Anthropic S-1 Shocker, Greatest Business Ever? Google’s $500B Wipeout, Midterm Predictions

How'd you do this week? Did you hit? Did you ring the gong? Did you hit your quota? Or are you going to have to work this weekend? Q4 is off to a good start, but I never want to count the chickens. Okay, that's good, considering you whiffed Q3. No, no, no. Q3 was okay. We whiffed Q2. Butchered it. Butchered it. That's why when I invested. All my fault too, because I forced these poor salespeople. I forced these three poor salespeople to just only focus on the gigantic deals. You're learning. You're learning. I had to learn the hard way. You want to get those singles and doubles and the people who pay on time and who start the projects on time.

We'll see in Ant's S1, but you can build a ginormous business with singles and doubles. Absolutely, you can. Speaking of gigantic businesses, Anthropic Ant dropped their S1. That's the document that outlines the nature of the business for an IPL, an initial public offering. and got to ask the question this seems to be the greatest business in the history of entrepreneurship goldman and morgan stanley are going to lead the round and they are targeting november 16th right before thanksgiving for this ipo we've been waiting for a long time it's been delayed. The ticker will be ANT-A-N-T. and they're aiming to raise wait for it 100 billion dollars in other words like three months of compute and that would make it the largest ipo ever surpassing spacex they raised 85 billion back in june if you remember and polymarket says our great partners at polymarket say 78 chance anthropic raises at least 95 billion the valuation 1.5 to 2 trillion here's your polymarket right now it's saying between 1.75 and 2 trillion market cap 31 percent so yeah assume it's going to be slightly under 2 trillion the revenue is the story sacks 16.3 billion in the first half of 2026 that is 14x year over year so in other words the first six months of 2025 1 14th of what they did in the

first six months of this year q2 is going to be a whopping 11.6 billion a 30x jump over the last five quarters and almost as much as they made in the first half of the year they say the tam the total addressable market for their tokens and services is 40 trillion that's extraordinary i don't know how they backed into that but we'll talk about it and they're projecting 100 billion of ARR by the end of the year. Now, unspecified if that's annual reoccurring revenue or their annual revenue run rate, which is ARRR, like a pirate, they've got $112 billion in cash and a very unique ownership structure. Seven founders, yes, they have seven, are going to hold 50.1% of the voting power through a single class F share.

Saks, is this the greatest business in the history of capitalism? It could very well be. I mean, I think this is probably going to be the biggest venture outcome of all time, especially given the time in which this was created. I mean, this is only a six-year-old company. I think the exit here is going to be on par with SpaceX's IPO, but SpaceX has been around for like 20-something years. So this is probably the fastest value creation of any venture-backed company in history. And I don't know if you saw, but there was a tweet this morning about the distribution of wealth this is going to create among the employees.

Hundreds and hundreds of employees are going to be making hundreds of millions of dollars, and then thousands of employees are going to be making $10 million plus. I mean, this is going to be an enormous wealth creation event like San Francisco and maybe all of Silicon Valley has never seen before. Now, there's a few other data points in this S1 that I think reflected the strength here.

Silicon Valley, and then this corporate structure, 51% ownership, and what impact this might have on the technology industry, the venture capital industry, and then on democracy here in the united states we've never seen this much capital flow through to a non-profit organization um or whatever they're calling this anthropic uh non-profit entity but 80 percent of the seven founder shares are going into this non-profit entity of some type benefit corporation who

knows what it's going to be structured as it's optional but that's another interesting uh shoe to drop so take it whichever way you like in whichever order you like can i just comment on the the economic value that's arising from AI? Of course, sure.

Those were my biggest takeaways kind of from the S1.

I don't know if you guys agree with this, but, you know, it all felt pretty remarkable to me. I'd be curious to know if you guys think I'm a little loopy on being too exuberant in my reading of this stuff. I think the thing that is probably the most important is the last box that you said where you wrote an assumption where you said assumptions right well how do they measure that but by the way i agree with you but the last box i made up i said assume two to ten x so i'm just i have no idea but i'm a user of claude i think we get a lot of value for claude i think our people are able to do more because of Claude than they would otherwise be able to do.

So our business grows faster, we can get more done in a shorter period of time. I think I tangibly experienced that pretty regularly. I've talked a lot about moving to open source and we have our own cluster installed with our own kind of open source now. But I think what Claude is showing is that they have such a high margin, they actually have good elasticity on pricing. So they could push price down and you could start to see them start to segment the market a little bit where they could start to be more competitive. perhaps, with cheaper tokens for cheaper, easier tasks, and then premium tasks charge a higher price for intelligence and start to stratify the value of the intelligence that they're providing by changing the price points. And I envision that's where everyone's going to go.

