That makes sense, anthropic is in a rapidly changing market. Revenue could crater if a better model is released by a competitor. AI demand could fall behind. Doesn't seem like that will happen, but its definitely not investment-grade debt worthy either.
Even if Anthropic invents a godlike frontier model that can do anything, it feels like they won't have a moat for very long before competitors like DeepSeek offer something almost as good for a fraction of the price.
If AGI is created, then it will be used by someone else to create a cheaper AGI, making the finances of the person who borrowed trillions to create it in question.
An extremely hypothetical experiment but what if this is some sort of MAD (Mutually Assured Destruction) and in our timeline, we have accepted it with AI.
Deepseek can do MAD on Anthropic and release open weights model (which means that they might not earn the most or basically burn millions/billions to then give us all essentially the same thing and we would all be on equal footing, oh they also released their inference engine right now.)
This might explain why the stock market got into an bubble and is fearing itself right now.
Mutually Assured Commoditization. (Credit where it's due I pasted my comment to Chatgpt and it gave me this term ironically and it seems to fit well to the comment that I am writing, I might write a blog about it someday.)
MAD / MAC assumes everyone has the same leverage on each other- that they are all as heavily invested in capital.
Where it falls apart is when you get companies that take open models, rent compute and sell tokens at a profit, without heavy investment into research or training. They spend way less, and if they can keep distilling the frontier models, they can produce reasonable products without the massive losses of subscription plans. In your example, DeepSeek et al aren't nearly so vulnerable. There's nothing mutually assured.
It is much more of a classic race to the bottom. Every new frontier model shifts the goal posts a bit, but eventually the house of cards will crumble - or at least, that's what the market seems to be thinking will happen.
Subscription plans are not massive losses. What are you on about?
They are simply less profitable than API pricing. They are on par with what sellers of open model tokens sell for.
If you price out Subscription limits against API pricing, subscriptions are 20x-100x less depending on model and so forth.
Yes, that's accurate.
Are you trying to say "the Anthropic API surely cannot be highly marked up! Therefore subscriptions surely are selling at a loss!"? If not, I'm not sure how your comment is particularly relevant to the discussion?
I mean, it's worth pointing out because either API pricing is crazy marked up and thus subscriptions are still profitable if they are used at full amount or subscriptions are subsidized and API pricing is more true cost. Sure, it could be second one but due to average usage, it's profitable overall.
Right. Either way, there's nothing at all to support that subscription plans are "massive losses" except the original commenter's imagination. A subscription/API price delta does not a massive loss make.
Agreed, but there is also no information to think subscriptions are profitable either. S-1 doesn't really explain it.
It would explain why Anthropic are anti open-weight too. They need the moat
This moat issue comes up a lot, but look at what's been happening so far; open models are consistently 6-12 months behind. What if their moat is simply staying ahead?
And once their models start to accelerate their progress, which may already be happening, this would further solidify their lead.
Demand is currently not sustainable because they - ant and OAI - refuse to raise prices.
Infact they’re going to end up in price competition unless they field an army of ‘FDE’ who go to every large firm and reorganise the operations around their models and displace labour.
I was under the impression this was only on the consumer side? I have heard of contracts expiring and them wanting a lot more money now (forcing from generously subsidized enterprise seat plans to all API usage). Specifically Anthropic in this case.
GitHub copilot then comes in and offers multi provider support including open source models, and gets the contract due to Microsoft’s existing establishment and lower price point.
Anthropic can’t raise their prices without loosing market share of Claude code