Ashwath Damodaran usually uses numbers, spreadsheets and formulas to decide his investments, but he has an interesting take on the broader AI space’s investability.
Damodaran, a finance professor at NYU Stern and the author of Damodaran on Valuation, is widely regarded as one of the world’s foremost authorities on how to price companies. So when he steps away from his discounted cash flow models to talk about ego and personality, it is worth paying attention. In a recent interview, Damodaran made a striking argument: if forced to pick between the two most prominent AI labs, he would choose Anthropic over OpenAI — and the deciding factor is Sam Altman.
“I pick Anthropic purely based on the ego of the people running the company,” Damodaran said. “This is a space where, if you have smart, egotistical people running the company, you’re in danger, because they’re going to overplay their cards. And with Sam Altman, my feeling is he might be a smart guy, he might have a good set of cards, but he’s always going to overplay those cards because he believes his cards are better than they truly are.”
For Damodaran, the AI space is one that demands a particular kind of leadership — one that is adaptive rather than overconfident. “This is going to be a space where you require managers to learn from what’s going on and change the way they behave,” he said. “I’m not sure OpenAI is capable of that learning and change that Anthropic is.”
That said, Damodaran was careful not to paint Anthropic as a screaming buy. His reservations about valuation apply across the board. “From an intrinsic value standpoint, I would be hard pressed to invest in any of these companies at the existing pricing,” he said. “Collectively, the pricing just seems too rich to me.”
His preference for Anthropic is therefore a relative one, not an absolute one. “On a relative basis, if you need an LLM in your portfolio, Anthropic is lucky in terms of who it competes against,” he said, running through the competitive landscape. “Given that peer group, it might be the best of the LLMs to have in your portfolio if you want one. I’m not particularly eager to have any of them in my portfolio — they all look pretty richly priced. But if you force me, I’d pick Anthropic over OpenAI.”
The comments land at a pointed moment in AI’s corporate history. Altman’s tenure at OpenAI has been anything but understated — from the boardroom coup in November 2023, when he was briefly ousted before being reinstated days later, to his increasingly public ambitions around AGI, semiconductor manufacturing and a restructuring of OpenAI into a for-profit entity. Critics have long questioned whether the organisation’s governance can keep pace with its ambitions, and 8 of OpenAI’s 11 co-founders have now left the company. Anthropic, by contrast, was founded by former OpenAI researchers — including Dario and Daniela Amodei — partly over concerns about safety culture and decision-making at their former employer. The company has built its public identity around a more measured, research-first approach. Whether that translates into better long-term returns remains to be seen, but for Damodaran, it at least makes Anthropic the more rational bet in a field where, by his own admission, none of the options are particularly cheap.