Nick, I'm going to show you, this is to Friedberg's point about what is the potential downstream productivity gains that everybody can have theoretically with AI. Just put that on the screen. This is from Microsoft's earnings. My research team put this together. It's really quite incredible. What this shows you is that Microsoft's revenue went from $198 billion to $332 billion in the last four years, while staff only increased by 2,000 people. I mean, isn't that stunning? You would have thought before AI that if somebody said, great we're gonna you know get close to doubling revenues at this kind of scale right you probably would have thought that headcount would have doubled too and the reality is headcount stayed flat and we don't know how many people will take this offer that microsoft just gave for you know to leave because i think they offered it up to 60 000 people but this number could be under 200 000 depending on how many take it and so just the scale and the impact on the productivity to your point this idea that it creates job loss i don't think it's true it's more that you're seeing productivity gains at the same number of human input and i think that's interesting i went

through the s1 you know i'm going to give you my little s1 breakdown this is the most incredible business i've ever seen i hope that they go public after november 11th because it will force them to update with Q3. And then we'll get even more insight into this is like some contraption that I've never seen before. I've never seen a business like this. It's really, really, really incredible. So let's cross our fingers because post November 11, you'll see Q3 drop, what people have been whispering is that the revenue growth kind of moderated to sort of like the 50% range. Q4 is TBD. But let's break this down in a bunch of charts, because I think it's interesting okay so nick start with chart number one and we'll just go through them one by one okay so the first thing that i always read in an s1 is what are the risk factors and what i had my team do is i said go put together a word cloud first tell me this is really cool first tell me what are they afraid of okay and when you look at it the share of words in the risk factors that are allocated to different risks are very important. And what this tells you is the single biggest risk to the ant business is compute. They mention it more than anything else. And specifically inside

of compute, they talk about data centers, power, chips, grid, electricity, hardware, etc. Then a close second, but still second is regulation. Okay. They care about government policy, they care about sanctions, they care about export controls. Then it's this idea of zero data retention and privacy and IP. Then it's AI safety. Then it's just, you know, making money. It's then there's their competitors, then there's governance. What you notice is, what are they not afraid of? They're not afraid of How are you doing? customer traction, because they rarely mention. They're not really afraid of employees leaving because you'd be an idiot to leave if you're inside. And they don't really care about taxes and any of these other things. So this is a business that is very much on the forward foot that understands the binding constraint. So now, if you know that the compute is their biggest risk factor, then you double click into that. And I had my team run a further analysis, which is to say, okay, how do they describe these risks, right? How many times do they mention them? How many words are you spilling talking about this? And what you find is that inside of the compute problem, their biggest issue is really data centers. And then further, it's the financing commitments that

they have, and it's the power. All of these are really important because again, it helps us highlight what the binding constraint is to this business. So as goes data centers, as goes power, and by the way, this is a great setup for the politicians, because it's very obvious if you're a Democrat, as you read this, and I'll speak about it in a second, what you should be trying to do to win in 28 versus what Republicans have to do in 28, right? Basically, the takeaway from all of this is, I think ant is emblematic of the entire AI complex, which is to say, it's all about data centers, which means it's all about power. If you're a Democrat, the best thing you want to do is slow all of this down so that there's a recession going into 28. The only thing you need to do is slow down power and slow down data centers. On the other side, if you're a Republican and you want to have the best chance of winning in 28, this is the one thing that must be done right. You must get the power, electricity, data center thing right. Okay. So based on this, your premise is they need data centers. If they don't get data centers, it can't keep growing.

However, Sachs, the truth is these are the liberal of all liberals in Silicon Valley. It is the largest amount of money that has ever been made by founders outside of Elon Musk. uh it would make sense to me perhaps the opposite of what chamat saying shouldn't the democrats come in and say we are pro data center and energy because this is going to help society because they want to see dario and his group win because they are going to be the equivalent on the left of elon musk on the right wouldn't it be better for them to steal the um the data center charge and make Anthropic even more profitable so that that 51% of all of their, or 80% of all their money just flows into Democratic super PACs? Maybe, but I don't think that's the Democratic Party that we have today. I mean, the old Clinton Democrats, I mean, Bill Clinton Democrats are long gone. I don't think the abundance Democrats are picking up a lot of momentum. I mean, the Democrat Party, as Gavin Newsom said, is becoming DSA-dominated. So what is their agenda with respect to superintelligence? Either to ban it outright, as Bernie Sanders and Elizabeth Warren and AOC want to do. They basically want 20-year jail sentences for developers of superintelligence,

and they want corporate death penalty for companies that build superintelligence. Or they want to have some extremely draconian regulatory regime that would feature a federal department of AI or federal department of SI, I guess, that would review and approve every single model before its release. Basically, they want to have a DMV for models. Let me challenge you. That is the Democrat agenda on this. Now, could that be shifted through oligarchs like, I don't know, Reid Hoffman, or maybe some of these new anthropic oligarchs, like maybe at Dustin Moskowitz, something like that. Maybe they can, through their massive influence in Democrat circles, could effectuate a change. But I tend to think that...

