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Issue 1: Anthropic Right Tail Underpriced?
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Anthropic Right Tail Underpriced?
By Jon Turek
It is rare for single companies in the $35T U.S. economy to become themselves a macro variable. Anthropic is one now. Their ARR growth, capex spend, and model impact on productivity all have multipliers on the U.S. economy.
An interesting trade to me is looking at the strip of the “Will Anthropic valuation hit _ by December 31st” Polymarket contract.
The interesting thing is where the market prices the convexity point and how the market prices the right tail in the context of the recent run that Anthropic’s valuation has been on.
Valuation has tripled just in the last six months and the revenue has backed it up. Not only have we gotten stories about ARR going from $9B to $45B, but Anthropic showed that they are already profitable this year despite massive capex intensity.
Fable Inflection?
Last week, the U.S. government reversed their ban of Fable 5, which has cross-cutting impacts on the forward valuation curve. On the one hand, this development could be bearish Anthropic’s valuation based on the fact that it will be harder to release new models going forward.
On the other hand, it is itself evidence that the model is a genuine capability leap rather than an incremental release, which is exactly what a step-function valuation jump needs. The other factor here is, as these models improve from a very high baseline, it also raises the chances of regulatory capture which would be very beneficial for Anthropic’s valuation in a world of increased model competition.
In this context, the strip has a strange shape. There’s a hard cliff exactly at the $1.5T mark, then the upper tail flattens, which in the context of the recent growth and where SpaceX went public, is surprising to me.
This reads as a mixture of two distributions: a tight cluster around the consensus round print, then a smoother “something else happens” regime above $1.5T. Given the trajectory of growth and what the current risk sentiment is in the AI trade, thinking that Anthropic doesn’t add another 50-75% of its valuation this year feels like a 50-50 at worst to me given the current non linear growth in ARR. Especially with an IPO kicker likely coming towards the end of the year.
In that context, Anthropic at a valuation of $1.75T or above by year end at 40% seems too low. And the convexity point where the market hands off from mode to tail seems too close to the spot valuation, even if that number is +50% from here.
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Cool graphs !