Patrick Boyle On Finance · Sep 26, 2026 · 35m · 17m saved
With Patrick Boyle, Founding Partner at Palomar Capital Management and finance professor
Anthropic is reportedly seeking a valuation of around $2 trillion in its IPO, which would put it at about 31 times its revenue.
Most of the debate about the listing is over whether AI is useful. Patrick Boyle set that aside and asked a narrower question: what an investor would have to believe for $2 trillion to pay off, even under assumptions he calls more generous than any a banker would make.
"Under those assumptions, you never get your money back. Not in 10 years, not in a 100. All of that revenue forever is worth about $1.27 trillion today."
Patrick Boyle, Founding Partner at Palomar Capital Management, a quantitative hedge fund, and a finance professor, on Patrick Boyle On Finance, works through the valuation math the way he would teach it, then follows the money through SoftBank, OpenAI, SB Energy and Nvidia.
The full episode is covered here so you can skip it. 35 minutes of audio, 18 minutes of reading.
Here are the 11 takeaways that matter.
Key Takeaways
Even with no costs, no taxes and every dollar paid out forever, $2T for Anthropic does not pay back
Discounted at the Treasury rate, that revenue stream is worth about $1.27T
Estimates of the AI market grew by $37T in 4 months, from $22.7T to $60T
SB Energy wants a $50B valuation and has not switched on a single data center
About 400 times its annual EBITDA, by the FT's Lex column's math
The AI financing chain is circular: SoftBank borrows at junk rates to fund OpenAI, which rents a campus Nvidia guarantees
Nvidia is near its cheapest level in more than a decade, at less than 17 times next year's expected profits
The price of AI output is falling about 13-fold a year, while chips, power and electricians get more expensive
Anthropic's IPO will be the first public price for a pure AI lab, and for the paper gains at Amazon, Google and SoftBank
1. Great Technology, Bad Price
Boyle opened with the backdrop. Anthropic is expected to go public in the next few months, and The Economist points out that a $2 trillion valuation is about as much as the 10 biggest tech IPOs of all time added together. The Nasdaq is at a record high, and a survey of purchasing managers just showed US business output growing at its fastest pace in 5 years.
Yet IPOs are being pulled. Jay Ritter, who runs the IPO initiative at the University of Florida, told Bloomberg that this is especially surprising with the Nasdaq at a record. Anthropic's public filing was expected as early as late August and still hasn't appeared, and OpenAI has pushed its listing out to next year.
Meanwhile Nvidia, up more than 1,600% over four years, is the cheapest it has been relative to expected profits in over a decade, according to Bloomberg. Boyle said the video was about why the company selling the shovels looks cheap while the company digging with them wants $2 trillion.
The question is the price, not whether AI works
"To be clear here, I'm not one of those people who claim that AI is useless. People clearly find it useful, but a great technology can still be a terrible investment if you pay too much when you buy in." — Patrick Boyle
