Michael Burry Calls Anthropic's Valuation a Bubble Worth 78 S&P 500 Companies
Key Summary
Michael Burry questions the valuation of AI company Anthropic, estimating it could buy 78 profitable S&P 500 companies. He compares it unfavorably to historical valuations, including a 1990s-era UPS valuation. Anthropic's valuation is under scrutiny amid concerns over its significant losses and planned spending. The company is set to go public before Thanksgiving.
Historical Context
Michael Burry notes that the $119 billion valuation of UPS in the 1990s, adjusted for inflation, was a record for inflation-adjusted pre-IPO valuations. This valuation was 26 times earnings and 2.4 times sales, with the company earning a net margin of about 8.6% at 92 years old.
Market Analysis
Burry questions the valuation of Anthropic, which is estimated to be $965 billion. This valuation could buy 78 profitable companies in the S&P 500, including Domino¹s, Clorox, and lululemon. However, Anthropic has significant losses and plans to spend $518 billion on cloud and infrastructure in coming years.
Financials
The company's leaked draft prospectus shows a $42 billion net loss for 2025, with most of the loss being an accounting charge. However, it also lists $11.5 billion in second-quarter 2026 revenue and points to a second straight operating profit.
Outlook
Anthropic is targeting a listing before Thanksgiving, with investors putting fair value between $1.8 trillion and $2 trillion. Burry's comments highlight the uncertainty surrounding the company's valuation and its prospects for growth and profitability.