Chamath is right that Democrats want to do anything they can to sabotage the Trump economy, and this whole SI boom is what is driving the Trump economy right now. So I tend to think that's going to be the partisan impetus. So you don't need to do much, I think, Freeberg to scuttle the Trump economy since the war tariffs and all that other stuff have driven inflation and all those problems. Wouldn't it be smarter for the Democrats to – Well, hold on. I mean, just hold on a second. My opinion, yeah. Jake, I think the latest numbers from like Fed GDP now, I think it was 3.7% in Q3 and it was 2.5% in the first half of the year.

And you could also look at all the capex that's being spent right now on this buildout, and it's roughly 3% of GDP. So you could say that all of the economic growth in the United States right now is coming from this superintelligence buildout. Concur with that. We can have fun with numbers. But the Trump economy is a disaster, according to Trump's own supporters. So let's just call balls and strikes here. His own voters, the independents who flipped over and voted for him, they are very displeased with the economy. And that can be seen very clearly in him having the worst approval rating of his entire career. And there's been some doozies in that career. Friedberg, what should the Democrats?

I don't think, even those critics, first of all, I don't know what Trump supporters you're talking about. I'm talking about the America First people who feel that he didn't deport the 20 million people, that they still have inflation. I'm just talking about that cohort. You could put Tucker in there. You could put Megan in there. You know, all that sphere. Yes, there are definitely people who don't like the war, and they recognize that there is some inflation being caused by the war. But I don't think they've said the economy is a disaster. Anyway, whatever. If you're not an equity holder, I think you look at this economy and say both parties, Biden and this Trump 2.0, I think that the bottom half of the economy believes that both parties don't care about them.

That's what all the feedback that you're getting. And we'll confirm it all next Tuesday and see what happens with the actual voting. Chamath, let's continue your teardown.

negative two. It is 80 billion of cash and short turns and 82 billion of debt.

Okay, now go back to this. What is my biggest takeaway? It's bigger than ant. I'm going to build on what Sack said, the entire United States economy is levered to the AI complex. So very narrowly, we're talking about seven or eight companies that sets the tone for the entire country. And whether we like it or not, that is where we are. Why do I say that? One, the most important companies in the world are in a massive spending binge, right? These were highly profitable, highly cash accretive, highly cash flow generative businesses that have said, we're going to put the foot down on spending because we believe in what's coming into the future.

That's what drives GDP and it's what drives growth. Okay, next chart. Now, as they do that, though, they deplete their cash, and they have to raise debt. Okay, and this is what you see, all but Microsoft, by the way, what an incredible job Satya's done. He's halved his debt, while everybody else has, you know, just gone to an unbelievably crazy high number. So the AI complex now owes $340, $400 billion to the market. And you'd say, okay, why is that important? The problem is this. these companies are raising so much money, it starts to crowd out the capital markets. And the most important part of the capital market that it starts to crowd out is the appetite for government treasuries. And what you can see here is that when you look at these AI firms, the amount of money that they need to raise through the end of 27th, it's 30% of all of what treasury is about to issue in that same period. So there, whether we like it or not, they are going to start competing for demand. Isn't this nuts? It's like you have seven companies that are crowding up the treasury market. You know, Chamath, a lot of people are looking at that number and they're trading these stocks down based on that. I kind of view it the opposite,

which is I don't, these are smart companies. I don't think they'd be making those kinds of investments unless they thought there was ROI there. And so there obviously is ROI based on the token usage and the fact that only one or two percent of people in corporate america are even using these tools we are greatly underestimating the uptick here claude hasn't even launched a bot yet a grok bot and open ai just launched theirs and it's in like a small use case when a hundred million or 200 million white collar workers who subscribe to say the office suite right the similar office 365 thing happens in corporate america everybody's got five agents running, I think the utilization of these things is going 500x. The token usage is 500x. That means we're going to have not enough compute, and everybody's got the buildout completely wrong.

