Today's number: 30. That's the percentage of Gen Z people who believe they are psychic.
Ed, does Forrest Gump belong to Gen X, Gen Y, or Gen Z?
Nope. He belongs to Gen A.
Wow, that really moved Claire.
My favorite part was the Nope.
It's not a transition from what he said. You said, 'I'm not sure,' then you said 'Nope.'
How was your interview with Ray Dalio?
Oh, it was great. He's got the same perspective he usually has, but I mean, he's been right about a lot of things. Yeah, we had an excellent discussion. Had a great discussion with Gil Laura as well. Talked about the tech earnings, which is interesting, which we'll get into as well. It's been a good week. Good week for the show.
You know what I really enjoyed? I don't listen to your work, but I accidentally stumbled across it yesterday. I listened to the guys talking about AI and power in the grid. I thought that was really interesting.
You should check out the podcast.
I like to watch it because I find you handsome.
That's good. I'll take that. I'll take that. A criticism and a compliment. We're net neutral. I'm happy with it.
I found myself putting rewind a lot to try and understand it. And I also want to announce that we are transitioning to a power inference GPU AI center company called Quint AI.
Quint AI. I love it. We're pulling in all birds right after the live tour, which is happening in 23 days. We're going to be in San Francisco. We're going to be in LA. We're going to be in Miami. We're going to be in Chicago. We're going to finish in New York. We're so excited. So please go get your tickets to profgmarketsour.com if you want to come see us. It'll be a great time.
I think this is your first tour, isn't it? It's the first time you've been on a live podcast tour, right?
Yeah, we're super excited and we have guests lined up for all of them. So it's going to be a lot of fun. All right, Scott, should we get to the news?
Today, we're discussing OpenAI's week from hell, also big tech earnings, and also a bailout of Spirit Airlines. So let's get into it. If you haven't already, please subscribe to our Prof G Markets YouTube channel and click the bell to get our latest episodes. It was a brutal week for OpenAI with a string of setbacks putting the company under pressure. A Wall Street Journal report revealed the company missed both key revenue and user growth targets. At the same time, OpenAI's legal battle with Elon Musk kicked off, centered on claims that the company abandoned its original nonprofit mission. And adding fuel to the fire, families of victims from a mass shooting in Canada filed a lawsuit against OpenAI and Sam Altman. The families allege that ChatGPT played a role in the shooting and that its safeguards fell short. Taken together, these moments highlight three core criticisms of the company: questions about the company's financial durability, also concerns around Altman's leadership, and ongoing doubts about its commitment to safety. So kind of a trifecta of bad news here for OpenAI, Scott, which we are going to unpack now. We should probably start with this Wall Street Journal report, which I have to say was a little bit vague. We didn't really learn much from this. But there are two concrete revelations that we did learn. One is that OpenAI missed its goal of a billion users in 2025. And two is that they also missed on revenue. We don't actually know what the revenue number was. We don't actually know what the revenue target was. All we know is that they missed it last year. And the reaction from the stock market was pretty severe. A lot of companies that have agreements with OpenAI in some capacity fell really hard on the news. So Nvidia fell 4%, Oracle fell 6%, CoreWeave fell 7%, SoftBank, which is a major investor, fell 12%. If you add up the amount of market value that was erased because of this one report from the Wall Street Journal, it came out to nearly $400 billion, which is roughly half of the entire value of OpenAI. I'm going to ask you a question, Scott, but it looks like you're getting changed.
It's so hot in here. We're not used to London struggling with a sweltering 65 degrees today. And anyways, I'm sorry. Trillions of dollars lost market cap. OpenAI.
Exactly. So, well, $400 billion in market value was erased of other companies. And so we don't know what the value of OpenAI actually is because it's private. We can sort of get a sense from secondary markets, which aren't as liquid and aren't as sensitive to timing. But the point being, they missed on this according to the Wall Street Journal, and other tech stocks were not happy about it. Not a good look for OpenAI. Your reaction, Scott?
I think this is more of an indictment on OpenAI and Sam Altman's leadership than it is on the space because it just strikes me if you look at the big tech's earnings yesterday, AI is just, I mean, it is growing into its expectations or it is meeting and maybe even surpassing its expectations. And by the way, OpenAI probably had incredibly ambitious internal goals. So my guess is the company is still, you know, doing well, just not as well. The biggest thing that's happened is that in just, I've never seen a recalibration of the market leaders this fast. You've never seen Pepsi overtake Coke this fast. You've never seen what was a distant number two in the eyes of the market in December become squarely the number one. So just some data here. Anthropic recently hit $30 billion run rate and OpenAI's run rate is $25 billion. So all of a sudden OpenAI is now the number two. And even more importantly, 80% of Anthropic's revenue is enterprise versus 40% at OpenAI, and enterprise revenue is considered the white meat of this whole space. Anthropic expects to break even by 2028, two years away, versus 2030 for OpenAI. And what's really striking is OpenAI is expected to burn 14 times more cash than Anthropic. It just looks like Dario Amodei seems to be a better operator. And then according to Kalshi, in November of 2025, again, only what, six, seven months ago, OpenAI had a 75% chance of IPOing before Anthropic. And today that number has dropped to 31%, and the odds of Sam Altman being replaced as CEO this year are up to 37% from 14% at the beginning of the year. So like, essentially every company but one, Anthropic, would pray for OpenAI's problems. And that is, it's not that OpenAI isn't doing incredibly well. It's just that they've ceded the number one position to Anthropic in what feels like overnight. But my guess is those numbers, if you looked at those numbers, while they might not have met expectations, the sense I get is the company is still on just an unbelievable march. I would argue that the court case is actually going to end really well for Altman. One of two things is going to happen. I think either Musk withdraws the case or it is squarely decided in favor of OpenAI. I think that this court case, I initially thought it would make them both look bad. I think it's going to absolutely make Musk look terrible, and I don't think he cares. I think he kind of is almost enjoying his villain status, and Sam is going to come out of this, I think, as the big winner here. So I wonder if the court case is going to remove a cloud of uncertainty, and a decision from the court, which I believe will be in favor of OpenAI, will be good for them.
