Apparently, the index funds are based on free float and since the number of free floating shares is limited, the total exposure to the index will be very small.
I think when these companies IPO later this year, we’re going to see the reality of the PNL numbers and whether they are sustainable etc as all the financials will become public.
Rumor mill suggests that Anthropic might be profitable (but at what magnitude), OpenAI is not profitable, Google is mostly vertically integrated and has a low cost structure as they are have pre-existing data center buildouts, their own silicon and experience that suggests they will be able to operate at a very low cost, but they still have to justify their spend.
I think having to report numbers publically on a quarterly basis will bring the whole thing into reality.
One can hope that reality intrudes before the bubble gets even more dangerously inflated, but how many years has Tesla had a ridiculous P/E ratio. Even after growth stagnated and market leadership was lost in Asia and Europe. Number still goes up.
I hate Musk, and I'm not going to justify Tesla's crazy stock valuation, but consider the following:
Outside of China, Tesla's probably the only company that can compete on battery prices. I don't know how accurate it was, but a news report was comparing the cost the manufacturer's pay to build the battery. Chinese companies were around $6000. Tesla was at $7000. Everyone else was around $12-15K. This is why a number of companies have exited the EV market - they just can't compete. This is why Ford lost money on every EV, despite the high MSRP. This is why the Ford CEO says "We're f####d" when he saw Chinese cars.
The only hope regular Japanese/American/European auto manufacturers have is if EVs do not gain substantial market share.
If the future is EVs, Tesla is the only non-Chinese company that has a chance.
This assumes it is literally impossible for anyone else to reduce their battery costs to a level which makes them competitive with Tesla in an environment when battery prices are falling rapidly and the tech continues to evolve (and Tesla's EVs are not even unusually cheap or experimental in their battery supply chains)
That sounds less likely than the bull case Tesla is trying to make on "we're a robotics company now" or "one day all cars will be autonomous taxis controlled by us".
Exactly. Looking at competition from China, but also the West, I don't see Tesla having a moat in EVs, in robots, or even in batteries in the medium term (compare e.g. [1]).
How can they produce the extraordinary growth and excess profits that would justify their valuation?
Fundamentals will reassert themselves sooner or later, but as we see it can take a long time.
> Fundamentals will reassert themselves sooner or later
I don't believe that's true, anymore.
TSLA is a pure meme stock. No one is investing in it because they believe in the numerous, actionable lies Musk tells. No one is investing because they think the P/E makes sense. They're doing it because they think the memes are fun, or because they think the people who think the memes are fun are bag-holders, or because they think the memes are fun AND Musk is actually still smart and adding value, etc.
It's the clearest, most obvious case for "the markets are not the economy".
Only if you're terminally online and believe everyone else must be as well. If you don't know what a meme stock is and think the humanoid robot is going to sell like hotcakes, TSLA seems like a great investment.
Tesla has vertical integration with their batteries, which is why they can make them cheaply.
> This assumes it is literally impossible for anyone else to reduce their battery costs to a level which makes them competitive with Tesla in an environment when battery prices are falling rapidly and the tech continues to evolve
No - it just means they can't do it as fast as the Chinese. The Chinese have been investing in battery technology for 10-15 years longer than most auto manufacturers. (And their labor is cheaper).
It's not depressing because it's not true. Tesla isn't investing in battery technology. Tesla also isn't developing new models at the same rate as VW, BMW, Mercedes, Hyundai Kia, etc.
Look at all the companies scaling back on EVs or exiting them altogether (e.g. Honda). It's not that Honda can't make EVs. It's that they can't compete on profit with Tesla + Chinese EVs. It's likely why Hyundai is dropping the Kona and the Ioniq 6.
Nissan dropped the Ariya, I believe. The Bolt is also out. The general shift is for more luxury EVs (BMW/Mercedes), and not EVs for the average Joe.
Giving up on EVs is crazy though, it seals their fate and guarantees the death of the company in exchange for a few more years of profit. The EV takeover will not stop, as of roughly this year they’re going to be cheaper than equivalent ice cars, it’s going to accelerate quickly.
It’s suicide in slow motion
I don't think self-driving is remotely close to working at any scale. I also don't think it's the killer-app. Right now, cheap electrics and moreso cheap hybrids are the killer.
It works "at scale" if you have no idea what "at scale" actually means and have never left the Bay Area or NYC. Or if you like, don't believe weather exists.
Okay, but do you admit it (self-driving, either Tesla or Waymo) works in the Bay Area? Because the OP said self-driving is not remotely working "at any scale".
The companies that have real boards would never take the risk.
Once Elon’s air cover is blown, the government is going the dissect Tesla. Once someone gets the injunction to stop deletion of crash data and allow for inspection, they are cooked.
If anything though, this shows that at least tech driven hype bubbles can stay around way longer than we think if we are looking at it from a product POV.
This just means short sellers might have a hard time sinking a hype-category stock with reasoned research because the irrationality keeps it afloat.