There won't be enough, and people are going to look back on this moment and say, why didn't you build more compute? Why didn't you spend more on CapEx? You're absolutely right, Jason. The problem is the regulatory pushback. The amount of approvals and the ability for utilities to find the staff and the ability to actually turn these things on. And then the ability to get the capital equipment you need, it just isn't there right now. So we as a country are sort of clogged up. We can't do it even if we wanted to do it. freeberg you know the the other issue here is if we are not spending enough building this out and the country a large percent of the of the country believes in socialism and is against the oligarchs both republican independent and democratic oligarchs this is a this is what they think of us and of the leaders in our industry and other industries this is really dangerous because we're not going to be able to to build out the compute we need and what does that do to the entire industry in the next three to five years if we if we can't build out this and how do we turn that narrative around so people are like yeah we should have data centers

their champions? Do they have champions yet? Oh my gosh, for sure. Listen, Anthropic, even as a startup, prioritized government affairs. They were very active during the Biden administration. All those former Biden officials who were doing AI in the Biden administration immediately joined Anthropic at the end of 2024. No, no, I get that, but you don't see them doing what you guys did, hosting a fundraiser for trump being out there publicly in front of it you don't see them oh sure but they've they have spent they've created packs sure and all sorts of entities and non-profits all ngos all that kind of stuff and they've been massively funding it they have a huge government affairs operation what you guys did like and you know getting out there in front of what you mean by you i don't know what you mean by you guys i did you hold on your support

for trump i've never seen a person publicly come out for i'm not a corporation yeah exactly i'm not i'm not can you let me explain i'm not a corporation of course i'm just one person who has views and yeah i support certain candidates and i do fundraisers for candidates i'm not like seeking regulatory capture i'm just one person i'm saying why hasn't dario or the other founders done that why haven't they said we choose this candidate we choose these candidates we don't know that they haven't how do we know they haven't done it publicly because we've never heard them do it that's my sure but they have given huge amounts of money i agree they've done it which is public information and those packs have supported candidates if they're going to make a run at this they should do it publicly there's a huge revolving door where anthropic has been snapping up every former official first it was the biden administration now frankly they're hiring a lot of former trump administration officials oh really and yo yeah this and this is all public information yeah but they are building a massive government affairs operation and look i think you can expect that as they power up through all of this capital, having a $2 trillion market

cap, they're going to have even more influence in Washington, or they're going to be capable of buying a lot more influence. And I think that is concerning. One thing I will say, though, is that as they go from being a startup to being a public company that's one of the top handful of companies by market cap on earth, it's going me very obvious that they are a big tech company and therefore they should be treated like other big tech companies, which is to say with suspicion, as opposed to this being some poor little startup that has innocuous views or is not the 800-pound gorilla that they actually are.

So I do think it'll be clarifying on that level for them to be seen correctly as what I've been saying is that they are the most powerful monopoly or duopoly ever in human history, which is they're creating AGI, right? I've been saying that for a long time. So I do think that

You had the greatest revenue, greatest business ever built, yada, yada. They have a ton of cash. They have the cash for the build-out. They're going to raise some cash in the IPO. And all of this bond activity is crowding out. treasuries is where you left off, I believe. So let's continue. Exactly. So I think you have to go to these risk factors now and think if you're going to price

This is confusing to you as a market participant who's on the inside. I get it. What I'll say is, you could actually argue the opposite, Shema. This is the greatest business ever created. It's an American business. The American economy is still the greatest economy in the world. You could argue versus China, etc. But we are running the table on super intelligence. And if you look at the history of the greatest franchises ever made, I did a little bit of research. and just this is first seven years of revenue to back up what you're saying here if anthropic hits the targets they've set out you know ballpark uh here is getting to a hundred and then 300 billion dollars in revenue eventually 600 billion in revenue they're well on their way they're at about 100 billion in revenue this year which is like a third of a google uh you know a quarter of uh of an apple and you look at the cumulative revenue in the first seven years of the best franchises America has ever made, which would be Amazon, Google search, cost per click search, Freebrager Alma Mater, and the iPhone franchise. It's going to become clear that the three best franchises in the history of business, in my mind, iPhone, Google cost per click search,

and Amazon, which will, this doesn't include AWS, this is just books and retailer, you put the books into the AWS into it into later years, it gets even more interesting. It's possible Anthropics business is bigger than the top three franchises in the history of business put together and that is something we've never seen which means you have no choice but to buy american debt and this debt if you're a global participant where are you going to put your money in france you know in china you can't put it into china i'm confused yeah haven't you been saying for like the past year that open models are going to eat anthropics lunch well have you changed your tune on that in the face of new evidence uh you would have to uh say that they are lowering the prices and the opportunity in the enterprise is um is so great that they're not being dramatically impacted by it you will see anecdotally startups and enterprises exploring it but it's obviously not enough now that we know their numbers that uh it's slowing them down it's not slowing them down yet i'm not i do think it's It's still the biggest risk factor, but if you're- I'm not debating revenue traction at all or business quality. What I'm saying is there

