Three AI-focused firms now command a $5.2 trillion valuation, sparking concerns from analysts like Apollo's Torsten Slok that tech companies must triple cash flow by 2030 to justify current infrastructure spending.
OpenAI projects $278 billion in negative free cash flow through 2030 despite revenue growth, signaling heavy spending on computing infrastructure.
Anthropic pushed back its expected transition to positive cash flow until 2028, indicating delayed profitability.
SpaceX's $2.1 trillion valuation after its June IPO is highlighted as part of a $5.2 trillion AI bet, but the article cautions that such comparisons are not investment metrics.
Apollo's chief economist warns that major tech firms must triple cash flow by 2030 or risk weakening the AI trade and slowing U.S. GDP growth.
SpaceX, OpenAI, and Anthropic have reached a combined $5.2 trillion valuation, surpassing the first-day market caps of over 3,300 U.S. tech IPOs since 1980. Despite these massive valuations, the firms face significant profitability hurdles, with OpenAI projecting $278 billion in negative free cash flow through 2030 and Anthropic delaying its path to positive cash flow until 2028.
Analysts are concerned because current valuations are based on massive future expectations rather than existing earnings, with major firms projecting hundreds of billions in negative free cash flow over the next several years.