Comment by lnkdinsuxs
1 day ago
I'm not convinced that 2026 was peak of the AI hype cycle.
Arguments are being made that, with the midterms over and 2028 just around the corner, a less sympathetic administration would create significant headwinds, adjusting the valuation of Anthropic and OpenAI down.
What we don't know are what Anthropic and OpenAI have planned and in the works.
A large population of extremely skilled and talented people are being laid off by their employers to make space for AI investments. It's likely a significant number of them will start their own business with AI.
AI is also gaining a much wider audience and acceptance. It's likely over the next few years, AI demand will grow, not stagnate.
That said, IPOs are usually liquidity events for LPs and for something really disruptive and unpredictable as AI, I won't be engaging in their IPOs. Only time will tell if this was a good decision, or bad.
Anthropic's original $2T valuation implies they are going to almost 100X their revenue.
I am highly confident that Anthropic will 100X their token sales volume. I am also confident that token prices will continue dropping through the floor due to competition. So to 100X their revenue they will have to 1000X or 10000X their token sales. That seems a stretch.
As AI grows in capability it will be trusted to do more of the work it already does and also break into new fields. Also, there are many who have never interacted with a chatbot. There is an entire world of potential customers out there. It can be quite a villainous business model but look at what Facebook did in Africa with their sponsored ISP and also what they’re doing with Meta Muse. Demand for AI usage will skyrocket.
Chatbots aren't a money maker. Each interaction is likely to be 1-2K tokens at most. AWS Bedrock prices 11K token input and 4K output for a total of $0.184 using on-demand usage [1]. So for normal usage (occasionally asking questions) you are looking at less than $1 per month for a person.
Using the models for data processing (a lot of input/output tokens) and for role-playing will use more tokens and thus cost more. However, those use cases are not common when comparing the percentage of the user base.
The money maker is agentic coding where people get the models to perform long-running tasks. This is why Open AI and Anthropic have been pushing these hard. However, there is pushback on this, especially among businesses looking for value for money/cut costs [2] like Apple [3], [4].
[1] https://aws.amazon.com/bedrock/pricing/
[2] https://www.ibm.com/think/insights/tokenmaxxing-dead-long-li...
[3] https://www.bloomberg.com/news/articles/2026-11-04/apple-cut...
[4] https://9to5mac.com/2026/11/04/report-apple-reduces-employee...
> As AI grows in capability
The issue is, at some point for AI to grow more in usage it will need to decrease in cost.
We are already seeing this with some companies reducing AI usage or moving to open models due to high costs.
AI will surely boom there's no doubt on that, but it won't necessarily produce the revenue that Anthropic investors hope for.
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Depends on the price.
Do we know if current pricing is sustainable?
Also, there are many who have never interacted with a chatbot.
Something like 99% of the people who have interacted with an LLM chatbot lose interest after a month.
100% of people who have to interact with an LLM chatbot taking the place of a human customer sales or service agent jump to a competitor.
Outside of the tech bubble, the LLM hype is already over.
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But will it increase by 10000X, as I back of the envelope calculated it would require to justify Anthropic's $2T valuation in the face of quickly dropping token prices?
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To be fair, when I buy stocks, I care less whether the company is worth 1 million, 1 billion or 1 trillion at the time I buy.
I care about whether it's going to grow in value/price from that point on or not.
And it's hard for me to imagine it growing even higher than the current valuation.
If datacenters hit significant headwinds, it will drive token prices up as more people start offloading work onto LLMs.
However this effect could just serve to make those who own the compute ridiculous money, while crushing those who need to lease compute.
Or incentivize using the minimum viable model for the job instead of throwing multi trillion parameter Fable sized models at summarizing documents or classification tasks.
I now do like 90% of my routine software dev/sysadmin stuff with Luna on Medium by default, some proportion of which could itself be offloaded to a small Qwen model.
But I wonder if that offloading will happen if prices rise past a certain point and it becomes not worth it.
Economic theory would state that if token prices go up people will stop offloading work onto LLMs and start doing it themselves again.
Indeed, 2026 was basically that: the LLM providers increased token costs and companies cut LLM spend to the bone. That is why Anthropic's IPO is struggling and MS and Google have failed to meet AI-related revenue targets for 3 straight years.
> A large population of extremely skilled and talented people are being laid off by their employers to make space for AI investments. It's likely a significant number of them will start their own business with AI.
What's you're point there? People laid off because of AI will immediately shift into AI-centric small business, and start hyping AI?
That doesn't make sense to me. People being laid off are likely to be bitter about the cause of their layoff, and even if they all start their own businesses (which is unlikely), most of those will fail, leading to more bitterness.