are moments where there's systemic risk in markets where everybody goes risk off. I think that what I am saying very explicitly is I've not seen in the last 15 or 20 years. The last time we came close to this was in the GFC, where you have a narrow part of the economy represent basically all of everything that's happening in the capital markets. All that means is that everybody has to pay a lot more attention. Doesn't matter what side of the AI trade you're on, whether you're long it, whether you're short it, that's not, I don't think that's important. I'm saying something more structural, which is about 10 companies collectively to fund one thing will be competitive with global governments on borrowing. I don't know what the implications of that is because I have not seen that. To the point, Sachs, that you made and challenging me, which is great. Their revenue is slowing down dramatically. You know, their quarter over quarter revenue is decelerating. So obviously, it's on a big number.

So we don't know Q3 yet. I mean, the scuttlebutt on X, and who knows, we can totally believe this is that things did slow down in Q3 a lot. But some of that may be attributable to the fact that they eliminated 99% of distillation, right? So they voluntarily took a big hit to the revenue From people stealing from them. Yeah, to prevent the copycat models from basically distilling them. So there was that. And then I think the scuttlebutt is that since they cut their token costs considerably, which was done pretty recently, now the demand has re-accelerated. Yes, Jevin's paradox in full effect. Yes, it seems like they're back to resuming their previous growth after a couple of hiccups in Q3.

But I think the thing that's really impressive is just that the way they're able to cut their token costs, it's not just because they're giving up pricing power, right? It's not that they're losing margin. They're actually gaining margin. The reason they're able to do that is because all the algorithmic improvements they're making in order to make their models much more efficient. Yes. And just to dovetail with that, Sax, what's happening with the models is even more impressive. the they're lowering the price of tier two and tier three models right your sonnets your opus those are getting cheaper but enterprises are saying that's enough for me so as they make that cheaper then businesses get more value they solve more problems out of it and they don't feel the need to be on the latest greatest fable. If you're a hollow, maybe you need that to do science. If you're a mathematician, you need it. If they can keep making their second and third run models this much cheaper, 10x cheaper each year, the Jevons paradox is going to get even more pronounced because enterprises will use it more. Token cost matters, right? We're sitting here with the token maxing cost. Look, what we're seeing is that, I mean, we keep seeing Jevons paradox play out at every

level, which is as you cut the cost of tokens or more and more use cases, enterprises use it more and more. And the net result is that the total demand just keeps going up and the total revenue and market size keeps growing. Also, just to reiterate a point that you made earlier in the program, the new applications that are coming all consume a lot more tokens than the ones that we started with, right? Like agents use a lot more tokens than prompting and cyber defense is going going to use a lot more tokens than just doing a pen test once a year, right? You're going to need continuous monitoring of agents, attack surfaces, all that kind of thing. So all the new applications are going to be using exponentially more tokens. 50 to 100 times the number of tokens, yes.

Exactly. So the price will keep going down, but the market size keeps increasing. I think the biggest risk factor to Anthropic, I do think it is some version of the open source models, maybe not catching them, but sort of saturating intelligence at a low price point for certain... Commoditizing it. Commoditizing it for things like coding or where there is a big chunk of the market. That is still a risk. I would say sort of a second order risk is that in order for Anthropic to stay ahead and to keep making their models more and more efficient, they have to keep using more recursive self-improvement, right?

You see this in the charts that they publish, that they are using their latest models more and more to discover these compute multipliers, to discover these new algorithmic efficiencies. So they have to kind of push the limits of what they themselves call risky activity. I don't know if I fully believe in the Doomer story about RSI, but they themselves say that RSI is very risky, but they have to keep pushing RSI in order to keep delivering these algorithmic improvements in order to stay ahead of the open models. And I just wonder how sustainable that is. At some point, do you get a breach with the doomers that becomes irreconcilable?

Do the doomers want to basically shut down RSI or basically slow it down to the point where then the open models truly do catch up? I don't know the answer to that question. And it's sort of just a more nuanced take on this idea of open models catching up. Yeah, and I think this chart is super illustrative, if you can pull it up, Nick. Gallup's been keeping a survey of who's using AI at work daily versus frequently, defined as a few times a week. And, you know, the people using it like frequently versus daily, we're still talking about 10 and 20 percent here. It's nascent. A lot of the top enterprises are not letting their employees use this in an unconstrained fashion, and they're certainly not letting them connect their email, their knowledge bases, their notions, their slacks. Big corporations are not letting people actually use the power of AI because they're scared about cyber. Once the cyber threat, Chamath, gets mitigated, this is going to go from 10% of people being daily users to 60 70 80 there's so much growth left here uh when every single employee has an agent i saw just last week uber bought open a open ai chat gpt for every employee that's going to be the next shoe to drop is do you buy these things for every single employee okay i think we beat that

one to death congratulations to the anthropic team and all the investors on making an incredible business. Extraordinary. And yeah, shout out to Sachs, who predicted this would be the greatest business ever on multiple programs. Turns out you got that one correct. And we'll see. We'll see what happens. But like I said, I said two things. Number one, best business ever creating this AGI monopoly. Second, they're going for regulatory capture, and we should definitely not allow that to happen, especially in light of number one, It's just kind of unseemly and gross for them to be seeking red capture when they already have such a good business and they're in such a dominant position.

