Anthropic Draws Investor Offers at Over $800 Billion Value

0:00Scarlet Fu:For years, the conversation around Bitcoin was the same. Is it real? And does it belong in a portfolio? While others debated, CoinShares got to work. In 2015, they launched the world's first Bitcoin EDP, regulated, listed, and built for institutional investors. Long before the U.S. market caught up. Today, they manage over$6 billion in assets and have remained profitable through every market cycle, including the 2022 downturn. What sets them apart? They're not a crypto exchange chasing trading fees, not a company betting its balance sheet on Bitcoin, not a mining operation. CoinShares is an asset manager with recurring fees, a fixed cost base, and a business model you can actually model.

0:39Scarlet Fu:Now listed on NASDAQ under ticker CSHR. Learn more at coinsharesipo.com.

0:58Scarlet Fu:Bloomberg Audio Studios, podcasts, radio, news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. All right, let's switch gears to technology. Always, always, always a lot of technology news out there. and it's news with really big numbers too. I mean, and today's no different. Anthropic has received offers from investors for a new round of funding that could value the company at about$800 billion or higher.

1:38Just the numbers keep going. And this is a private company. Yes, yes. And if I'm, you know, putting my IPO banker hat back on from back in the day, I'd be knocking on these doors so hard saying, let's rip this thing in the public market. But we'll see. Mandeep Singh joins us, global tech research lead for Bloomberg Intelligence. He's over in London right now, cracking heads over there at Bloomberg Intelligence over there, whipping them into shape, as well as seeing a bunch of clients. See, I can look at his calendar. I see he's actually doing a lot of real business over there, too. So we appreciate that generating some revenue, hopefully.

2:06Mandeep, talk to us about Anthropic here. Any surprise here? Well, I mean, we knew when they released that 30 billion ARR number that, you know, The growth rate is phenomenal. It's been accelerating, driven by the use of their product as a coding agent. And they seem to have leapfrogged OpenAI and other frontier LLMs when it comes to coding agents specifically. So right now, everyone is lining up to be part of their next funding round. And since OpenAI was valued at$850 billion, given, you know, Anthropic has surpassed OpenAI's ARR, I'm not surprised that we are talking about$800 billion range for Anthropic in the next funding round.

2:55Scarlet Fu:So the big numbers that Paul was mentioning were a new funding round that could value it at$800 billion. It sounds like Anthropic doesn't actually need the money right now. So are investors just throwing money at the company and the company saying, no, no, thanks. We're pretty good. We just raised 30 billion in February. I would say these companies do need a lot of money simply because, you know, they keep saying they are compute constrained. And look at, you know, what OpenAI has been doing with regards to, you know, all the deals that they have signed to get the compute. And look, in the case of hyperscalers, at least they have the free cash flow to pay for, you know, the CapEx.

3:37In the case of Anthropic and OpenAI, they don't have any free cash flow like the hyperscalers. So they actually need the money to pay for all the compute and AI infrastructure. And that's where, you know, it's great that OpenAI was able to raise$120 billion before Anthropic surpassed them in terms of ARR. I bet you they'll have a harder time now than they had a couple of months back. And right now it's Anthropic's moment. So the more money they raise, the more compute they can lock in. And it is actually good that they have the compute to really, you know, spend on acquiring all the users and make sure they become a sticky product.

4:22Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. For years, the conversation around Bitcoin was the same. Is it real? And does it belong in a portfolio? While others debated, CoinShares got to work. In 2015, they launched the world's first Bitcoin EDP, regulated, listed, and built for institutional investors. Long before the U.S. market caught up. Today, they manage over$6 billion in assets and have remained profitable through every market cycle, including the 2022 downturn. What sets them apart? They're not a crypto exchange chasing trading fees, not a company betting its balance sheet on Bitcoin, not a mining operation.

5:00Scarlet Fu:CoinShares is an asset manager with recurring fees, a fixed cost base, and a business model you can actually model. Now listed on NASDAQ under ticker CSHR. Learn more at coinsharesipo.com.

