Nvidia anchors Anthropic's $2 trillion IPO

0:00This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online makes sense? There's no place like Chrome. Check responses set up require compatibility and availability varies 18 plus. Propel Fitness Water With Gatorade Electrolites, Zero Sugar, and Vitamins, propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade Electrolites When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Find less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at Indeed.com slash podcast.

1:04That's Indeed.com slash podcast, terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Anthropic is seeking to raise up to $100 billion in an IPO, valuing the company around $2 trillion. And Nvidia is in talks to be an anchor investor, putting in up to $10 billion. Yeah. I mean, a listing of that size puts them in a category completely separated from normal market mechanics. Right. It's just a different universe. It is. And Nvidia is shifting its position with this move too. They're evolving from just supplying the hardware for these models to what really holding the purse strings of their biggest buyers. Yeah, which is a huge shift. Right. And it brings up this tension. Infrastructure supplier buying a massive stake in its own largest customer, validate the actual market demand. Or does it just create this closed loop financial ecosystem? Well, the mechanics of an anchor investment are fairly straightforward, normally, right? But when you apply them to a $2 trillion valuation, the physics change.

2:05They completely change. Because normally an anchor investor commits capital before the wider marketing even begins. The goal is just to build confidence for the institutional investors who will be pitched during the road show. Right. If you're a mutual fund manager looking at a new listing, seeing a $10 billion commitment already on the cap table, that provides a psychological floor. Yeah. The risk profile of the entire offering changes when a heavyweight has already cleared the diligence process. Exactly. It signals to the market that the largest player in the space believes the valuation is justified. You are essentially borrowing the credibility of the anchor to sell the rest of the shares to the public. We're not subscribed yet. Take a second and hit follow on whatever podcast app you're using. It helps us keep making this. We appreciate you being here. So getting back to Nvidia, the strategic wrinkle here is that they're anchoring the IPO of their largest GPU customer. We are looking at a company with just an enormous war chest. Nvidia has what $99 billion in equity investments right now.

3:07Yeah. And another $25 billion in investment commitments. And those span across semiconductors, computing infrastructure, networking, biotech, and private AI. They have the capital to essentially just make their own markets. But that balance sheet reality is exactly where the friction is. The vendor becomes a major shareholder in its biggest buyer. And that creates a direct financial incentive to keep the training runs locked onto Nvidia Silicon. I mean, if you're in the topic and Nvidia holds $10 billion of your equity, you're highly unlikely to start experimenting with alternative chips from competitors. Exactly. The financial relationship inherently dictates the engineering choices. And the thing is, even if anthropic re shares perform poorly post IPO, Nvidia might still win simply by securing the hardware sales. Right. Because the capital they put to the equity round, essentially just round trips right back to their own revenue column. Exactly. When anthropic builds its next data center, it's a highly efficient way of ensuring your

4:09assembly lines never stop running. It really requires looking the difference between a traditional venture capital investment and a supplier funded investment. Yeah. They operate on totally different access. Right. Because the traditional VC firm operates on a single axis. They put money in and they're only when condition is the company is valuation going up so they can sell their equity in premium. They don't care what servers the company uses. No, they don't care what networking cables they lay or how they structure their physical operations just as long as the margins improve. But a supplier has a dual mandate. Exactly. They want the equity to go up, sure, but they also use the investment to guarantee a pipeline for their own products. It functions sort of like an automaker buying a massive stake in a rental car company. Right. The automaker ensures a permanent buyer for their fleet. They don't even really care if the rental company itself is highly profitable in the short term. The primary goal is just moving metal, which leads right back to the core question of whether a supplier's backing is actually an independent validation of anthropics business model.