Many people who are being laid off will not find another spot in their industry and will need to pivot. Most of that subset of people will go to existing companies and take traditional roles. The small few remaining might take it as an opportunity to start a new business, and when they do so, they are likely to take risks on technology and business operations which will include AI. Is that so hard to believe?
I don't buy for a second that people laid off over AI will be so darn mad at AI that they won't use it, but I don't know where the hell the markets for all of these hundreds of thousands or millions of new small businesses are.
If these giant monopolies couldn't squeeze revenue out of these employees using AI, why would we think that they will be able to do it by themselves?
The vast majority of them if they want to be entrepreneurs will be better off starting a new lawn care business, or a bicycle repair shop. They can use AI to help them run that. Getting paid $175K per to write ruby CRUD was a moment that is over, hope you didn't spend all your salary on toys and rent.
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They will try to start businesses out of necessity as stable employment is not an option, and they will use AI since it's almost mandatory now for any technical productivity.
Is stable employment is not an option, their businesses will fail for the exact same reasons.
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> A large population of extremely skilled and talented people are being laid off by their employers to make space for AI investments.
Outside of programming and a couple of other sectors I’m not sure that is true. It isn’t visible in the unemployment figures.
> Outside of programming and a couple of other sectors I’m not sure that is true. It isn’t visible in the unemployment figures.
The unemployment figures is mostly a political projection, like CPI.
In 2026 everything fron sewage to chickens to oil to education is now tied to AI. The entire economy is now, for good or bad tied to AI.
What most people either didn't notice or understand is that the U.S. was entering a recession and would have been in one if it hadn't been AI
> In 2026 everything fron sewage to chickens to oil to education is now tied to AI. The entire economy is now, for good or bad tied to AI.
Tied how? How strong is the corellation between these? I'd say very weak, other than everything having to compete with AI for resources.
The same is true of any technology tied to powerful personal computers or the internet - people built and designed beatiful houses, great cars, airliners, wrote books and ran restaurants without computers or the internet.
It has even become a meme how putting smart features and lcd screens into things like washing machines have made them strictly worse.
> What most people either didn't notice or understand is that the U.S. was entering a recession and would have been in one if it hadn't been AI
Is it maybe more accurate to say that the US is in a recession, outside of the industries that are fueling AI?
Life's pretty recession-y for everyone else imo
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Everything is tied to the internet or electricity before that, yet the Mag 7 isn't all ISPs and utility companies.
The capabilites are here though.
Even if it takes them 3-6 Month to open up a new field, its going to happen steadily now and were it started, the AI investments will be recuped by layoffs.
Artists -> Translators -> Journalists -> Software engineers -> mathematicians -> lawyers -> Accountants -> ...
Its already disruptive
Lawyer, accountants, doctors, architects, and engineers won't be replaced.
We're not paid just for what we do, we get paid because we accept liability for our mistakes. Professional liability insurance is a large part of why licensed professionals charge so much money for their services.
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Do you really see lawyers being replaced? I don't see anything special in their work but since it's a regulated industry I doubt it will be so affected.
At best some layers will work faster, but automating their work or people not requiring them? Usually when you contact one there's a lot at stake. Same with accountants.
Software engineering and translators is a different story. Most of the times if something goes wrong nobody cares.
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Somewhat ironically it would appear most CEOs believe the only jobs AI is replacing are developers since they built an app last weekend. Every CEO is saying why do we have so many devs and why are we paying them so much… so devs blew up the market for devs but beyond that there doesn’t seem to be much impact.
> What we don't know are what Anthropic and OpenAI have planned and in the works.
Wouldn't they tell us before IPO? Unless it's not that promising...
> AI is also gaining a much wider audience and acceptance. It's likely over the next few years, AI demand will grow, not stagnate.
That does not mean the current players profit from this and the infrastructure investments were necessary at that scale. There is competition, there seem to be enormous efficiency gains and it's questionable that demand for even bigger models is large enough.
At a minimum we should continue to see smarter and more efficient models in 2027.
If datacenter production sees significant headwind then it’s very bad for ANT. Securing compute is listed as one of their major risks to the SEC.
The major counterpoint here is commoditization; you may have the market growing and models becoming cheaper at the same time. And we don't even have to look to Chinese models for that, as OpenAI has been adjusting its pricing already. For profitability, Anthropic still seems to be pretty dependent on its current price levels.
That said, I'm also somewhat skeptical that there is even much room for growth left unless somebody finds a new, important, and token-hungry use case.
I believe that the value that OpenAI and Anthropic hold, in light of stiff competition from China, is not their products but their internal models. China’s work is all derivative of American model API access. The exponential RSI loop means that as long as Anthropic and OpenAI keep steady footing and only release older models they will will always be the best on the market and all others will be in their tailwinds. These two things combined are what make me believe OpenAI and Anthropic will hold value and grow as companies.
