SpaceX, OpenAI Anthropic: to the Mars?

00:00:00: Hi everyone, and welcome to this special episode where we will talk about the US IPO market that's just about to heat up with technologies most exciting.

00:00:10: And most promising names looking to go public among them space X open AI an anthropic.

00:00:18: these companies are all expected to get listed in the coming months in the West and they biggest IPOs of all time.

00:00:28: So the excitement is mounting, these companies are not simply selling products, they're selling the future and understandably everyone or at least many people want a piece of them.

00:00:38: But At what cost?

00:00:39: And at what risk?

00:00:41: because eye-watering valuations an extraordinary success stories mask cash burning machines and raise questions regarding the ability to sustainably generate profits.

00:00:52: So we will talk about all that more but before We do as always please keep in mind That opinions are my own and this is not financial advice.

00:01:07: This show is brought to you by Swiss Quo.

00:01:09: So let's cut to blah, blah and start with SpaceX.

00:01:12: for years SpaceX was one of these mythical private companies.

00:01:15: Ordinary investors couldn't touch it.

00:01:17: It became the symbol off Silicon Valley ambition under The very Elon Musk who is willing to create build reusable rockets He wants to colonize Mars, who has a starlink satellite and now AI infrastructure in orbit.

00:01:33: kind of dreams.

00:01:34: But while Elon Musk has crazy ambition to colonise the space well The real engine of Space X today is not rocket.

00:01:42: No it's not its connectivity Starlink?

00:01:45: It is great!

00:01:45: Actually does generate billions of US dollars in profits And has effectively become the company financial backbone.

00:01:53: The one that allows to finance the other and cash burning departments of the company as a traditional space lounge business, for example continues to consume enormous amounts of capital.

00:02:04: at the same time Space X is increasingly transforming itself into something much broader than just a Lounge Company or a connectivity company.

00:02:12: It wants build orbital AI competing infrastructure space based data centers learner industry And long-term Martian settlements.

00:02:20: because they kind mix off a are becoming terrifyingly expensive, training large AI models now requires gigantic amounts of electricity cooling systems and semiconductor capacity.

00:02:33: And the AI revolution is now colliding with real-world physical constraints.

00:02:37: power grays energy availability and chip production bottlenecks obviously must answer to do worldly problems as radical.

00:02:44: if earth cannot provide enough energy and cooling capacity efficiently why not move part infrastructure into space.

00:02:52: Oh, this is crazy exciting but it's also crazy dangerous!

00:02:55: Now from a technological perspective the idea sounds visionary.

00:03:00: From a financial perspective however It sounds terrifying.

00:03:05: SpaceX itself admits in its IPO filing that many of these concepts may never ever become commercially viable.

00:03:13: And while the company actually reported an operating loss or four point nine billion U S dollars last year, and this year is already down by four point three billion US dollars on that matter somehow because investors will not be financing proven businesses with space X when they will opt for a SpaceX stocks if they do day we'll be financing a massively speculated and incredibly expensive infrastructure, that is in best case the case ahead of potential profitability.

00:03:42: Elon Musk will have around eighty five percent of the voting rights and a company meaning that investors will directly put their money into Elon Musk's hands.

00:03:52: So it may not be everyone's cup of tea in terms of risk.

00:03:55: Elon Musk is certainly world champion for selling the craziest ideas to the entire world but when it comes to profitability, concrete financial results well its quite another story.

00:04:07: Now let's move to open AI.

00:04:08: If SpaceX represents the physical infrastructure of the future, while OpenAI represents the cognitive infrastructure, Chatchapiti actually did change the public perception of artificial intelligence almost overnight.

00:04:22: since January two thousand twenty three.

00:04:24: suddenly I stopped feeling theoretical and became a mass market product.

00:04:29: And that huge success story an open AI now sits at the very center off them.

00:04:34: fastest technology adoption cycles in history.

00:04:38: That's not just exciting, that extremely exciting.

00:04:42: but behind excitement lies an extraordinary financial reality as well because AI is unbelievably expensive to run investors should be made upfront.

00:04:50: open AI must spend aggressively on chips data centers cloud infrastructure to offer services and revenues are rising yesterday or But they're not rising at the same speed than their rising spending.

00:05:04: That means that open AI will lose tens of billions of US dollars before becoming sustainably profitable.

