More Tales From Nvidia: AI IPOs (Issue #219!)
* The implication is increasingly clear: before hard consumption caps become commonplace, AI demand is already being redirected toward lower-cost models, making economics — not model capability alone — the next competitive battleground.
AI IPOs… I wonder if they can happen under these circumstances?
SpaceX ($SPCX) already a flop. Then, the dynamics in the sector are rapidly changing. Anthropic put up a huge Q in front of what was expected to be the IPO and that Q apparently had several one-time big boosts in it including revenue from tokenmaxxing that is now being stopped and a big subsidy from SpaceX that was revealed in their own S-1 if I remember correctly.
Now in addition to caps on token use, the Chinese and other Open Source models seem to be gaining traction again, at much lower prices.
At any rate, how can anyone have any confidence in any forecast that is produced for either Anthropic or even worse OpenAI? What sort of trajectory can Anthropic produce from its last Q that was aided by what are presumably either 1x or unsustainable events? The valuations these companies are demanding, the cash burn and continual funding they require, and all the commitments they have already made?
Since when do market share and pricing losers that hemorrhage cash command these types of valuations?
At any rate, there are so many moving pieces, how can anyone have any confidence in a forward financial forecast for any of these guys? How can someone even produce a forecast with any confidence? Can an underwriting bank really stand behind any of this with confidence?
Then can the market absorb all this liquidity? Big unlocks coming from SpaceX. They all will have unlocks and seemingly continual needs for equity issuance. Then the market overall, a lot of the big buyers of their own equity have obliterated their own balance sheet and cash flow with all the spending and future commitments and off balance sheet stuff. All of the sudden the equity supply/demand equation has flipped to the negative direction as well with all of the equity issuance that has occurred and is on the come, as well as the unlocks.
All my opinion, but it is going to be interesting.
The Caps Are Coming, The Caps Are Coming.
“Tokenmaxxing” may be AI’s latest buzzword, but ETR’s latest AI Pulse Survey suggests enterprises are becoming just as focused on controlling consumption as expanding it. While AI usage continues to climb, hard consumption caps have emerged as one of the fastest-growing governance mechanisms, rising from 17% of organizations today to an expected 41% over the next 12 months. Demand isn’t slowing — it’s becoming managed. This week’s Open-Weight AI Models survey indicates over 30% of respondents all ready running them in production and nearly half piloting open-weight models, with cost savings the primary adoption driver, and 91% of non-users say demonstrated savings would increase their likelihood of adoption.
The implication is increasingly clear: before hard consumption caps become commonplace, AI demand is already being redirected toward lower-cost models, making economics — not model capability alone — the next competitive battleground.
Position: Short SPCX (S)