5:14Right. If the investment secures billions in future GPU orders, you could argue this is just a highly sophisticated customer acquisition cost. Yeah. And Vity is buying guaranteed future revenue and calling it an equity investment. And public investors are going to have to parse out how much of this demand is organic versus how much is subsidized. Imagine you're running a casino, right? And you want to ensure the highest roller state your tables. Bank. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online makes sense? There's no place like Chrome. Check responses set up require compatibility and availability varies 18 plus. Propel Fitness Water with Gatorade Electrolites, Zero Sugar, and Vitamins. Propel hydrates better than water to help you get the most out of your workout and get

6:16back to your best self. What propels you? Propel with Gatorade Electrolites. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at ande.com slash podcast. That's indeed.com slash podcast, terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Following them directly keeps the chips flowing through your own ecosystem. If they win, you take a cut of the profits through your equity stake. If they lose, they lost the money back to your house anyway. The money never really leaves the building. The financial engineering is brilliant from Nvidia's perspective. They de-risk their own supply chain by capitalizing their buyers. It forces public market investors to figure out how much of the demand is a true reflection

7:19of the broader economy adopting AI and how much is being artificially sustained by the vendor's own treasury department keeping the wheels turning. To understand why Nvidia would even need to bankroll its customers to this degree, you really have to look at the numbers coming out of Anthropic. Yeah, the internal financials are operating on a frequency that is very difficult to comprehend, even for institutional investors who are, you know, used to hyper growth tech companies. The primary number driving all of this is revenue. Anthropics is annualized revenue leaped to $65 billion. Which is just wild. It's a seven-fold jump from $9 billion just seven months prior. Seven months. Yeah. We are looking at an organization that started as this cautious lab, famously turning down military contracts, and they are now sprinting toward the largest listing ever. Well generating $65 billion in annualized revenue means you are fundamentally altering global infrastructure. Yeah. But a $2 trillion valuation leaves zero room for ordinary execution.

8:23The market is not pricing in strong growth at that level. No, they're pricing in perfection. Exactly. The market is pricing in years of absolute uninterrupted leadership in the sector. Every single quarter has to be perfect. If they miss earnings by a fraction of a percent once they're public, hundreds of billions of dollars in market capital just evaporate in a single afternoon. The sustaining that level of revenue requires an operation that strains comprehension. Compute, chips, power, distribution. They aren't just background operating costs anymore. No, they are the entirety of the strategic picture for Anthropic. Generating $65 billion in API calls means you are spending up millions of GPUs constantly. You're dealing with physical constraints now. Right. You're dealing with a land securing power purchase agreements with utility companies, sourcing specialized cooling equipment. And you have to wonder how much of that $65 billion is actually supported by paying end users versus expansion funded by fresh capital. Right.

9:23Because if a massive enterprise signs $100 million contract with Anthropic to overhaul their internal data, that is organic revenue. Right. But if a significant portion of their revenue is coming from other startups who are spending venture capital to buy API access, that creates a really fragile ecosystem. That is the circular economy of AI right now. A venture capital firm funds an application startup. The startup uses that funding to pay Anthropic for API access. Anthropic takes that revenue and uses it to buy more GPUs from Nvidia. Nvidia takes his profits and invests them back into Anthropic. As long as the venture capital keeps flowing at the bottom layer, the machine works. But if the venture capital dries up, the startups stop paying Anthropic and Anthropics revenue drops and they stop buying servers from Nvidia. And public markets are acutely aware of this risk. A $2 trillion valuation requires Anthropic to prove that their revenue is anchored to actual, sustainable business use cases. Use cases that generate real cash flow, not just other startups burning through Series

10:26A funding. Right. And the public croissant of Anthropic adds friction to this entire process. The safety branding remains completely intact, but the balance sheet is operating with hyper aggressive momentum. Yeah, they are positioning themselves as the cautious, thoughtful alternative in the space. While simultaneously pushing for the highest valuation the market has ever seen, the cognitive dissonance is loud. And this friction between safety branding and massive capital events is showing up across the entire industry. It's not just Anthropics. No, Sam Oldman confirmed that OpenAI is pushing its IPO further out, specifically citing a need to slow down and get AI safety right. And we also have Dario Amadei and Elon Musk publicly calling for the industry to slow frontier model development. Right. But at the exact same time, private valuations are soaring. Cognition just closed over $2 billion at a $48 billion valuation. Every company still raising private rounds is moving at full speed. The pattern is highly visible. The moment a company faces the prospect of listing publicly, they suddenly make the safety

11:28argument. And the function as a capital strategy disguised as a moral stance. You really think it's just strategy? Well, delaying a public listing avoids public market scrutiny on growth numbers while locking in higher and higher private marks. Staying private means you never have to answer to retail investors about your compute costs on a quarterly earnings call. I mean, I look at the statements from Amadei and the research papers being polished and I see a real existential concern that legitimately requires slowing down. The capabilities of frontier models are scaling in ways that the researchers themselves admit they don't fully understand. We're seeing models develop agenteic behaviors, writing and executing code autonomously. The safety concerns are grounded in actual technical unpredictability. Safety is absolutely a real concern from an engineering standpoint. I'm not denying that, but you cannot ignore the timing. Yeah, it is convenient. It is a highly convenient reason to stay out of public view while the valuation math still has room to run in the private sector.

