Everyone worried about the market doing a dotcom while the current valuations and single stock moves have already cratered to inverse dotcom levels is ironic and a scenario I didn’t have on my bingo card for late 2026.
let that sink in... (from the S-1). thats a measure of "saturation" at current runrate of 70-75bn ARR.
weeklies cont.
$DELL held 20wk EMA still higher lows still uptrend, still high volume in low volume out..
$CLS 4 weeks down -> undercut and reclaim all, longer term weekly MAs still all in uptrend.
the OG bull market leader.
$GEV energy
$GOOG ( $META wekly double top 780 ) getting punished for capex. "AI late" companies like $AAPL $MSFT rewarded. market not a fan of FCF -> AI capex flows right now)
solana:56DeqXiADWY2Y3iD8pdbpTi9jhXXneofTY5dp4Xjpump OpenAI claims to have proved existence of a consistent interacting quantum field theory, likely SU(5) in 4D cont. spacetime with UV completion?
is this right?
$ANT Anthropic went from essentially zero revenue few years ago to a business doing 16.8bn in the latest quarter, reached positive 1bn GAAP operating income, and through H1 2026 had only about $6–7B of cumulative free cash flow burn since inception!
That’s extraordinary capital efficiency!
100bn IPO leaves it with 232bn - 240bn cash balance (reasonable for them to add 8bn in cash flow since June), just under half their whole current 7-10 years compute spend of 520bn+ !
And growing rev at 1100%+ y/y growth rate even up to THIS nominal level of revenue and incredible 21% free cash flow margin as of H1 2026!
cash conversion: $3.45B of FCF on $16.29B revenue in just six months, so 2-2.8bn q3 FCF scenario is reasonable.
Simply incredible metrics for humanity’s corporate history.
And you’d think that would be what the consensus is right? “Nothing to see here”.
Except… the consensus is the polar opposite.
It’s quite rare regardless of opinion and bias to witness such a disconnect between objective financials, and what the market narrative is about them.
Profits and FCF is what matters in the end all the noise and storytelling aside, and on this most relevant metric in an environment where rates are high and credit is expensive, the official S1 did not disappoint!
$ANT Anthropic S1 (S-1) official release changes what we know from prior leaks and Investor Day.
Profitability is the biggest positive surprise. $ANT was already GAAP operating profitable in Q2, with $974M of operating income, while adjusted operating profit was $2.24B / 19% margin.
Q3 remained adjusted-profitable at >11% margin, making this look like a sustained. Importantly, the adjusted metric still includes training spend and channel fees; the main exclusions are stock comp, non-cash charity expense and the Bartz settlement. So much better than what we previously thought was included on the cost side.
FCF looks even better. The S-1 shows roughly +$3.4B of FCF in H1'26, meaning $ANT reached positive cash generation substantially earlier.
Q3 appears to show margin compression. Using the Investor Day figures, $16.8B revenue at ~$1.70 of revenue per $1 of compute implies roughly $9.9–10.5B of compute spend, up about 78–89% QoQ versus revenue growth of ~45%. Adjusted operating margin appears to have fallen to roughly 11–12%, from 19% in Q2, making Q2 the margin peak disclosed so far.
Seasonality matters. The S-1 explicitly warns of summer and winter usage dips, which helps explain some of Q3’s slowdown and should temper Q4 run-rate extrapolation.
Costs are worse than expected. Channel-partner fees are roughly 2× prior assumptions, and training/R&D spend equals about 60% of revenue, which is lower than my prior conservative 75/25 split assumption that Q3 figures seemed to potentially imply.
full table here.
$ANT Anthropic S1 (S-1) official release changes what we know from prior leaks and Investor Day.
Profitability is the biggest positive surprise. $ANT was already GAAP operating profitable in Q2, with $974M of operating income, while adjusted operating profit was $2.24B / 19% margin.
Q3 remained adjusted-profitable at >11% margin, making this look like a sustained. Importantly, the adjusted metric still includes training spend and channel fees; the main exclusions are stock comp, non-cash charity expense and the Bartz settlement. So much better than what we previously thought was included on the cost side.
