spend.
There is the FT covers it…
> Its largest commitment is with Broadcom, which co-develops the TPU AI processors with Google and leases them to Anthropic in deals worth $161bn over five years. From 2028, Anthropic expects to spend up to $150bn more on TPUs.
https://www.ft.com/content/a6c43402-719e-4295-ae5f-541edb0ae...
Thanks for clarifying, that’s a huge difference. Obviously they will have other revenue sources, but will likely make a small portion of their revenue. If we approximate their growth rate by these numbers, it is quite a slowdown.
You're right that my numbers are imprecise, but I did mean $500b in revenue annually.
This is just the compute, which primarily covers training + inference. They still have to run the rest of the business. If you think AI should look like SaaS and spend 10% of their revenue on compute, that's $1T in revenue. If you think it's a hardware business, that's 30% margins and perhaps $200b in revenue. I went with something in the middle at $500b.
They won't disappear as a company at $200b in revenue, but I don't think that's their aspiration. These commitments imply to me that they're confident they can do much better.
> If you think AI should look like SaaS and spend 10% of their revenue on compute, that's $1T in revenue. If you think it's a hardware business, that's 30% margins and perhaps $200b in revenue. I went with something in the middle at $500b.
I'd think it's more sound to just look at what percent of their current spend is on compute? Seems to be 50-60%
> Put another way Anthropic has committed 52 billion dollar a year
Idk where you got this figure from, but the actual figure are very different from that:
It's 120B over four years for SpaceX alone and 120B for Broadcom over 6 years. These two players, representing less than half of the total commitment, already give you an annual commitment above 50B.
Good point. Although they also need to make a profit. To justify an eventual PE ratio of 25 and a current valuation of $1 trillion they need to make an annual profit $40 billion. And then lets assume $40 billion in other expenses. So they need revenue of $50 + $40 + $40 = $130 billion revenue annually.
But if you buy them today at a $1 trillion valuation, and they only make $40 billion in annual profit, your investment will go nowhere. They need to be growing profits at 20% per annum to justify a PE OF 25.
And then you have the competition problem. The cheap open weight models are good enough for many (most?) tasks.
And then you have the problem that LLMs may not be that useful outside of programming, customer support and law (and doing homework).
We have examples today of companies that don't need to justify an eventual PE ratio of 25 so why would this be a thing all the sudden? I think you all are misunderstanding vague notions of market fundamentals as some kind of rules by which the market works.
500B in a decade is really a lot
Yeah, it's a crazy number, but they got the AI business right, just like Google got internet marketing right 25 years ago, as long as they keep the momentum (and prices).
Isn't the issue tho, that google launched at i dunno a 1bn market cap and grew as the internet grew.
what you're buying into here is a company that is already large on the idea of growth over the next 10 years.
Modern IPO's just reek of investors cashing out
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Did they get it right? I'm geniunly curious because from my point of view the only company to get AI right so far is Microsoft. This is from the point of view of an EU energy company married to Microsoft services mind you, but Microsoft is the only AI company which actually sells AI to us in a manner that can be considered useful. 7 months ago I thought Copilot (the m365 one, not the github one) was useless. Now I think the chat part is as good as what you'll get on the smaller subscriptions to ChatGPT or Claude, and it's Cowork is very good.
Obviously it's not like having Claude Code or similar, but those would be very hard to run legally and safely in EU regulated industries like us in energy production. You could run Codex but it would require your IT department to have yet another place to manage security and software integrations. Which is a fairly big issue when you have around 1 IT staff member per 300 employees, and an organisation which will buy five different sharepoint solutions for the same problem.
Microsoft sells something that seamlessly integrates into everything else you buy from them. It's easy to manage credit spending and when I say that I don't mean that it's easy to set it up. It's easy to track and budget so the right departments pay for it. It can read your emails, your onedrive, your loop, your sharepoint, your powerbi/fabric and anything else you have access to. Sure it's annoying to be confronted with a point you've made 7 months ago (like how you think Copilot is utter trash) and since changed opinions on it's frightingly good at finding relevant stuff, even in some obscoure legal document on your intranet.
I assume that Anthropic and OpenAI makes money of this somehow, but for the most parts our users wouldn't care if it was the GPT and Claude models or Mistral or Deepseek. Which is why I asked if they had really gotten it right.
What fraction of coding opex do they need to capture to justify this, whether they got it right or not?
> Put another way Anthropic has committed 52 billion dollar a year to these companies and their S-1 indicates they earn 67.2B a year in revenue.
A very large part of that revenue is paying for inference. There’s not enough leftover for the committed outlays. So it has to come from smucks I mean investors.
These commitments are in large part the paying for inference..