12:29The financial incentive aligns perfectly with the safety narrative. Because if you go public, you have to file an S1. Exactly. You have to show exactly what your gross margins are. You have to explain to Wall Street why you are burning tens of billions of dollars on electricity in silicon. But if the models actually pose a threat to digital infrastructure, forcing them into the public markets might be the worst possible move. How so? Well, public markets demand quarter over quarter growth. They demand that you ship products faster than your competitors. If anthropic is public and their stock is dropping, the pressure from activist investors to abandon safety protocols and ship a more capable, less-aligned model just to hit a revenue target would be immense. That might be true, but staying private allows them to avoid answering the fundamental question of whether their business model actually works. Yeah, that's fair. It allows them to rely on the economic structure in video is building beneath all of these companies. In video is creating a highly efficient economic flywheel that really only functions optimally

13:30as long as the numbers stay obscured in private valuations. Right. They supply the infrastructure to build the models while investing capital into the companies that create the demand for that infrastructure. When you map out Nvidia's public holdings, the scope of this flywheel becomes apparent. They have positions in Intel, SpaceX, CoreWeave, Coherent, Nokia, Synopsies, Nebius, and Generate Biomedicines. They're placing capital across semiconductors, networking, biotechnology, and computing infrastructure. Because successful portfolio companies like Anthropic, OpenAI, and CoreWeave generate investment returns for Nvidia. And simultaneously, they expand the total addressable market for Nvidia technology. Yeah, if you look at CoreWeave, they're a specialized cloud provider. Right. In them, CoreWeave uses debt financing to buy massive clusters of Nvidia GPUs, and then AI startups rent that compute. Nvidia is effectively seeding every layer of the soil. If AI continues scaling at this rate, Nvidia stops looking like a semiconductor manufacturer.

14:32They start resembling a combination of a technology platform, an infrastructure supplier, and a strategic investment fund. Yeah, the biggest long-term value for them might not come from selling GPUs at all. It might come from financial participation in the industries those GPUs enable. Right. By taking equity in the companies building the models, they capture the upside of the applications, not just the hardware margin. But there is a serious risk of a house of cards forming here. Oh, absolutely. We saw similar mechanics during the telecom boom in the late 90s. Yeah, equipment manufacturers were financing the company's laying dark fiber. And as long as capital was flowing, it looked like a perpetual motion machine. But eventually, someone actually has to use the fiber. Exactly. In this case, if the end user applications do not generate enough actual cash flow to pay for the compute required to run them, the entire structure faces a severe correction. The infrastructure layer is currently valued on the assumption that the application layer will eventually be wildly profitable.

15:32Mm-hmm. If you look at generated biomedicines, they are using AI to design novel proteins that requires massive amounts of compute. And video invests in them. Because if generates succeeds in creating a new blockbuster drug using AI, the return on that equity investment is astronomical. And it validates the need for every other pharma company to buy Nvidia hardware. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. When I and Chrome is here for it, ready to make anything online makes sense? There's no place like Chrome. Check responses set up require compatibility and availability varies 18 plus. Propel Fitness Water With Gatorade Electrolites, Zero Sugar, and Vitamins, Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you?

16:32Propel with Gatorade Electrolites. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at ND.com slash podcast. That's ND.com slash podcast, terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. But if those biotech applications fail or if the enterprise software tools do not make workers measurably more productive, the demand for the compute drops. That is why the prospect of an anthropic IPO is so critical. If they move forward at a $2 trillion valuation, the IPO will serve as the ultimate test for the entire sector. It forces the transition from hypothetical private market math to brutal public market reality. It will show exactly how much of today's private AI valuation logic public investors are

17:37actually willing to swallow. Capital is already moving away from betting purely on models though. Yeah, we are seeing a shift in where the money is flowing. Investors are looking for AI applications that close the loop on their business models and create genuine value rather than just raw intelligence. Public markets operate on a totally different set of physics than private venture capital. When a company goes public, the narrative has to translate into sustainable financial metrics. And investors will scrutinize specific metrics that private companies rarely discuss openly. They'll look at cash burn, they'll look at long-term computing commitments, and most importantly, they will look at gross margins after inference costs. Yeah, the cost of running a model, the inference cost, is ongoing. This is a concept that often gets lost in the discussion about AI. It does. Everyone focuses on the cost of training a model. It requires thousands of GPUs running for months. That is a massive capital expenditure. But inference is the cost of actually using the model.

