The Conundrum of Investing in AI Today

In this episode of Motley Fool Hidden Gems Investing , Motley Fool contributors Travis Hoium and Lou Whiteman are joined by Motley Fool analyst Emily Flippen to discuss:

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Travis Hoium: Is AI rationality here? Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing . I'm Travis Hoium, joined today by Lou Whiteman and Emily Flippen. Guys, we can't start the show without talking about some of the biggest deals that we have ever seen in private markets. We're going to get to the rationality that may be here in artificial intelligence, but I want to start with Anthropic. They announced this week that they're raising or they completed raising $65 billion, Emily, at a nearly $1 trillion valuation. It seems like Anthropic can do absolutely no wrong at this point.

Emily Flippen: In the Anthropic case, it feels like the only thing that's stopping itself is maybe itself. Because, as you mentioned, that trillion-dollar valuation, near-trillion-dollar valuation, begs the question of how much profit are you projecting out over the next decade, over the next two decades, over the next 100 years to justify that? Ultimately, right now, all of this private market funding that's flowing into Anthropic is justifying that valuation. But if and when that funding dries up, suddenly, Anthropic is going to be experiencing the pressure on itself to make its business profitable. I think that involves no longer subsidizing usage. Forcing enterprises to potentially pay more. When you start adding in the complications of that equation for companies, it does start to beg the question of what you mentioned, which is what does rational AI look like at an enterprise scale? But for now, that's not really Anthropic's problem because everyone's giving the money hand over fist.