FCF looks even better. The S-1 shows roughly +$3.4B of FCF in H1'26, meaning $ANT reached positive cash generation substantially earlier.
Q3 appears to show margin compression. Using the Investor Day figures, $16.8B revenue at ~$1.70 of revenue per $1 of compute implies roughly $9.9–10.5B of compute spend, up about 78–89% QoQ versus revenue growth of ~45%. Adjusted operating margin appears to have fallen to roughly 11–12%, from 19% in Q2, making Q2 the margin peak disclosed so far.
Seasonality matters. The S-1 explicitly warns of summer and winter usage dips, which helps explain some of Q3’s slowdown and should temper Q4 run-rate extrapolation.
Costs are worse than expected. Channel-partner fees are roughly 2× prior assumptions, and training/R&D spend equals about 60% of revenue, which is lower than my prior conservative 75/25 split assumption that Q3 figures seemed to potentially imply.
full table here.
PL retweeted
Pretty much.
As of the past few weeks, debt markets have almost entirely shut off access to money for any company that doesn’t have substantial revenue independent of AI data centers.
SpaceX closed $40B of debt for GPUs, but we’re investment grade and have Starlink & launch revenue.
That means the 200+ neoclouds are going to see guppy-level death and consolidation. Some will make it through, but not many.
"mixture of experts" is such an interesting approach.
Consider the idea that you can model 10 different ways of looking at the same trading phenomenon.
Each "way" is something i'd call an "aspect", like a scale/dial/grade. the Ssale is generated by some kind of objective function you pick which is a defined over some observables of the trading phenomenon you're looking at.
so alot of the time, there's no linear gradient along the whole scale and it's easy to just jump to "nothing to see here" conclusion. But it may be that most of it is a wash, but the very extreme (can be either or both extremes) gives signal.
Non random ones have two common shapes:
subtle linear gradient across the whole scale,
OR no gradient but its a "polarizer" - ie the extremes contain information.
On its own, it may have a marginal edge maybe even <0.08R per trade. Looks like noise right? Well, this is where first principles come in...
Point is you can end up with 10 different aspects that on their own dont look like much.
But when you combine them, you get a "profile" ie across 10 of these dials, what the sweetspot looks like.. if there are hilltops and plateaus rather than "all over the place", that means you're getting somewhere.
so a high edge setup is just a "profile" that hits sweet spot across these 10 different aspects. in way, you can think of each aspect as an "expert" on one particular metric.
when 10 different experts are telling you a setup is scoring highly on their different metrics at the same time. you get a high edge.
PL retweeted
As someone with a portfolio of energized land assets here is what I am seeing:
1. Neoclouds are disorganized and poorly capitalized. Some are definitely better than others however.
2. Hyperscalers are intractable, bureaucratic organizations that take 3 months to do an NDA and want 18mo escrow periods. We built our portfolio by competing against these terms because of our speed and simplicity. The more future assets orgs like ours win, the bigger the problem for the hyperscalers downstream (see 3).
3. There are delays in the existing pipeline that will catch people off guard in 2027. Hyperacalers will (obviously) react by focusing on their own internal compute needs over any third party. If the third party is a model company, they will tell them to go through their model router where they will also take a non-trivial vig. Them telling Ant they have no compute for them (rumored in Ant’s S-1) if true is a huge tell that this is already happening.
All of this is to say that it does look like there will be a lot of partially stranded compute and compute sitting in inventory in 2027 than is currently forecasted. This is bought and paid for but effectively underearning (below total cost of capital) or collecting dust. We see this as true for everyone - model companies, hyperscalers, neoclouds except ONE (you can guess which one).
This dislocation will benefit two kinds of orgs: the non-bureaucratic big scalers who can build industrial scale quickly and the nimble, well capitalized players feeding them.
2027 will be a turbulent year because it will clear out a bunch of wrong/bad bets. It will also be a consolidation year for a few.