And I think actually that this IPO will be very helpful and clarifying on that because, again, once they're seen as a big tech monopoly or part of a huge duopoly, the arguments for giving them regulatory moats just go away. In fact, we should do everything we can to make this market more competitive and help it stay competitive. Anthropic movement, break up Anthropic, separate the lab from the tokens, from the subscription. It will, like, if, and who said it, Gavin, that they were claiming they were building the last business ever? You know, when you look at the other franchises. Yeah, Dario said that.

Well, Gavin said somebody said Dario said it. Yeah, Gavin said that Dario said that and then he, Gavin, but Dario did not deny it, remember? Yeah, he said it might have been kind of said, yeah, so So, yeah, I mean, I think they obviously believe it. And if you look at that chart I made with the other franchises, they obviously have an incredible franchise that's theirs to lose when we get the OpenAI data. Man, then we're going to have all three of the major players in this space disclosing the key information we need. And that's going to be really interesting when we have all of the hands turned over in this poker game when OpenAI files.

All right, Google got smashed on Thursday, 10%, 15% down. We record on Thursdays, obviously. Q3 earnings wiped out about $500 billion in market cap. Why? For two straight quarters, Google missed on search revenue. Even though searches are growing massively, the people clicking on the ads is not, which leads to a little bit of shenanigans and trying to get people to click on more ads. They're negative on free cash flow, even though cloud is ripping, cloud doubled year to year, 30.7 billion. That's the AWS business they have. It's called Google Cloud. It's quite nice. And overall revenue is still strong. They're growing 25% year over year. The issue is people are looking at that Google cost per click advertising network and saying, well, obviously that goes away at a certain point if you just give people the answer, right? ChatGPT, Anthropic Rock, they just give people the answer and in some cases they go solve their problem if it's an agent so that is pretty disruptive search business is what pays for everything and that grew 12 down from 17 so it's decelerating but it's still growing nicely freeberg this is your alma mater you witnessed the cost per click greatest business ever this was the previous one that we said was the best business

ever created along with the iphone franchise what are your thoughts here are you worried about that franchise or do you think they've done a good enough job with the other businesses? Google Cloud and YouTube come to mind, Android, in terms of diversifying their revenue. Are you worried about Google as a buy opportunity or is this stay away? It's a complicated story. I think the core

well no i'm saying manage this is the best business i'm saying manage search let me be When I say bending spoons, I'm saying manage it for earnings, not for growing it necessarily.

Just get as many dollars out of it as possible. I think that's what they've been doing in the last quarter. That's why people didn't like that. I mean, there was a very interesting tweet. Nick, maybe you can put it up here.

whether this is true. The second, though, is very narrow. How do you keep Demis at Google? that's it that's the only task okay uh there's nothing else pay thomas curian whatever he wants how do you keep demos at google sacks looking at this uh business it's been obviously a journey for the past 10 years to make alphabet have resiliency in revenue streams diversify the revenue streams you think there's uh some great risk here and would you be long short or neutral on the stock? Well, I'm seeing people post that Alphabet's Google search revenue dropped below 50% of total revenue for the first time. And they're making it sound like that's a catastrophic situation. Basically playing into the narrative that the search business is going to be disrupted by SI. And that's what it seems like on the surface. But when I dug into the numbers, it didn't really seem that bad at all. So it's true.

that Google search's relative share decreased, but its absolute revenue still increased. So if you look at Google search revenue year over year, it was still up 12%. It increased from $56 billion to $63 billion. So it's still a roughly $7 billion year over year increase in Google search. So Google search is still thriving. I think you could say it's not growing that fast relative to other businesses, but you're not seeing it deteriorate yet. And again, the reason why the share fell below 50% is because other Alphabet businesses are simply growing much faster. And the main one is Google Cloud, which basically doubled year over year to 30.7 billion. So it's the rise of the Google cloud business that has made Google search seem like it's on the decline. But I tend to think it's a good thing that Alphabet is now finally getting some of these other businesses to really work and to really grow fast and to finally diversify the revenue. Diversifying from search has been something they've wanted to do for a long time. They now have all these other segments.

