AI Stocks Slide as Anthropic’s IPO Costs Come Into Focus

Brunson (0:03)

Welcome to RiskReversal's MRKT Matrix, your AI-generated podcast curated by Guy Adami and Dan Nathan, breaking down the day's most impactful stock market and business headlines. We're your hosts, Brunson and Alex, and all of today's market data is provided by FactSet.

Alex (0:17)

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I'm Alex.

Brunson (0:24)

And I'm Brunson. Stocks reversed early gains today to finish lower as semiconductor and AI shares weighed on the broader market. An initially positive reaction to a slightly cooler than expected October wholesale inflation report faded as treasury yields moved higher. The October PPI increased 0.3% month over month, slightly below the 0.4% expected. But that came on the heels of a hotter than expected CPI earlier in the week and with the core number in line with expectations. Equities initially jumped higher on the number, but were met with immediate selling after the open.

Alex (0:57)

A lot of that had to do with an early Nvidia attempt to bounce failed to gain traction, while AMD and Broadcom, which had rallied sharply during Nvidia's leadership turmoil, reversed lower after the open. Marvel, Arm, CoreWeave, Nebius, Sandisk and Western Digital were among stocks hit today.

Investors have been reassessing not only Nvidia's leadership situation, but also the enormous capital commitments and financing arrangements supporting the AI buildout.

Brunson (1:22)

With Nvidia scheduled to report earnings next Tuesday, and Anthropic's enormous IPO expected to price next week, we're heading into a pretty important stretch for the AI trade. There were several developments today worth unpacking, including some new reporting on Nvidia's leadership transition, the company's relationships with its largest infrastructure partners, and just how expensive Anthropic's ambitions could become.

Alex (1:44)

Now to the latest news on the situation at Nvidia. The Wall Street Journal takes a closer look at the relationship between Jensen Huang and his successor, interim CEO Colette Kress.

The report describes a particularly contentious meeting this summer, when Huang criticized Kress during a presentation on Nvidia's increasingly aggressive financial commitments to AI companies and data center developers. Huang reportedly called her a deer in the headlights, as she questioned guarantees being considered for customers that couldn't afford Nvidia's chips. Kress and her finance team had been pushing for greater discipline around these arrangements, including efforts to scale back some of the company's proposed financial support for OpenAI.

Brunson (2:21)

Speaking of Nvidia's relationships with partners, Barron's examines what Jensen Huang's departure could mean for Neocloud providers like CoreWeave, Nebius, and IREN. Nvidia has been much more than a chip supplier to these companies, providing investments, financing support, and in some cases, serving as both a customer and strategic partner.

CoreWeave is particularly exposed given Nvidia's substantial ownership stake and its role in supplying the chips that power the company's data centers. With Crest now in charge, investors are questioning whether Nvidia will continue providing the same level of financial support to these businesses, particularly if the new leadership team takes a more disciplined approach to capital allocation.

Alex (3:02)

Despite all the drama surrounding the company, Bloomberg reports that retail investors have largely stayed committed to Nvidia despite the leadership turmoil. Vanda Research estimates that individual investors purchased approximately $111 million of Nvidia shares during the first half hour of trading Thursday. The largest opening half hour buying flow ever recorded for the stock. That was on the initial dip following the Huang resignation news.

Fidelity customers also placed nearly 395,000 buy orders by midday, compared with roughly 80,000 sell orders. That buying helped Nvidia recover from an initial decline of more than 14 percent.

Brunson (3:38)

Turning to Anthropic's upcoming IPO, The New York Times examines the enormous spending requirements behind the company's upcoming public offering. Goldman Sachs, one of the lead underwriters, forecasts that Anthropic could burn more than $65 billion in cash next year, followed by another roughly $41 billion in 2028, as it races to secure computing capacity and develop increasingly powerful AI models. The company has already disclosed approximately $900 billion in long-term computing and infrastructure commitments, highlighting the enormous financial obligations that come with its growth ambitions.

Alex (4:13)

There's another interesting wrinkle in the IPO process.

Bloomberg reports that prospective share orders from China have been rebuffed, as Anthropic prepares for what could become the largest public offering in history. The reported restrictions highlight the growing sensitivity around allowing Chinese investors access to strategically important US artificial intelligence companies, particularly given the national security and intellectual property concerns surrounding frontier AI.

Brunson (4:38)

Over in energy and transportation, Bloomberg reports that the US plans to extend the Jones Act shipping waiver for another 90 days.

The waiver allows certain foreign-flagged vessels to transport oil, fuel, and fertilizer between US ports, bypassing restrictions under the century-old maritime law. The extension is intended to help ease domestic energy and commodity transportation bottlenecks amid disruptions associated with the conflict in Iran. However, the administration is expected to retain tighter, case-by-case reviews of individual voyages rather than provide blanket exemptions, a compromise that has drawn criticism from both domestic shipping interests and groups seeking greater flexibility to move fuel around the country.