Nvidia Taps Wall Street for $500B, Anthropic Eyes September IPO

**Zaid Admani** (0:00)
Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Tuesday, August 11th. In today's episode, we'll tell you why the U.S.'s emergency oil stash is now at its lowest level since 1983 We'll also break down Nvidia's plan to turn AI chips into a brand new asset class with the help of Wall Street. We'll also give you an update on Anthropic's IPO plan. Seems like they're just weeks away. Then stick around to the end of the show for an update on SpaceX stock and the insider selling that didn't end up happening last week. We got a great show for you today.
Let's go.
Markets had a quiet start to the week. The S&P 500 fell less than 0.1% after closing at record highs on Friday, while the NASDAQ dropped by 0.3%.
So not a lot of action on Monday. The best-performing sector was energy, and that's because of oil prices. Oil jumped 5% on Monday, with Brent crude getting near $90 a barrel again, as hopes for a quick deal between the US and Iran are starting to fade again. Remember, just a few days ago, there was a lot of optimism that Iran and Oman were close to reaching an agreement that could reopen the Strait of Hormuz. Well, now both sides are digging in. Iran says they want sanction relief and compensation for war damages before fully reopening the Strait, while President Trump responded by demanding that Iran pay reparations to the US instead. So again, we're at a standstill here, and there isn't much tanker traffic to the Strait of Hormuz. I got to say though, given all the uncertainty here, I'm a bit shocked that oil is still trading under $100 a barrel. One reason for that might be the Strategic Petroleum Reserve, which is the U.S.'s emergency oil stash. The Trump administration has released about 172 million barrels since the war with Iran started back in late February. So that probably helped absorb some of the oil shock. But now reserves are running low, dropping to under 300 million barrels for the first time since 1983 So with levels running this low, the US might not have the ability to absorb more oil shocks if this conflict isn't resolved soon. So that could mean that oil prices might stay elevated or start rising again if the Strait of Hormuz does not reopen soon. And that's gonna have a ripple effect across the economy because higher oil prices means higher inflation and higher inflation could force the Fed to hike interest rates. And that makes tomorrow's July CPI report even more important because of inflation comes in hot while oil is ripping again. Well, that's not exactly the combination that investors want to see. So we'll see what the report has to say. We'll break down those numbers on tomorrow's episode along with everything else happening in the market. So definitely get subscribed to the podcast if you haven't already and tune in every day to stay in the loop.
Let's run through some headlines. Starting with Nvidia. Nvidia announced that they are partnering with six firms on Wall Street to raise over $500 billion and this money will be used to finance the AI build out. Nvidia is partnering with some heavy hitters from Wall Street. They signed agreements with Apollo, Blackstone, Blackrock, Brookfield, Goldman Sachs and KKR to create massive pools of capital that Nvidia's customers can tap to build AI data centers and buy AI chips. Essentially, Nvidia is bringing in Wall Street to lend money to companies so these companies can keep buying more of Nvidia's chips. And the interesting part here is how these loans are supposed to work. The plan is to use the GPUs themselves as collateral. Jensen Wong literally called his chips an investible asset class like commercial real estate or toll roads because GPUs are revenue generating. And Wall Street seems to agree with them. Blackrock CEO Larry Fink compared this to the creation of mortgage-backed securities in the 1970s. And he called it the next phase of financial engineering. Now personally, I don't know if I'd be making the mortgage-backed security comparisons if I was trying to make people feel better about this because mortgage-backed securities eventually became a pretty important character in the 2008 financial crisis. Shout out to the big short. