Anthropic S-1
sec.gov1528 points by SiNTEx 15 hours ago
1528 points by SiNTEx 15 hours ago
Everything comes back to whether the demand is really there.
Anthropic thinks it is. The got the demand / datacenter match right in Q2, got great margins, and committed hard.
They've got:
- $114b committed to Google
- $110b committed to AWS
- $161b committed to Broadcom
- $120b committed to SpaceX
If the party continues, they'll go from $50b in revenue to $500b and be fine.
But if they don't, it's going to hurt. And that's their only choice, because otherwise, they end up with a frontier model and 50% of the capacity and get eviscerated on either availability or last-minute datacenter leases.
It's a big business, but it's not an easy business.
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.
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)
> "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"
Is that really a viable path? (Honest question)
At this point, you can get the chips you just can't get the power. So in typical elon fashion, he just "solves" the bottleneck. Long term, no, that is not the strat. Thus the pivot to space.
What happens when he sucks the natural gas pipes dry in the peak cold of a Texas winter and thousands of people die to keep xAI burning?
SpaceX does not make turbines that can run for tens of hours producing megawatts of power. A turbopump is a different beast.
Not the whole turbine, but they are manufacturing turbine blades in bastrop texas. The turbines are available right away, but the blades are 12-18 month lead time, so Elon built a foundry. From what i heard they've only gotten a couple proto's out of the foundry/ no idea the grain quality. But they are doing it.
all Anthropic contracts are cancelable if the intent is to stick public shareholders with a bag
I'd imagine all of the vendors have an incentive to keep their main customer a float, while there might be penalties etc. for missed targets - it doesn't make sense for any of these vendors to ride the contract into chapter 11.
This is so important in analyzing these commitments. Anthropic's commitments will make them a Top 10 customer at many of their vendors. (Even at Google/Amazon, how many other customers do they have with $100B+ committed?)
Those vendors would very much like to retain as much of that business as possible. If the space goes sideways, I would very much expect some kind of renegotiation/work out.
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.
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
wait what, how is Broadcom worth so much with so little revenue?
Their current stock price is pricing in these contracts, which have already been announced but have not been fulfilled (or booked as revenue) yet. So Broadcom's 2025 revenue was 63B; note that this is already up almost double from its 2023 revenue of 35B, largely on AI contracts. If Anthropic spends another $32B in 2026, that's in addition to their declared revenue; investors expect they'll be making $100B+ in 2026. Broadcom's operating margins are pretty good, so a lot of this flows through to the shareholders as earnings, and so investors are valuing it on the assumption that these contracts result in tangible cash flow.
If the AI companies go tits-up, that introduces counterparty risk, the revenue doesn't materialize as cash, and suddenly their earnings take a nose-dive. If they've staffed up significantly to design and sell these AI accelerators and suddenly there's no market, they could be in a lot of hurt.
AI aura.
BRCM and Marvell are both the actual designers of many of the “we designed our own ai chip” chips that so many companies have been announcing.
Broadcom is also a major supplier of the networking chips that the hyperscalers use. Clusters are moving away from infiniband and nobody is particularly impressed by Spectrum.
I'm sure there are others here that are experts on this topic, but my 2 cents on this is that Broadcom specialise in custom / specialised AI chips, and their collaboration with Google to manufacture the TPUs is a pretty solid revenue moat over the next several years.
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.
It goes down because contracts expire.
AMD is missing, true but commitment schedule isn't known. Also missing estimated additional TPU purchase for 28-31, ~$125B-$150B.
- 2026: $97.08B = Broadcom $26.87B + SpaceX $30.13B + Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B
- 2027: $97.08B + AMD (TBD) = Broadcom $26.87B + SpaceX $30.13B + Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B + AMD (TBD)
- 2028: $128.33–134.58B + AMD (TBD) = Broadcom $26.87B + SpaceX $30.13B + Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B + additional TPUs $31.25–37.50B + AMD (TBD)
- 2029: $128.33–134.58B + AMD (TBD) = Broadcom $26.87B + SpaceX $30.13B + Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B + additional TPUs $31.25–37.50B + AMD (TBD)
- 2030: $98.21–104.46B + AMD (TBD) = Broadcom $26.87B + Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B + additional TPUs $31.25–37.50B + AMD (TBD)
- 2031: $98.21–104.46B + AMD (TBD) = Broadcom $26.87B + Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B + additional TPUs $31.25–37.50B + AMD (TBD)
- 2032: $40.09B = Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B
- 2033: $40.09B = Google $14.31B + Amazon $10B + Microsoft $5.61B + Nscale $5.58B + Lambda $4.59B
- 2034: $14.59B = Amazon $10B + Lambda $4.59B
- 2035: $10.00B = Amazon $10B
- 2036: $10.00B = Amazon $10B
Combined total: $782–807B+, including estimated additional TPU purchases and conditional AMD spending.
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
> google launched at i dunno a 1bn market cap and grew as the internet grew
Google closed its first trading day "worth more than $25 billion" [1] with $1.5bn revenues, up 234% from 2002's $440mm [2]. That's a 16x revenue multiple, 0.07 growth adjusted [3].
On a similar revenue multiple, Anthropic's $16.3bn half-year earnings are worth $543 billion. Adjust for Anthropic's 1,400% YoY growth and you're well over $3 trillion.
Obviously, it's a lot harder to grow at a thousand percent from a $16bn baseline versus a few billion. But purely on a multiple basis, Anthropic is in a similar ballpark as Google.
[1] https://www.nytimes.com/2004/08/19/technology/shares-of-goog...
[2] https://www.sec.gov/Archives/edgar/data/1288776/000119312504...
If only it was that simple, to switch multiples around between random companies and come up with valuations
Google was profitable, free cash flow positive and had no debts basically
Anthropic is burning money by the millisecond, no profits, free cash flow negative and has lots of debts & commitments
Correct does that poster actually know what comparables are?
Comparables are not by peer group or sector.
It’s cash flows, growth and risk bud. If you want to do peer group - go ahead - just don’t forget to control for differences..
Price to sales multiples are internally inconsistent by definition.
Is there an internet rule for folks asking if someone else knows something following it with a completely wrong definition of that thing?
As another check, SpaceX is trading at ~62x sales with a growth rate in the 30% range. Assigning the same sales multiple puts Anthropic at ~$2T market cap. Add in a factor for much faster growth (and non-GAAP profitability) and $3T is a really easy place to end up.
Sure, you can throw any numbers around, if you wish to get any valuation you want.
In reality, a valuation based on revenue (sales) is bonkers to begin with, but even worse when you consider that Anthropic has so much debt that it doesn't have positive equity value, it's in a deficit ("When liabilities attached to an asset exceed its value, the difference is called a deficit and the asset is informally said to be "underwater" or "upside-down""). At least SpaceX has more assets than liabilities.
There are a set of mistakes in what you wrote, but
> SpaceX has more assets than liabilities.
is definitely a choice thing to write on the day SpaceX announced a $40B debt deal to purchase compute to run other companies' models. Based on available information, this will put SpaceX into a place where it has more liabilities than assets.