OpenAI and Anthropic are racing toward IPOs while growing at all costs, with OpenAI now catching up to Anthropic in revenue.
Both prioritize compute and growth over profitability, a strategy the market currently tolerates but whose long-term viability is uncertain.
The entire structure increasingly depends on debt financing from hyperscalers, creating a chain where demand ultimately traces back to these two AI firms.
What happened
OpenAI and Anthropic are both preparing for IPOs while pursuing aggressive growth strategies, prioritizing revenue expansion and compute acquisition over profitability. OpenAI has begun catching up to Anthropic in revenue through more aggressive pricing, and both are willing to pay top dollar for compute resources. SpaceX already completed its IPO this year at a valuation that reached nearly $2 trillion before declining.
Why it matters
The market is currently pricing these AI companies entirely on growth with no regard for margins, a dynamic that has held so far but raises questions about sustainability. The buildout is increasingly financed by debt—hyperscalers including Alphabet are now free cash flow negative—creating a structure where demand from Alphabet, Meta, and Microsoft ultimately traces back to the same two IPO-bound companies. Profitability pathways remain unclear; most people do not pay for subscriptions to Claude or Gemini, and advertising revenue is speculative.
What to watch
Nvidia has begun backstopping debt from institutional providers using a tiered risk structure (similar to credit default swaps), signaling a new phase of supplier-backed financing. The sustainability of this debt layering depends on whether companies can generate sustained cash flow—not necessarily profits for lenders, but eventually profits for equity investors. Lou Whiteman noted this is "a house of cards, or it's a solid foundation" depending on whether the companies can deliver, and that consolidation among neoclouds (specialized cloud providers for AI) may become necessary if no clear differentiation emerges.
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The AI industry finds itself in an unusual moment: two companies, OpenAI and Anthropic, are approaching IPOs while operating in a growth-at-all-cost mode that defies traditional investment logic. As Lou Whiteman noted on the podcast, profitability is no longer a prerequisite for capital access—SpaceX demonstrated this with its recent IPO near $2 trillion—but growth is everything. OpenAI has begun narrowing Anthropic's revenue lead through more aggressive pricing, and both firms are competing fiercely for compute resources, driving up costs across the infrastructure layer.
The financing structure underlying this growth creates a novel risk pattern. Hyperscalers like Alphabet, Meta, and Microsoft are borrowing heavily (Alphabet is now free cash flow negative) to fund AI infrastructure, but their ultimate customers are the same two companies seeking IPOs. This creates a circular dependency: the demand that justifies the debt comes from firms whose profitability remains speculative. Nvidia's recent move to backstop institutional debt with a tiered risk structure (first-, second-, and third-in-line claims) formalizes this interrelatedness and signals confidence that the chain will hold—at least as long as GPU demand remains strong. However, Jason Moser highlighted a structural concern: without clear consumer revenue streams, these companies remain "one trick ponies" in an increasingly commoditized market.
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