You've got YouTube, you've got G Suite subscriptions. So in any event, I tend to think Google is a little bit oversold on this news today. I agree. Although I'm not certainly not telling anyone to buy anything. Since inception, and maybe past 10 years, you can pull both charts up. We'll go through them real quick here. But this is just this franchise, the number of searches is still going up. The revenue per search. And that issue is obviously the one people are concerned with. But the other side of the coin is absolutely correct, David. The other businesses that they're now only 50% dependent on this business. And that will continue. So for me, I just literally bought some shares. So I'm long. I just bought more shares in Google while doing the show.

Just remember, Alphabet owns 6% of SpaceX and like 15% of Anthropic as well. I think 85% of Waymo as well, right? Like that's the other piece of this puzzle. Amazon also owns a big piece of Anthropic. They're going to be a big winner. All right, listen, that's our time here. Do you guys want to talk about the election ahead of Tuesday night and predictions or anything like that? You've been shepherding this guy. What are you guys watching on the midterms? Anything you're keeping an eye on, Chamath? Any big contrarian predictions on what might happen on Tuesday? It's so interesting. I'm like really confused. I've started to stop paying attention just because there's so much misinformation. I thought that we are going to have, and I still think what Sachs called a spritz. I think it's more of a democratic spritz. But when you look at some of the early data, and I don't know if Brett Baier was doing this just to kind of hedge his bets or not, but he did a clip which went viral on X where it just looked like it was going to be a bloodbath for the Republicans and they were going to lose both sides, both the Senate and the House. I think it's still set up to have the Republicans keep the Senate and the Democrats

to have a narrow majority. And just going back to maybe where we started, the mandate from the Democrats then becomes obvious, which is how do you introduce FUD? And there's one way to do that, which is to start subpoenaing everybody and start to do disclosure, discovery, release document after document after document and let, you know, the, the masses start to churn through this stuff going into 28. So number one, create FUD. And then number two is, I think a economic slowdown benefits the Democrats going into the 28 election cycle. And so whatever they can do to kind of like influence power permitting and data centers, because as we talked about earlier, that's the lever bet. So to me, it almost doesn't.

matter what happens at the federal level, except for the FUD part, I think we now should be paying a ton of attention to what's happening in these governorships and some of these other races. Zach, has your view changed? Look, I think that you can't trust any of these polls. First of all, a couple of these polling firms have come out and admitted that they are fake. I mean, we literally have a couple of- Oh yeah, there was a hoax, right? Fake polls. It was literally a hoax. And those fake polls were included in those averages. So some of the polls are outright fraudulent. And then the rest of them are well known to have a bias. Patrick Graffini did a study of the last three elections and found that three quarters of the polls all, you know, erred in favor of Democrats. So we see this as a recurring pattern.

We saw this in 2024. You had Ann Seltzer, who was supposedly the gold standard, say that Trump was going to lose Iowa by like 10 or something like that. And it turned out to be total nonsense. So the pollsters have a history of bias, of fraud, or you could just say, for some reason, oversampling progressives in their polls. So I think that people should shut that out. I think that some of them are a tactic designed to depress and suppress turnout. And Republicans should just go out there and vote. The economy is not a disaster. That is total fake news. We know what the growth rates are. It was 2.5% in the last quarter, and it's tracking at 3.7% right now.

median household income is almost $90,000. It's at an all-time high. Poverty is at an all-time low. I think the percent of people below the poverty line is like 12%. It's the lowest it's ever been. It's not just a K-shaped recovery. You're seeing real wage growth in real terms by the average household, which was not true during the Biden years. So I don't think people should get psyched out by this media operation to make people super depressed about what's going on. jacal any views oh well i uh agree the polling data has been you know a suspect for a long time now across many elections wedgwood uh did this like they're claiming performance art but they were kind of serious i don't know who they're working for or what the shenanigans are but i do trust polymarket i think when you look at the polymarket pretty clear what's going to happen here and i can tell you polymarket was wrong on balsanero although i think maybe he got robbed it was wrong on Netanyahu. So the poly markets are just a reflection of public sentiment or public sentiment that's willing to place a bet, and they could be totally wrong. So they were totally wrong about those two national elections. By the way, I'm not predicting some sort of

miraculous Republican win here. It would be very unusual for the Republicans to win a midterm election when they're in the White House, right? And you remember that Bill Clinton and Barack Obama both suffered horrendous midterm losses. Bill Clinton, remember, lost in 1994. He lost to New Congregates, the whole contract with America. That was the first time Republicans took control of the House for the first time in 40 years. With Obama, you had one of his midterms was the shellacking. So it's quite customary for the out-of-power party to do very well in the midterms. I'm just saying that the media is already portraying this as a tsunami or a bloodbath, and I think it might be a more normal midterm result. That's all I'm saying. So in any event, I think people should just go out and vote, not get depressed or psyched out by whatever the media is telling them because the media has a long track record of being wrong and biased. And J.K.L., any view that's different than where we've been in the past?

