Anthropic needs “supernormal” growth to cover its spending commitments, which are likely more than what meets the eye, according to “The Big Short” investor.
- Burry said Anthropic’s total commitments run from $1.05 trillion to $1.07 trillion, versus the disclosed figure of $895.4 billion.
- Anthropic would need 11.6% sequential monthly revenue growth through 2027, and even higher if it wants to achieve a 20% margin.
- Last month, Anthropic published an amended S-1 filing which included its third-quarter performance.
“The Big Short” investor and AI critic Michael Burry said that Anthropic would have to show “supernormal” growth to cover its contractual commitments in the coming years and that he would not pursue an allocation in the upcoming initial public offering, nor would he become a shareholder later.
Burry said in a new blog post, Anthropic’s total commitments actually come to $1.05 trillion to $1.07 trillion versus the disclosed figure of $895.4 billion, which excludes certain contracts tied to AMD, Google, and SpaceX.
Based on his math, Burry said the AI startup would have to cover projected payment commitments – $101 billion in 2027, $112 billion in 2028, $127 billion in 2029 – and Anthropic would need 11.6% sequential monthly revenue growth through 2027.
And to achieve a 20% GAAP margin, it should be at 16.1% sequential monthly growth.
“Anthropic published a number. $895.4 billion. Which may even amount to nearly $1.2 trillion in commitments just from this one company that the optimists say will do $100 billion in revenue the next 12 months,” Burry wrote.
“That kind of growth is mandatory. Not only is the company priced for optimism, it is betting its entire existence on that optimism, that kind of supranormal growth.”
Anthropic’s Q3 Numbers Give Bulls And Bears Ammunition
Anthropic’s new S-1 filing, which includes its third-quarter performance and was published last month, has generated significant buzz, even as bulls and bears cherry-pick information from the prospectus to make their cases.
What’s clear, however, is that its revenue growth slowed sequentially – sales rose 47% sequentially in Q3 vs.144% in Q2 and 132% in Q1 – and has raised concerns among some pockets of the investment community.
Earlier this week, valuation expert and New York University professor Aswath Damodaran trimmed his view on Anthropic’s initial public offering (IPO) valuation.
He estimates Anthropic’s equity value at $1.45 trillion, slightly down from his previous estimate of $1.475 trillion, though he admitted the new Q3 numbers do not materially change his thesis or the $100 billion revenue projection for the coming 12 months.
Burry said the Q3 deceleration came as the “tokenmaxxing” frenzy diminished.
“The slowdown from 132% and 144% in the first two ‘tokenmaxxing’ quarters of the year stands in stark contrast. The sharp deceleration in growth coincides with press reports of a broad reduction in tokenmaxxing strategies as the frenzy of training and clumsy inference subsides into more targeted, resource-aware inference.”
Other Risks
To reduce dependency on costly short-term rentals, Anthropic is launching “Anthropic Direct” to build and operate its own compute infrastructure – a move Burry warns will increase long-term liabilities.
He also said that because Anthropic’s $120.5 billion SpaceXAI contract is excluded from the S-1 obligation tables, which include only non-cancellable contracts, the company’s true near-term spending commitments over 12 months could be over $100.8 billion rather than the reported $69.8 billion.
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