CNBC Squawk with Pauline Yang - October 27th, 2026

0:00 Our ne next next guest firm led anthropic series H funding round earlier this year is calling the S1 filing incredibly impressive. Joining us here is partner at Alter Capital Pauline Yang. Welcome back Pauline. It's great to have you. >> Good morning. Thanks for having me on again. >> What do you think is the is the most impressive part here? I think there was one stat that really stood out to me which was that in the history of the company, Enthropic burned less than $10 billion of cash to get to a calculated quarter, you know, Q3 revenue of 16.8 billion. Now, if you annualize that quarterly revenue, that's a almost seven times multiple, right? Again, if you're thinking about three years of a lot of burn and the fact that this last quarter covered all of that and much more, I think that is by far the most impressive stat coming out of the S1.

0:54 >> But what do you make of this report that, you know, it took HCAN really getting in there and providing financial guarantees to protect lenders from losses in the in the event that Enthropic defaults on these loans? This is a different kind of financing environment and and it's making people nervous. I think the first thing again that came out of the S1 was that this company has already a lot of cash on the balance sheet. So in Q2 they had 130 billion of cash on the balance sheet. The rumors around the IPO is the company is going to raise 75 to 100 billion which means that they'll have over 200 billion of cash on the balance sheet. Just to put that into perspective that is more cash than basically every hyperscaler including SpaceX, including Meta except for Amazon. Amazon is the only one that has more cash in this company. And so I do think that the fact that this company has a really strong balance sheet and the fact that the billions of compute that they have coming, that ratio, you know, if you think about the 500 billion that they have disclosed in the S1 up until 2033, right? I think that that ratio is actually a much less ownorous ratio than I think people thought. But I certainly think, look, the rumors around the S1 numbers had been floating around, but I think until the S1 dropped and and all the figures were kind of public, it took a little bit of time for the market to to analyze and process that.

2:21 >> Yeah, we we made note of the cash balances yesterday as we were pouring through the filing. And the obvious question is, well, why would you need to go public if you had that kind of hoarde? is the obvious answer that they see the backdrop for capital raising degrading over time and it's it's a bit of a land rush. >> No, I you know in my perspective I think that in large part this is a company that wants to make sure that they're in the strongest position possible and certainly you know as investors in both the public and private markets it's easier to raise capital in the public markets. it's easier to issue debt in the public markets. And so I think that Enthropic is doing the right thing by positioning itself to be able to tap into all these different types of capital in the public markets. And certainly we're excited to continue to own it into the public markets and also have retail investors be able to be part of this journey. And I think the opening letter that the founders wrote was really well written and I think you know made a really clear narrative that this is going to be a multi-deade journey in the largest tech wave and innovation wave in human history.

3:34 >> So you don't plan to sell it? >> I think Altimter is certainly hoping for a big IPO allocation. We hope that it'll be one of our most sizable investments in our hedge fund and already our private fund. this is our largest investment not even considering kind of the fair market value if this company goes out at 1.5 to2 trillion in valuation. So we're very excited and long-term holders of this company. I mean the other argument that's getting tossed around a lot is is just the the tokconomics basically and the and the and the falling price of tokens and at the same time increasing adoption of openw weight models and what ultimately that might mean for these very strong margins that Anthropic has and and its edge.

4:16 >> Yeah, I think there was a really great stat that they put out there. So, when they released Claude Opus 5.5, which by the way, the developers that I've been speaking to have been absolutely raving about, they cut prices pretty meaningfully. And they shared that basically that price cut allowed to drop customer costs per task by 40% while preserving margins. And so the fact that they have this amazing compute engine and are able to serve tokens much more cheaply while maintaining these incredibly high gross margins is incredibly bullish for the company. And I think to your question about open source, you know, we as Altimter, we are big users of AI and we benchmark cost per task across open source across other models. And I think even if you set aside the financial cost, which by the way, we haven't found that the cost of running open source model is cheaper, but you also have to take into account things like enterprise readiness, right?

5:16 Ability to deliver the model reliably and with low latency. And so I think and by by the way that's if you can secure compute which over the last year it's been a very compute we've been in a compute shortage right and so if you add all those things up certainly we think that open source has a place in the world but we continue to believe that most of the spend is going to be with the frontier models. The other thing that got a lot of attention yesterday of course were within the risk factors sort of this mix of your fiduciary responsibility to maximize profit and revenue and then attend to these societal risks which they're quite plain about. I wonder how you think they balance that in the framing of the S1. Yeah, look, I think that this is an unprecedented company in so many ways and certainly I think AI the way that it's being adopted, the way that Anthropic and the management team expects for this to be adopted, you know, certainly there's it's an unprecedented governance structure, but I think that's to address the unprecedented opportunity, but again, the risks of the company. Now what I would also say though is having observed this team and this management team for many years now I know that this is one of the best teams the best team to really you know take the models and make them the most capable but also align that with safety and alignment. And so the fact that they've taken meaningful compute put it against safety and alignment have paused training for a month to be able to secure the environment and the models better. I think that's really really strong indication that this company is going to be able to handle that, you know, balance incredibly well.

6:57 >> So, I know we can't do valuations yet. We don't know, you know, the amount of shares or or where it's priced, but but how are you I mean, how do you guys think about this? Is this a is this $5 trillion company one day? Is it a $2 trillion company? What does that look like for you? >> Yeah, I think the range that has been the most rumored, right, is 1.5 trillion to two trillion. Let's take the midpoint of that and say 1.8 trillion. That would represent the largest IPO in human history, larger than SpaceX that went out earlier this year. And by the way, I actually don't think that the even a 1.8 trillion market cap is really not that ownorous. You know, what we're projecting for next year, 140 billion of GAP revenue, and that translates to just a little bit over 11 times forward revenue. And by the way, that's for a company that's still growing two and a halfx, that is very capital efficient and is in the dead center of the most important wave of technology and innovation. To us, that feels, you know, dare I say cheap, but certainly like a fair price and I think has room to continue to to run and grow.

8:04 especially if you look at how other companies like Palunteer, like Palo Alto Networks are trading that certainly multiple does not seem ownorous. What's what's the edge? What what keeps Anthropic at the top versus an open AI or a Google or Meta or or all these others that are developing their own models? >> I think that Anthropic has really perfected and and and really improved on this flywheel of they released the best models. Again, I think Opus 55 has been kind of undoubtedly the best model on the market for now a month, which allows them to generate more revenue.

8:39 Certainly, I think this company, the business model of this company is driven by model releases, which then gets them to having more profits, which then is able to allow them to allocate more compute to training. There was this amazing stat that the company shared yesterday that of its entire compute budget in the first half of 2026, 70 plus% of that went into training. So when you can when you have that big of a training budget, you can train the best models which again that gets you more revenue which again gets you more profit and the cycle kind of continues and and I certainly think that they have the next model waiting which is Fable 55 which I expect to come out in the next year and that should top in terms of intelligence should be the smartest model that is commercially available and so I think that that flywheel is what is going to keep anthropic at the edge.

9:36 >> Well, that that's the bullish case. Pauline, thank you for joining us for this this IPO. Pinyang from Altimter Capital.