5:24Scarlet Fu:you're listening to the bloomberg intelligence podcast catch us live weekdays at 10 a.m eastern on apple carplay and android auto with the bloomberg business app listen on demand wherever you get your podcasts or watch us live on youtube let's talk about remez because lvmh came out with the results yesterday and they seemed kind of encouraging we thought okay the luxury consumer doing well overall. Hermes, maybe not so much. Andrea Falstead is our Bloomberg Opinion columnist joining us from London. Andrea, what happened here with Hermes? Well, there's been a few worries about Hermes for the last sort of few months because there's been this reset in the luxury sector where a lot of brands have got new creative directors.

6:09So it's a bit of worry that Hermes, which is very much sticking with its designers, We have got a new designer coming, but it's very much sticking with its creative, you know, setup. It's going to get left behind. And what's really focused people's minds is Chanel. There's been this Chanel mania. And Chanel was one of the brands that was most criticized for raising prices. But they've got this new designer, Matthew Blasey. Everyone loves his clothes. Everyone loves his bags. There have been frenzies at Chanel stores. And the worry is that some people who would have bought Hermes back will switch to Chanel instead.

6:49So you have that going on anyway. Then what's happened today is you've got that backdrop. Today, Hermes has shown that it's not the resilient story that everyone expected. Hermes has outperformed. There are long wait lists for its bags. So when times are tough, it can just work its way through the wait list. If someone said, oh, you know, I can't afford a Birkin right now, there'll be someone else on the list who can. Been really resilient. But what's happened is it's been really hurt by the Middle East and not just the Middle East by tourists. And the big revelation was that they said they got more than 50 percent of their sales in France from tourists.

7:28And that was a surprise because the market had always thought it was the local customers that were keeping them going and that they have such a big tourist exposure. So all this is adding up to show that Hermes is not untouchable. And that's why the shares have re-rated. The shares have re-rated already. They're on about 33 times, 34 times the next 12 months earnings. That sounds like a lot. But its five-year average is 48 times. So you can just see how much it's been pummeled. And I think there were probably some hopes that, you know, it would reassure today. The shares were going up. That's not happened.

8:08I think one of the harder jobs in global Wall Street is to be a luxury analyst because not only do you have to have the numbers right and the multiples right and your earnings models, but you have to have a call on fashion, which is fickle to say the least here. Exactly. If you're Hermes, do you just bring in some new blood here? Well, they are doing that. They've got a lady called Grace Wales Bonner, who's a very well-respected menswear designer. Big surprise. She's going to be the creative director of menswear. She's been very influential. Her collaborations with Adidas helped to spark the, you know, the big jump in demand for Adidas traders, particularly those Sambas that were everywhere a couple of years ago.

8:51She's very powerful. She's very well respected. She could, although it's menswear, she could bring a bit more of a, you know, a bit more pizzazz back. They're also doing haute couture. But the question this morning on the analyst call was, are you going to reduce capacity? There are certain bags, the Kelly, the Birkin, and also the Constance, which is quite hard to get. You have to put your name on a list. Hermes is gradually ramping up production. Now, Ferrari also had these problems, and it's kind of dialed back its production of like the bog standard model. If you can get a bog standard Ferrari, like a run of the real Ferrari.

9:29and it's doing these very special editions so could Hermes do that could it you know limit some of its bags and and even go more upmarket and do like super rare Birkins super rare Kellys or even a new bag altogether that could compete with which you know so great news um you know potentially for resale values it'll be coming down very bad news if you've got your name down for one of these bags it could be you know if they change the model it could be getting even harder to find one. Stay with us. More from Bloomberg Intelligence coming up after this.

10:08Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's stick with industries overall and talk about the auto sector. Clearly very much impacted by the rising oil prices. Stellantis, Ford, GM, they all have to keep a very close eye on how oil prices are trending, especially as they have transitioned away from EVs, at least in the United States, to focus on those big gas guzzling vehicles. Let's bring in now Steve Mann.

10:46Scarlet Fu:Steve runs our global autos team here and industrials research, and he's actually in New York today. Hi, Steve, good to see you. Hello. So talk a little bit about what Solantis is doing, because it's now looking into reviving a partnership with China's Dongfeng Motor that would involve joint car production in Europe and China. Yeah, we actually wrote about the emerging trend of global automakers using China as a manufacturing base and really take the competition to the Chinese. Because the Chinese has done really well exporting vehicles out of China, not only in Europe, but in many parts of emerging markets, Southeast Asia, parts of Latin America.