I have thoughts on the lawsuit. I kind of disagree half with your comments, but I'll get to that in a moment. Let's just focus on OpenAI's financials for a moment. I think one of our team members, Chris Nonah, you said it best. She said, you know, we're not in an AI bubble right now. We're in an OpenAI bubble.
And I think that's really what we're seeing, where AI businesses across the board are completely taking off, as reflected in the earnings that we saw. I mean, these businesses are just, the numbers are just ridiculous. The growth rates are incredible, growing off of these ridiculously large bases. These are the largest businesses in the world, and they're growing at startup-like rates. It's just kind of insane what's happening here. But the attention is turning towards, like, how are you managing your balance sheet and how are you managing your spending commitments?
Exactly. And you look at the way OpenAI is handling this. I mean, we talked before about how ridiculous and insane it was that they were saying that they wanted to spend $1.5 trillion over the next few years. How many years exactly? They didn't really say, but they came out and they made these commitments. We pointed out that they had generated $13 billion in revenue and they wanted to spend $1.5 trillion. It just made no sense at all. Well, they have now changed the number and they're now saying publicly that they plan to spend $600 billion by 2030. That is the number that they're saying. And that is still an insane number. It's less than half of what they said before, but it's still insane. It's actually in line with the amount of money that Meta is spending right now on AI. The only difference is that Meta is generating $225 billion in annual recurring revenue if we look at the most recent quarter. And OpenAI is generating $25 billion in annual recurring revenue. And so when you just think about the amount that they're planning to spend versus the amount that they're actually raking in, it just starts to get a little bit ridiculous. And then you think about these valuations. I mean, OpenAI, they raised at an $850 billion valuation. They're currently trading at around $880. That's 35 times sales. I mean, there are so many reasons to not trust the trajectory of this company. Not just the fact that we saw this Wall Street Journal report which showed that they actually missed their expectations, but also the slew of other things. The fact that they are kind of lying about how they're going to deal with spending moving forward. The fact that we saw this Ronan Farrow article in the New Yorker where literally every single person close to Sam Altman has said that this guy is basically a serial liar, that he has a serious problem with telling the truth. So clearly OpenAI is having some trouble right now. I think the question is, do we think that $880 billion at the current secondary markets valuation, is that fair? I would say it's kind of a crapshoot either way, but the most important point would be that Anthropic is now more valuable on the secondary markets. Anthropic is now trading at a $1 trillion valuation, which is something that we thought might happen at the end of last year. And then eventually you did flat out make the prediction that Anthropic would overtake OpenAI. Let's just play that clip really quickly.
I think Anthropic's raising at 350. OpenAI claims are raising at 850. Within a year, and I don't know what the relative numbers will be, but in a year, Anthropic is going to be worth more than OpenAI.
Boom. Boom. That's why they come here. Scott, when did we say that? When was that?
I believe you said that in, I want to say, February.
You said it before it happened, and that's what matters most.
Yeah, it's like, look, I actually think this court case is really good for Altman because I think Altman compared to Dario Amodei makes him look bad, but Altman compared to Musk, I think it comes out looking pretty good. And unfortunately, it's got to be a huge distraction for Altman in an era where his company is struggling. But I kind of buy what Kalshi says. But I think there's somewhere between one in three and one in two chance that by the end of the year, especially this pissing match with Satya Nadella, well, they made up. They had their truce last year. They arrived at a deal, and a lot of people would say that Sam Altman came out on top. I would say that they both got a decentish deal, but they did kiss and make up.
But wasn't there a memo leaked where Sam is posting Microsoft and blaming their lack of progress in the enterprise market on Microsoft? Do I have that wrong?
There was before. They had serious tensions that were flaring up. I guess my point being, the new plot point is that they have supposedly made up as they finally came to a deal that I guess OpenAI would be more happy with as of this week. Yeah, we said this a few weeks ago. OpenAI has the most negative momentum of any important company. And then this court case is going to be really illuminating in terms of what comes out. I'm just trying to think. I don't think there's ever been a one becomes two and two becomes one this fast and this radical, as reflected by how much Anthropic's revenue increased in a matter of months. They literally went from $9 billion to $30 billion a year. It took them like a couple of months, and now they're ahead of OpenAI. OpenAI is at 25. I mean, how much can we even trust these numbers? I'm not entirely sure. It's all self-reported, and I just can't wait until these companies go public and we actually know the numbers. I think it's going to be a very big deal. But yeah, I mean, the acceleration, the speed with which Anthropic has scaled and the amount of businesses that are turning to Anthropic, it is really unbelievable.