I think polymarket is going to get it right. I think Democrats are going to win the Senate 68% chance right now on polymarket. I believe that. And House, obviously, everybody believes that 92% chance. So when that happens, and the reason I'll back that up is if you look at the net approval rating of Trump, all time low, the country is very upset. And the libs are going to come out in force to vote anti-Trump. the uh the the moderates are either not going to show up and they're not going to be trump curious like they were for the second term and you know oh kamala was such a disastrous candidate they were like okay i got to try something else here and they went for trump reasonably if you were going to have a choice between kamala and trump i think trump's the better choice for most americans and then you have the fractured uh republican party where the american first people feel really like they got rug pulled by trump because of the economy inflation didn't get solved the wars didn't get solved and he started another war so that group's kind of pissed off so when you put all that together i think it's a very easy sweep for the democrats then i think you know if we want to look at what the next two cards are if you look at impeachment you know that that process from what

i understand is a house and then senate and it's a legal proceeding i think we're going to go right back to Trump being impeached. And then both houses are going to do that. It's going to be absolute chaos. And then the Dems are going to start putting legislation out there and force the Republicans to vote against it in order to scuttle J.D. Vance's chances. So this is obviously going to be a chaotic two years. So what's going to happen is it's going to be a chaotic two years. And I think what will come out of that ultimately is we're going to need some new candidates on the Republican side, and they're going to put the Trump era to bed. And then I think that means they put J.D. Vance and Marco Rubio to bed, and they're going to need a new champion that is more populist and actually executes on the populist agenda, which they feel Trump represented, but didn't execute on. And that's not my personal belief. That's just my analysis. Go ahead, Jamal. No, I think what I'm saying is you think there's going to be a Democrat-FUD campaign. They could control the House. They're just subpoena everybody.

They're going to subpoena everybody. They're going to look into every single accusation of grift they can think of and ones that are valid, ones that are not valid, everybody in between. And so, yeah. And then we have a really good group, by the way, coming. So join us for the all-in midterm live stream, 8 to 10 p.m. YouTube X and Polymarket. Shane Copeland, Tim Dillon, Rahm Emanuel, Taylor Lorenz. It's going to be chaotic and fun. Taylor Lorenz. She's on a redemption arc, I have to say. Base Lorenz. She's actually been great on certain topics lately. What is going on? Full redemption arc, I have to say.

Wow, Base Lorenz coming on the pod. Love it. It's going to be a fun time. I love Tim Dillon. He's coming on. I'm not going to be there. Where are you going to be? What do I need to do a midterm live stream for? Because you're going to lose. Your party's going to lose, so you're not coming. If we outperform, I'll pop in and spike the football. Otherwise, I'm not showing up. That's not cool. Everybody wants to hear you. Come on. We can drink some tequila. We'll have fun with this, Zax. Come on. You can't cry. We should all be drinking, by the way. Chamath, maybe we should get together at Chamath's house and drink and do it live.

I agree with a lot of your analysis about what will happen if the Democrats win J-Cal because they have not changed their stripes. OK, people are just forgetting who the Democrats are and what they were like during COVID, all the lawfare that they perpetrated, all the crazy woke stuff. It's all there, ready to come back. They have not really analyzed why they lost in 2024. They have not really changed or adjusted anything. If anything, they've become more extreme, right? The DSA is ascendant in their party, as even Gavin Newsom acknowledged. So I think that if the Democrats do take Congress, you're likely to see how nutty they are. And the American public will be reminded of that. And that will be really interesting to see. So, you know, but that's why there's a pendulum in politics, right?

there is a pendulum um i think we need a yeah i mean i i'm wondering who the champions are if it's not jd and um ruby i wonder who the champion on the right will be i think it's gonna be somebody we can't even name right now is going to emerge and i think the same thing on the left anyway it's going to be exciting we're going to get sacks to show up and uh we'll see you all next Thursday night for our live stream. Love you, besties. Bye-bye. Bye-bye. We'll let your winners ride. Rain Man, David Sacks. And it said, we open source it to the fans and they've just gone crazy with it. Love you, besties.

Queen of Kinoa. I'm going all in. Let your winners ride. I'm going all in. Besties are gone. We should all just get a room and just have one big huge orgy because they're all just useless. It's like this like sexual tension, but they just need to release them out. I'm going all in