Agreed, and assuming local open AI models start catching up, which they seem to be doing, the foundation models' hold on society gets a lot slipperier. If there's a "what to do about all this" from an engineer's standpoint, pushing the needle toward local models, whether in research, agents, or just using them, understanding how they work, and advocating for them when it makes sense (which is more often than they get credit for) is probably the best ROI.
While I agree with you on open models getting better, I have been starting to see how the value, the reason you pay for Claude, isn’t in the models.
For example, I just hooked Claude desktop up to my outlook to build a report for my timesheet then I used the chrome extension to fill it out automatically with that data. It could read Jira tickets if that’s where the information was.
A local model can’t do that for me because I have to get the rest of the integration software somewhere.
I also think this is why OpenAI is the worst positioned of the group of AI giants. Anthropic is trying to make a productivity operating system, while ChatGPT is basically just a website until recently.
Aside from filling in the timesheet (which I assume could be done from a CSV import - I appreciate this is another step), I have almost the same setup as you, without AI. I have bugwarrior pulling JIRA tickets and github PRs into taskwarrior. I have an integration from task warrior into time warrior and from there another hook back into JIRA to get titles and summarise.
All of that is done with two API keys and no AI. A local agent could easily put it together for you.
Now sure, I had to put this together and I lose the AI summary you have plus the auto filling, but what I'm trying to say is that I have 80% of this without any AI.
I also have a script parsing git from my emails and a little tui that translates them into git diff and a key binding to pull the PR but I find it a little cumbersome and don't really use it, and trying to parse todo from maildir is also a little useless so I accept that AI would be better there.
I also accept that your example is just one prompt of a dozen and I have to plan the solution for every one of your prompts, but I also don't find prompting to be terribly useful for occasions where I don't think the solution through- because it probably means I don't know what I want or don't really need it.
What I do find it really useful for is digging through Kubernetes and asking how two services are connected. Claude is better than local for that but there's nothing inherently non-local about that usage.
I get local models to drive applications through MCP (e.g. Google Chrome DevTools) via OpenCode all the time, and do things that would otherwise be very token-intensive and result in pointless meatspin. This is totally possible, and will become more so.
The real reason you pay for Claude _is_ in the models. The locally runnable models are impressive for what they are, but simply will not accomplish the task as effectively, incisively or quickly enough. I have to be willing to let OpenCode run in agentic loop on "download my bank statements"[1] for an hour and just walk away, and take a low-ish but profoundly nonzero chance that it will just fail. Claude can do it in 5 minutes, if I let it (I have), and it will not fail. Both are driving the browser via MCP and performing the same task.
[1] One of those difficult-to-use, modal-rich JavaScript-laden banking portals that seems quite intentionally designed to prevent this sort of downloading, or I wouldn't bother letting an agent loose on it in the first place.
So far there's no moat though. A lot of that kind of stuff is available open source too if you look for it (and was available before claude desktop). And for anything that doesn't exist, with coding agents now you can write one up in an afternoon.
It's kind of paradoxical in a way. By making writing software cheap, they've made it much harder to create a moat for themselves that involves only software. It'll be interesting to see how they respond.
If there’s an open source alternative to Claude desktop that has a similar amount of extensibility with connectors specifically I’d be very interested to know about it. I’m very much not deep into this space.
Unfortunately for Claude, you can have it set up local models to do that for you and then you don't need to renew it. Codex's computer use is better than Claude's, imo. I'm a Mac, no idea about windows but I know there's no Linux version. Haven't had enough time with Opus 4.8 but GPT 5.5 > Opus 4.6 and 4.7.
I have mixed feelings here. I find codex much better than Claude for generating PoCs and debugging small scripts, and for finding online documentation. I find Claude a bit better for debugging distributed systems and summarising data
Anthropic have only scraped together a month of profitability by cooking the books. They have an extreme compute discount from spacex that only applies for the first couple of months of the deal. By pushing the costs down the road they can make themselves look good before IPO. Even they have admitted publicly though that they don't expect profitability to last.
i think the narrative of “all white collar employment replacement in the near future” can sustain their public market valuation for many years, regardless of how profitable they are in the medium term.
> I think having to report numbers publically on a quarterly basis will bring the whole thing into reality.
That is a good reason that all companies (over a certain size, say in terms of gross expenditures) should have to report such numbers. There's no reason that huge companies should be able to distort the economy while not having to report anything just because they're not publicly traded.
I linked elsewhere in a comment, Metaculus has AGI forecasts.
You can also now use AI forecasters like FutureSearch [1] (disclaimer: I work there), which are competitive with the best humans / teams of humans. And since you aren't depending on a human crowd, you can ask any variation of AGI questions with any definition, even ask conditional questions.
Personally, I find the biggest problem is the lack of a neutral wire in most older homes. It forces me to use hue bulbs plus a Lutron aurora in the 80 percent of locations where that actually works but I have to find a really expensive electrician for every other location.
Plus most people who use hue aren’t even aware of the Lutron aurora.
Because they are forking over some of their revenue to affiliates. If there is no affiliate, Amazon keeps that money for itself. Paying the affiliate only makes sense if it's driving purchases that wouldn't have happened otherwise.
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