[lukeschlather]

The R&D expenditure seems reasonable, and the revenue numbers seem realistic. I have no trouble believing they can be profitable by 2030 or much sooner. What I don't get is how you get from $30B in revenue to a nearly $1T valuation, but that seems almost level-headed compared to SpaceX, and it's not like any of the big tech companies' valuations make much sense in the context of their revenue.

[philistine]

> What I don't get is how you get from $30B in revenue to a nearly $1T valuation

There is something that has fundamentally changed (or broken, depending on your perspective) with the valuation of American tech companies. They've always traded at a premium, but the pandemic and the encroachment of the monopolists has turned the earth sour.

[ghtbircshotbe]

I don't know if that's completely true. Google, Apple, Amazon, Nvidia etc are somewhat expensive, but not ridiculously so based on earnings and growth. Tesla, spacex and openai are in a different universe, though I honestly can't say wtf is going on with them

[somenameforme]

The market is pricing in the potential for future revolutionary shifts which seem fairly likely. For instance if there ends up being substantial labor disruption due to LLMs then the economy as we know it is going to end up being reshaped in ways that are difficult to imagine beyond the fact that the LLM providers would likely play a critical role in it.

Similarly, SpaceX has already brought the cost of getting things to space down by a couple of orders of magnitude, and Starship is rapidly progressing with the potential to bring them down a couple more. The aspirational goals there are being able to get things to space on the order of $10-$20/kg. That would dramatically reshape not only space but even transport as we know it, very likely in a way analogous to how the ability to quickly send a 0 or 1 signal long distances for cheap reshaped the world in ways that would be essentially impossible to predict prior to its happening.

I'm bearish on the LLM revolution and bullish on the space one, which generally seems to also be the market consensus.

[skybrian]

Why should we believe that Starship launch costs will be that cheap when we don't believe Musk's other numbers? Where does that number come from? Has anyone looked into it?

It doesn't cover launch costs directly, but here's a bearish take on reusability of the second stage:

https://mceglowski.substack.com/p/how-should-we-think-about-...

[somenameforme]

Yes, it's been extensively analyzed. Space is a massive industry with a huge base of people, disproportionately made up engineers and the like, who love digging through the nitty gritty of pretty much everything. Nasa space flight forums [1] are the analog of hacker news, but for space. That link is just for discussion on Starship, and currently has hundreds of thousands of posts.

[1] - https://forum.nasaspaceflight.com/index.php?board=72.0

[skybrian]

So what's the consensus? Any article in particular that you recommend?

[somenameforme]

Peruse the forum. There's a topic on near everything relevant you might imagine. If you want a topic starting from a bearish premise, here is one. [1] In general I think there's little doubt that Starship is viable, but the exact implications are open to a wide range of speculation. Prices are going to go down, and payload sizes are going to go up, but the exact degree is open to speculation varying by orders of magnitude.

[1] - https://forum.nasaspaceflight.com/index.php?topic=63166.0

[freakynit]

"""For instance if there ends up being substantial labor disruption due to LLMs" ""

.. who are they gonna sell to if people don't even have money to buy? We live in circular economy... everyone's dependent on someone or the other... you take one leg out of this, and the whole thing stops. UBI won't work either because it will lead to runaway inflation and extreme levels of invasive control over people's lives and what they can and cannot do.

I hope no one here is naive enough to believe that AI would actually be used for general welfare of people.

[doctor_phil]

> UBI won't work either because it will lead to [...] extreme levels of invasive control over people's lives and what they can and cannot do

I've never heard this before. I thought UBI would be very freeing and without much control. If it is universal then there needs to be no control of who gets it or not. What am I missing?

[somenameforme]

I think "The Expanse" offers one of the most viable portrayals [1] of what a society under UBI would look like. One practical issue is that you'll end up with people who earn and create and those who passively consume, and that will lead almost immediately to a class system and segregation. And it's likely that basic criminality and other issues will come disproportionately from the consumption class, which will lead to calls from the production class for further regulations on their behaviors.

