Narrowing the Downside on the Labs

Given the private market valuation of OpenAI and Anthropic, it does feel a little strange for me to claim the labs may be better business than appreciated by investors. But I do notice a persistent skepticism among many investors about the labs business model. While there are indeed some key open questions that can keep the range of outcomes for labs wider than the publicly listed big tech companies, I suspect some corners of investors are too focused on labs lack of GAAP profitability today. Admittedly, I myself have maintained a tone of skepticism about the labs throughout 2025 and even much of 2026 which in retrospect indicates a lack of understanding and perhaps more importantly, imagination on my part. However, some recent data points have propelled me to update my point of views on the AI labs (Anthropic and OpenAI to be specific) much more positively.

I will explain the evolution of my thinking on the labs behind the paywall.

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