11:30So, you know, I think for global automakers like Stellantis, I think Volkswagen is considering doing the same thing. GM is definitely doing it is really to build cars in China at a low cost base and then compete with the Chinese in these emerging markets. Why would so what are the BYDs, the Chinese auto companies saying about this? Well, I think I think, you know, they they feel they have an advantage because they are local. They feel that their automobiles are more techie and resonates with especially the younger first time car buyers. And many of them are in emerging markets. So, you know, I think I think the Chinese will will continue to export quite a bit of vehicles going forward.

12:17Scarlet Fu:What does this mean for these kinds of vehicles in the U.S.? I mean, we're still obsessed with the gas guzzling vehicles. They've done away with all the tax credits for, you know, greener vehicles. How does this position Stellantis and other car makers for how they offer lower cost vehicles for Americans? Yeah, interestingly, that's a good question, because a lot of the buyers in emerging markets are actually skipping the ICE gasoline vehicles and going straight to electric. So that's also an advantage to some of the Chinese local automakers. but it actually helps the global automakers like Stellantis because even though the U.S.

12:57have stepped back on EVs, the rest of the world are not, right? They're still pushing EVs, so they need to continue to build EVs. They still need to invest in EVs. So, you know, having them produce in China and able to compete in the rest of the world with the Chinese, you know, gives them a great, great option and a great revenue stream. So if I'm Stellantis here, I don't know, one of the brands, Jeep or whatever, the car will be, the vehicle will be manufactured in China at that cost. I'm going to stick my Jeep name on it and sell it in France or the U.S. Yes, it's possible. So it's a little bit difficult in the U.S.

13:39because there are tariffs. And I think the administration actually frowns on that. They actually had some discussion with this GM about that. But I think more in the rest of the world, like Europeans and the emerging markets.

13:54Scarlet Fu:We keep talking about how the lowest cost or the average price of a new car in the U.S. is north of$50 ,000, right? Yes. That's where we're standing at. In terms of actually coming to market with an affordable, low-cost vehicle, Tesla's supposed to come out with something. And I don't know if we have any kind of timeline on that. Have GM and Ford kind of skipped making this a priority? No, I think, you know, first of all, there are kind of rumors in social media that, you know, Tesla is going to go back and think about reintroducing a smaller compact vehicle. But GM is still investing. They're still launching the Chevy Bolt.

14:38Look, they have, GM does have a strong portfolio of EVs, not in the U.S. Well, they do have a strong portfolio in the U.S., but they also have a strong portfolio in China. And, you know, I think the U.S. automakers, even though they have dialed down the investments in EVs, they're not forgetting about it. They are still spending a lot of money. Ford is introducing something in 2027, 2028, a smaller, more affordable vehicles. Look, in the U.S., it's interesting to see. Even those EV sales have been down, the infrastructure, the charging infrastructure, actually is continuing to expand. So I think as a consumer finds the convenience of having EVs, I think there's still a place for EVs in the U.S., but not at the growth rate we saw in the past.

15:34Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. All six big banks have now reported their results. And clearly, the war, the uncertainty that the war has created has not really damped stock trading because their equity trading desks did incredible business in the first quarter. Herman Chan is our senior analyst for U.S. Banks here at Bloomberg Intelligence, and he joins us now.

16:14Scarlet Fu:Herman, which bank came out ahead overall? Because they all did really well when it comes to equity trading, less well on fixed income trading. But when you look at the results as a whole, which bank comes out the winner? Yeah, I would say Morgan Stanley probably outshined the most across the trading front, both on equities and fixed income. But overall, everything was great on the trading front. We're talking about 25 % growth in equities, 11 % growth in fixed income across the six banks. Really strong results. Fixed income, as you mentioned before, was a bit more mixed with Goldman. Weaker. Bank of America a touch weaker.

