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| By Nilus Mattive |
I have always said my favorite investments are like lemonade stands.
They’re singularly focused. Relatively easy to understand. And pretty simple to value.
Which is also why I rarely want to invest in any type of technology company.
By their very nature, these firms are inventing entirely new product categories …
Their markets and competitive landscapes are constantly shifting …
And in many cases, they have very limited histories to go on.
Yes, when things go right, the rewards can be spectacular.
But the risks are equally enormous and ever present.
Which is why I had to laugh when Eric Schmidt, the Google co-founder, recently said there is no AI bubble because Anthropic is growing almost twice as fast as Google did in its early years.
Let’s put aside the fact that Schmidt was an early investor in Anthropic …
Owns about 1% of the company’s shares …
And stands to make a killing from Anthropic’s upcoming IPO.
Instead, let’s just pretend I have a lemonade stand based on the information in Anthropic’s S-1 filing.
Yes, Anthropic is definitely growing sales very fast right now.
The company reported $16.3 billion in revenue for the first half of 2026 versus just $1.16 billion during the same period last year.
Of course, if I owned a lemonade stand that did $16.30 last summer — maybe because I only had it open for a day or two — versus $229 this summer, it would be growing just as fast.
Now, let’s say I wanted to sell you this relatively new but very-quickly-growing lemonade stand.
How much would you be willing to pay for it?
Would you buy it for $21,073.62? Or maybe even $28,027?
That’s anywhere from 92x to 122x my recent six-month sales, the equivalent of what Anthropic will be asking if it goes public in the $1.5 trillion to $2 trillion market cap range it’s aiming for.
Is this reasonable?
Before you decide, perhaps you’d like to know how many customers my lemonade stand has.
Well, I have lots. But five very thirsty people currently account for about 25% of my sales.
These customers don’t have to keep buying my lemonade, either. They can go to any other stand they feel like, at any time.
Don’t worry about it, though.
I have a very nice cash cushion equal to about three months of recent sales!
I also plan to keep growing like crazy.
Which is why I went ahead and already signed huge seven-plus-year contracts for lots of lemons, sugar and water.
They’re worth about $6,300, or 27.6 times what I made in revenue over the last six months.
Oh, and I also have something like another $1,000 in additional contracts signed, but I can cancel them so you can ignore that for now.
Just to summarize everything …
I sold $229 of lemonade in the last six months and I have about $110 in the bank.
A quarter of my money is coming from five people who can stop buying at any point.
Meanwhile, I am already on the hook to spend at least $6,322 over the next seven-plus years and maybe another $1,000 on top of that if we consider contracts I can cancel.
And those are just a starting point. They will probably go up. Way up.
So, do you want to buy my lemonade stand?
Wait, before you answer, there’s one more thing you should know …
There’s a small chance — I mean, I don’t know, maybe like 10% — that my lemonade is going to kill everyone on earth sometime in the near future.
Now, have I oversimplified things a bit?
Maybe. But that’s the whole point of the exercise.
At its core, a business has a product.
It has costs associated with making and selling the products.
It has customers (hopefully) buying those products.
And if it does everything right, it will have money left over to keep as profits.
Anthropic was founded less than five years ago.
It’s selling an entirely new product, one that is rapidly changing.
It has massive future spending already locked in place but no such guarantee on the revenue side.
Its sales have shot up quickly, but from a low base.
And it is running a race against several major competitors who are all operating in the very same way.
There is no guarantee that any of them will end up being the winner.
Or that customers will keep paying for the lemonade.
Or that the lemonade won’t get substantially cheaper.
Or that, in all seriousness, the lemonade won’t actually kill us all.
Anthropic’s S-1 contains more than 90 pages devoted to various risks, including warnings that its systems "have exhibited, and may in the future exhibit, unexpected strategic or self-preserving behaviors" …
Like "attempts to resist shutdown, conceal or manipulate information" …
And that “sufficiently advanced AI systems could pose catastrophic or existential risks to society if not developed and deployed responsibly."
The company goes on to say it will try to keep these risks in check “but there can be no assurance that our efforts will be successful.”
So yeah, I’d still rather recommend investing in a company like Altria (MO), which has been making consistent profits off cigarettes for many decades.
Related story: This Dividend Superstar Is a Must-Own Right Now
Its business is easier to understand and forecast.
It pays terrific dividends quarter after quarter.
It’s trading at a very reasonable valuation.
And, heck, its main product might even be safer, too.
Best wishes,
Nilus Mattive
P.S. If you think these revelations about Anthropic are bad, then you need to see this video warning I just put out about its rival OpenAI.
P.P.S. We also didn’t get into all the circular financing and risky debt associated with this AI buildout. If you want to learn more about that, watch this new exposé that Martin Weiss and I recently did together.