18:37Every single time a user types a prompt or analyzes data, it costs the company money and compute. It burns electricity in real time. Exactly. If you are charging a user $20 a month for a subscription, but they are generating so much text that the electricity and compute cost you $30 a month. Your gross margin is negative. The more successful your product is, the more money you lose. And the central question for public investors will be whether andthropic can fund those ongoing computing needs from its own operating cash flow. Because if they require ever larger financing rounds, just to keep the servers running, the public markets will punish the stock. A $2 trillion valuation implies that anthropic has figured out how to make inference highly profitable at scale. And if their S1 filing shows that they are subsidizing the cost of compute just to gain market share. Public investors will not give them the benefit of the doubt. The next way of opportunity might not belong to giants like anthropic at all. No. If the inference costs remain stubbornly high, building a universal model that can write

19:39poetry, code and Python, and analyze financial spreadsheets might just be economically unviable. The compute required to maintain that level of general intelligence is staggering. It could belong to smaller companies focused on vertical AI agents, companies that figure out how to make the economics work sustainably within a specific industry. Right. A medical AI that only reads radiology scans doesn't need to know how to write a screenplay. Exactly. It requires less compute to run, and the value it provides to a hospital justifies a high price point. That is a closed loop business model. And the broader market is starting to look for exactly that. The private markets can support ambitious expectations based on future potential, but public markets simply ask if the business can keep delivering profitable growth today. Yeah, the tolerance for burning cash to acquire users is just much lower than it was 10 years ago. So the real story here isn't just the size of the IPO. It is how deeply interconnected AI models, cloud infrastructure and semiconductor capital

20:40have become. You can no longer analyze a software company without understanding the balance sheet of the hardware manufacturer supplying their servers. Search the IPOs that actually happen, not the ones that keep getting delayed. Because when the real market correction hits, it will be the public companies that have to answer for their computing costs. If you're not subscribed yet, take a second and hit follow on whatever app you're using. It helps us keep making this. We appreciate you being here. Also check out our YouTube channel for more business and tech updates. There's a link in the description. Fall has never looked or tasted this good. Sweet Greens Fall Harvest Menu is back with seasonal favorites dressed to impress and made to be devoured. Warm roasted sweet potatoes, crisp apples, maple glazed brussels and crave worthy flavors in the autumn harvest bowl, maple glazed salmon plate and roasted bacon brussel side. The season's most desirable menu has returned to sweet green. Featuring falls best dressed. Make your move. Order on the sweet green app. Push your limits, train with precision, see the results.

21:43At Equinox, that's type performance loving. Everything you need to lock in and unlock your potential at Equinox. Start today at Equinox.com. Labor Day's savings are happening now at the Home Depot with select appliances starting at $399. Plus, save up to an extra $1,000 and get free delivery on appliance purchases of $998 or more. When you shop pick up at Fred Meyer, you can expect the savings you love and fresh groceries selected just for you. Our associates are committed to getting every detail right, carefully hand picking your items, checking for quality and freshness and packing your order with care. Because bringing you fresh, quality groceries is what we do best.

22:44And right now, enjoy $30 off your first online order of $75 or more. Restrictions apply, seasite for details. Fred Meyer, fresh for everyone. Close your eyes, exhale, feel your body relax. Go of whatever you're carrying today. Well, I'm letting go of the worry that I wouldn't get my new contacts in time for this class. I got them delivered free from 1-800 contacts. Oh my gosh, they're so fast. And free. Oh, sorry. I almost couldn't breathe when I saw the discount they gave me on my first order. Oh, sorry. Namaste. Visit 1-800-contacts.com today to save on your first order. 1-800-contacts.