And in cases where the strain on resources is significant, you could easily see things like efforts to restrict the fertility of the consumption class which would enter into the domain of defacto eugenics. And from all of these sort of issues you're going to see a conflict arise between the two classes, but one holds all the power. It's not going to be pretty. FWIW, a decade ago I was a huge advocate for UBI, but my outlook on the realities of political leadership, and it's probable inescapability, has changed my opinion over time.

[1] - https://expanse.fandom.com/wiki/Basic_Assistance

[freakynit]

One simple 100% effective way of control is to control the livelihoods of the dependents. UBI does exactly that by giving that control to governments(politicians), which in turn generally serve corporates interests, thegerby extending that control to them. We can already see it happening with data-centers.

[godwinson__4-8]

What do "corporate interests" even mean in a world with UBI and automated production?

Your fight against the data centers is misguided. All so they can be built somewhere else so what you have a few extra years of getting paid to fill out a spreadsheet or something? You're applying pressure on the wrong side of the equation.

[godwinson__4-8]

UBI is really one of the few positive end states. You can't put the genie back in the bottle. People against UBI really need to get over themselves unless you are part of the mega capital class its simply not in your interest to oppose. This will be hard for many software engineers who even in today's market are used to being overpaid and overvalued.

[general1465]

> What am I missing?

Nothing, it is nonsense. UBI is just expanded social welfare in Europe. There are some checks that you are not abusing social welfare (i.e. living in a huge house while taking housing subsidies) but with UBI these checks are nonsensical from that first letter U = Universal. There are no checks by default.

[somenameforme]

I think a common mistake people making is viewing an economy as fixed, but everything is based on supply and demand. Tech is a tool, like a hammer. But right now it's a hammer that very few people can wield, and that alone is what drives its value. LLMs, if they reach their potential, stand to turn tech into just another hammer that anybody can use. And so being able to use that hammer will no longer be valuable, but there will likely be an explosion of new things being made, with our new-found hammer literacy, that fill the vacuum and then some.

[quietfox]

I’ve always been wondering how they are actually planning this scenario. If they cut human labor on a massive scale due to AI, consumption is about to drop heavily. AI doesn’t pay healthcare insurance or taxes, it doesn’t buy groceries or cars or gas and it doesn’t rent apartments. How do people imagine to compensate that?

[JMiao]

i am not ready for our weyland-yutani overlords

[danielmarkbruce]

It's easy actually. If it grows a lot, with decent margins. Grow 30B at 40% pa for 10 years and you arrive at around $850B in revenue, assume 25% operating margins, that's slightly over 200B of operating income, and it all makes a lot of sense.

You can debate the assumptions, but it isn't witchcraft. The math is simple.

[niemandhier]

I think the reasoning should be the other way around:

If you limit yourself to simple math, than you get this result.

Assuming linear growth into a market with competition and an unclear ability to absorb that growth is a gamble.

[anshumankmr]

I think what PEOPLE are saying IT is very difficult to sustain that level of growth.

[moi2388]

Of course it is. But stocks aren’t a measure of current profitability. It’s a bet on future profits.

How many serious, large AI players are there? Google, OpenAI, Anthropic, and who else exactly?

At least one of them will probably win. And winning here means billing almost all companies for AI and automation, consumers, perhaps robotics and research.. and that potential earning is massive.

So yes, I will pay 10 times the worth for the stock now, but paying 1000 per stock for a chance of owning all that future profit is not that outrageous.

[necovek]

I believe a more likely outcome is that neither one of them outright "wins", and they get joined by other players like xAI, DeepSeek, Qwen, Mystral, Llama even...

That should make it hard to bank in on future growth with any single AI company: what I believe is happening is investors jumping in on the short term gains train.

[riffraff]

You see, in this _new economy_ you can't rely on old metrics to judge value.

At least that's what I remember from the 00s.