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Please join The Information at the New York Stock Exchange on Monday, April 27, to hear from top executives and investors on how the rapid buildout of AI is reshaping tech, finance, and capital markets. Learn more here. Hello! It’s Valida in San Francisco. I’ve spent the last week talking to people who are in town for Morgan Stanley’s annual technology, media and telecom conference at the Palace Hotel this week. Even before the fireworks last week between the Pentagon and Anthropic, the gathering was sure to be buzzy, given the lineup of richly valued private startups—including OpenAI and Anthropic—and the havoc their growth has been wreaking on software stocks. Indeed, conference goers were so eager to hear both the OpenAI and Anthropic chief executives that the rooms hosting their talks were overflowing, according to those who attended. But it was Anthropic that many of the attendees wanted to talk about. Of course, many in attendance were eager to hear some of Anthropic CEO Dario Amodei’s first comments since the company’s dispute with the Pentagon over military use of AI mushroomed late last week, sparking fiery missives from both President Donald Trump and Defense Department Secretary Pete Hegseth, who moved to bar other military contractors from working with Anthropic. But that dogfight wasn’t the only headline capturing investors’ attention. In less than six months, Anthropic’s skyrocketing growth has made public market investors downright heady about its prospects as a listed company. They pointed to its annualized revenue, which is approaching nearly $20 billion, as we and others reported this week. That’s more than twice as high as Anthropic’s revenue late last year and has narrowed the gap between it and its older and bigger rival, OpenAI. The investors also talked about the better discipline of Anthropic management, which has focused the company on products sold to large corporations. Indeed, these managers of mutual funds and other other investment funds have seen a stream of Anthropic product releases rampage through the stock market, mowing down the stocks of cybersecurity companies, software providers like IBM and financial services companies. OpenAI, on the other hand, is aspiring to build a wide-ranging portfolio of projects, including its hit consumer chatbot and agents for big companies, as well as AI-powered hardware devices and data centers. In one sign that it’s trying to rein in its sprawling goals, the company has backed away from plans to sell goods directly in ChatGPT in favor of putting checkouts inside apps that plug in to ChatGPT, my colleagues reported this week. The chatter about OpenAI was notably different from what I heard the last time I was mingling with conference attendees at the Palace Hotel. Six months ago, at Goldman Sachs’ annual tech conference, everyone was buzzing about the eye-popping deals OpenAI was making at the time with cloud providers such as Oracle. Anthropic, which sent its chief financial officer Krishna Rao, got far less attention. Still, investors were excited about OpenAI CEO Sam Altman’s appearance at 7 a.m. Thursday, an early-morning slot that replaced a scheduled presentation for CFO Sarah Friar on Wednesday afternoon. OpenAI’s own growth is nothing to sneeze at: It topped $25 billion in annualized revenue and surpassed 920 million active users at the end of February, as my colleague Sri reported last night. In another sign of the times, investors were eager to hear from the leaders of the semiconductor, memory and other hardware companies that are riding high off the AI boom. Seagate, Sandisk, Astera Labs and Coherent occupied the largest ballrooms, while most software companies were upstairs in the smaller rooms. “Some investors are saying, ‘I can’t really pick who’s going to win at the application layer, but boy, do I know who’s going to win—memory, hard drives—because you need to actually store large language models to train and ultimately do the inference’” or run the models, said David Chen, global co-head of technology investment banking of Morgan Stanley, in an interview. When it comes to software companies, on the other hand, software executives are trying to figure out something else. “Is AI ultimately a threat, or do you actually have enough, you know, characteristics to suggest that you actually have a strong moat in the AI landscape?” Chen said. The sell-off in software stocks has dampened the prospects for private software companies to go public. But those perceived to be less vulnerable to the AI boom, along with the ones benefiting from it, can still bend public investors’ ears. This thinking applies to more than just SpaceX, Anthropic and OpenAI, the three mega-IPOs on everyone’s mind. I was told that the rooms were quite full for Applied Intuition, the nine-year-old maker of self-driving–car simulation software; prediction market startup Kalshi; and AI voice startup ElevenLabs. Other eventual IPO candidates to watch are nine-year-old Faire, an e-commerce startup, and seven-year-old Ramp, which offers corporate cards and expense management. Maybe the best sign that investment bankers are gearing up for a bigger IPO year was the return of a familiar face: Michael Grimes. The star Morgan Stanley banker, who recently returned to the investment bank after a brief stint in the Trump administration and who is close to SpaceX CEO Elon Musk, was seen floating around the conference.
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