00:05:09: And this is what makes investors a bit worried, I would say because the path to profitability still filled with risks among them insufficient or slowing revenue growth in the future.

00:05:21: somehow the inability to find a steady and rising competition.

00:05:25: Because lately, open AI started sharing its cake with Anthropik and that reportedly resulted in missed internal targets at OpenAI.

00:05:35: A bit worrying for a company generating roughly twenty billion West dollars in revenue per year while facing potentially hundreds!

00:05:42: hundreds of billions of US dollars and possibly over one trillion us dollar in long term AI infrastructure.

00:05:50: And compute commitments over the coming decades, then it said that open AI is burning around ten billion US dollars a year.

00:05:57: And this brings me to anthropic because the letter, The House of Cloud Model positions itself as a go-to model for AI developers and also governments in terms of security.

00:06:08: And military applications is now that new rising star.

00:06:13: The company has been releasing AI models once after the others that disrupted established software companies businesses.

00:06:20: As a result, the software companies are being sold off like there's no tomorrow for them on weekend or you.

00:06:27: that a part and maybe a large part of that funding, off that money should flow into Anthropic as this AI apps are aiming at the businesses.

00:06:36: Of these software companies.

00:06:38: The problem is anthropic is also burning cash right now And it has as open AI huge but absolutely huge investment in chips data centers an AI infrastructure to keep running and keep growing.

00:06:51: I'm because amount needed or massive here.

00:06:53: both OpenAI and Anthropic rely on investments from big technology firms like Microsoft, Amazon, NVIDIA or Google who then sell their computing power.

00:07:04: Their chips and there are other infrastructures to these companies.

00:07:08: as a result of this company's have to pay these big technology companies back on.

00:07:13: to do so they should bring money in from outside their circles.

00:07:16: turning it circles will not be enough if revenue doesn't show up.

00:07:20: So This is the real issue today.

00:07:22: Everyone agrees that AI is revolutionary.

00:07:24: Everybody knows this is something big, but nobody truly knows where the profits will ultimately settle The fact that SpaceX, OpenAI and Anthropik are startups And they're chasing businesses which did not exist a few years ago or simply do not exist yet.

00:07:42: All three of these companies are burning cash at an impressive speed.

00:07:47: They have jaw dropping Valuations, obviously raise a few questions.

00:07:53: How will AI evolve?

00:07:54: Will the profits go to model creators like OpenAI and Anthropik or will they flow towards chip makers like NVIDIA and AMD or cloud providers like Microsoft Amazon and Google?

00:08:04: Will SpaceX go to moon and to Mars, colonize there?

00:08:08: And how profitable business they are.

00:08:09: Will these companies ever become profitable or will they become profitable before they face competition?

00:08:15: Will AI eventually become commoditized compressing margins across the industries?

00:08:20: Will investors ever see stable and sustainable return on their investments?

00:08:24: Are these companies cheap today?

00:08:26: Are they expensive?

00:08:27: is this above all a huge And once in a lifetime opportunity, could macroeconomic conditions become a drag at some point in time when global yields are rising?

00:08:37: Governments are heavily indebted.

00:08:39: Energy systems under pressure and geopolitical fragmentation across the world is increasing.

00:08:44: No one knows the answers to these questions yet.

00:08:47: What we know, however is that these IPOs could become historic wealth creators but they can also be symbols of excess if expectations detach too far from economic reality.

00:08:58: The future probably belongs to AI and advanced infrastructure But even in the future it will overpriced sometimes.

00:09:06: And when companies are overprice, the pullbacks could be sizeable.

00:09:10: so getting to soil right is not enough.

00:09:12: investors also need to get the valuations and timing right!

00:09:16: That's always a hardest part for this kind of company because traditional math comparing revenue investment in debt was very difficult.

00:09:24: When it comes to these kinds of companies that can go to the moon or fall back on earth time will tell.

00:09:33: Let me know what you think about it, would your body sucks when they become public or not?

00:09:37: Or Would You Just Avoid

00:09:38: Them?,

00:09:39: I'm very interested to know indeed.

00:09:41: but this is all for today!

00:09:43: I am Yipega Oskar Deshkoja and thank you for joining me And Thank you For All Your Beautiful And Supportive

00:09:49: Comments!!

00:09:50: I hope This episode of Market Talk has been helpful & It Has Been Insightful To You.

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00:10:21: So I will meet again tomorrow!

00:10:24: Until then good day.

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