Weren't DeepSeek the first to release chain of thought/reasoning models? [1]
They are also (like other models we know about) experimenting with the architecture. [2]
[1] https://arxiv.org/abs/2501.12948
[2] https://sebastianraschka.com/blog/2026/kimi-k3-architecture-...
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Even if we were to accept your entire argument [1], none of it contradicts the commoditization argument. Note also that competitition does not come just from China, but also from Google, Meta, and SpaceXAI. Where they currently are is not relevant, the entire LLM landscape will likely look nothing like today by the end of 2027.
[1] I don't, I think China is primarily limited by compute and will be at least for the next couple of years, probably longer.
Best on the market, for something not being sold on the market? How is that helpful in terms of actual revenue?
If Anthropic manages to start producing new pharmaceuticals with their internal models or something that thesis could make sense but not if 90% of their revenue comes from enterprise API sales which would necessarily have to be accessible to the public. Which are then inevitably fast followed by Chinese models 3 months later.
You can be the best in a $100B market, but that won't make you worth $2T.
Generating a full length movie script and then the video?
In theory, yes. But the reality is that deep learning models just aren't good at creative output (to put it mildly). And neither Anthropic nor OpenAI have any models that generate video, so this wouldn't help them; in fact, OpenAI killed off Sora.
It certainly isn't the peak of the AI hype cycle. Eventually something will surpass LLMs and the hype will start all over again. Will it really be the final invention this time? Place your bets!
AI will keep going up. The perspective of the investor is on whether OpenAI and Anthropic will be the next Google, Apple, or the next Yahoo, MySpace.
Tulips, Railroads, and the Internet also didn't go away when the financial bubble around them burst. That doesn't mean there wasn't a massive market correction in response to the over-investment.
> Tulips, Railroads, and the Internet also didn't go away when the financial bubble around them burst. That doesn't mean there wasn't a massive market correction in response to the over-investment.
Your Railroads and the Internet parallels are so very apt. We certainly are very productive even in 2026 off those but almost no one remembers how many large behemoths were wiped out in the U.S. because of them.
Yes, it does seem to me that the AI of 2026 will be like the Railroads and the Internet - fundamentally transformative technology that changes how things are done into the future but there will be blood in the short term, which is why I would not be participating in the IPOs directly
Tulips kinda did go away
I don't believe they literally meant Tulips but rather its hype cycle. I commented on the other two that can be taken literally
There's a beautiful tulip garden just down the street from me, and an outdoor weekly market where tulip bulbs are sold. Tulips are very much still around, I assure you.
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Only popular with companies that want to make a quick buck and tech people (hey! that's me!).
You really don't know what we have here, do you? Let me illustrate what you can do with Qwen3.8@q4 locally with about 2TB of storage and a small cloud server to host a website.
Locally you scrape and process every elected official and start tracking what they're doing, what they're promising, and what they're not doing. You build embeddings and make them all geotagged in a database and just start with the largest cities.
The website provides public facing search. User drops in a zipcode, city, state, specific rep's name and gets what's relevant to their results.
All of this is to say, we literally have the technology to hold accountable our representatives and then show everyone objectively who's doing good and bad for their constituents.
It wont take much to solve the problem of bad representation after these last two years. The hard part is literally making sure people going to a polling station can immediately know who the heck the 10 - 30 different people are they're voting for, and track them efficiently within their own specific parameters.
Regulation is coming for more than just the inference providers.
Got a website for this? A politician leaderboard sounds like it could do some good, even with Goodhart’s law.
I'm still working on my implementation. The hard part is data sourcing. This is about to run me a TB in storage to do and it's going to require some data archival. My estimate is that I can serve some, but not all cities. Just keep an eye on my user posts, I'm sharing it when it's live.
Not making a leader board to be clear though. The goal is to build a branchable leaflet style page based on zip codes that lists ALL the people that were elected. Clicking into the each person will yield details on any legislative actions, their attendance, publicly made promises, etc.
I'm really sick of hearing lip service from politicians so I want to build receipts that even a child could understand.
got one of those already https://www.theyworkforyou.com/ https://www.govtrack.us/
These are a good start, but they aren't quite enough. I just voted for ~25 different people going all the way down to local government. These don't answer the questions I'm about to be answering top down for myself and neighbors.
> a less sympathetic administration would create significant headwinds,
I find myself wondering what "less sympathetic" and "significant headwinds" mean in the minds of people in the upper echelons of the AI industry.
Rules for training frontier models? Requirements for renewables to power data centers? Actually having to pay people for the content you train on? Data center rules that would end them going behind the backs of local electorates to get governments to approve the building of data centers?
I'm not convinced that 2026 was peak of the AI hype cycle.
Agree. these valuations will hold. Pundits made the same prediction after Facebook's IPO in 2012 that everything would soon crash. here we are...