16:52But everybody else was really strong on the fixed side. What are they saying about the pipeline here for business? Because it seems like this is going to be a year where we could potentially get some mega IPOs. I'm thinking SpaceX and all the Anthropics and all that kind of stuff. Yeah, yeah. I think the IPO calendar looks a bit spottier. We have the big blockbuster names, like you mentioned, with SpaceX, potentially OpenAI, Anthropic, Databricks. Those are going to be the headline ones. But on the other hand, maybe some less activity from the private equity backed businesses that may be finding it tougher sledding in terms of getting into the markets, giving the volatility in the environment today.

17:35But nonetheless, there's going to be these blockbuster deals that are going to happen this year in our view.

17:39Scarlet Fu:And it doesn't appear that companies have held off or held back from deal making either, even with all the uncertainty caused by the war. Yeah, that's right. M &A, at least for the first quarter, was solid. strong all the way around. On a year-over-year basis, it was gangbusters, up 68 % year-over-year. So we'll see how that continues, given some of the, you mentioned the volatility is great for the trading front, less for M &A activity and equities issuance. So it'll be a bit potentially slowing down over the course of the year. So we heard Ted Pick on earlier today with Lisa Bromowitz talking about the Morgan Stanley results.

18:21Man, they look pretty solid there. Is that in the returns they're generating? Talk to us about the returns these big banks are generating now before versus, you know, several years ago. Yeah. I mean, returns are improving across the board. J.P. Morgan leads a 23 % return on tangible equity. And then even some of the laggards like Citigroup at 13 % ROTCE. That's relative to their expectations of 10 % to 11 % for the year. So everybody's actually increasing their returns. It's been helped by the trading results that we saw in the first quarter. It's also been helped by stable expenses. I think AI will be a big driver of that going forward as well, with less headcount growth for the industry.

19:07But positive operating leverage, all of the top line strength is falling to the bottom line, which is good to see.

19:12Scarlet Fu:I'm glad you bring up expense growth because there's a Bloomberg News story indicating that the Wall Street banks cut 5 ,000 jobs in the most profitable quarter ever. How much is this an indication of what we're going to see quarter after quarter from here on out? I mean, is this the kind of pace of job cuts that we might anticipate? Yeah, it's an interesting question. It was a question that was asked by the analysts on the earnings calls across a number of the banks that reported. um i i think the management teams were a bit shy to really give out concrete numbers but ai has been a game changer especially on the consumer side where bank of america gave some numbers on the headcount on the consumer side it's come down drastically and a lot of that has to do with areas that are more manually intensive and also areas like the call center where you just don't need the same amount of people doing that, given the fact that Make of America has bolstered their AI chatbot, which they named Erica.

20:12That's been driving a lot of the decline in headcount needs. So we'll start hearing from the regional banks soon. They have a much lower exposure to the capital markets business. So what are you going to be looking for from the regional banks? Yeah. Regional banks kicked off earnings today with PNC, MNC, and First Horizon reporting. I'd say it was a mixed bag. PNC probably outshined on the lending front with strong loan growth, particularly in commercial lending. And that was echoed across the big banks as well, where they saw broader growth in commercial lending, increasing line utilization, which has been in the doldrums for several quarters, given the uncertainty with tariffs last year.

21:00And then some pickup in production from areas like small businesses and the like. So that's great to see for banks like PNC. For MNC, it was a bit weaker. They did guide down on their net interest income because of less growth in consumer lending.

21:17Scarlet Fu:When it comes to the big banks, there are a lot of questions about private credit and how exposed these big banks are to potentially bad loans made directly to some of these companies. Is this a problem for regional banks? It's also been a growth driver for regional. So it's an area that's been one of the outstanding areas for loan growth. That being said, there is virtually no concern across the management teams. I can point to PNC's CEO, Bill Demchak, that just spoke earlier this morning. He said there was a question on where on the loss curve could private credit be in a recessionary environment.

22:02And basically he said it's not on the curve. He's saying that they don't expect any losses. And he contrasts that comment with what happened a few years back on the office commercial real estate front, where they were very open about their exposures and potential loss rates there. They virtually see no losses from their private critics. So that's great to hear that. And they were very adamant about that.

22:29Scarlet Fu:This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 10 a.m. to noon Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.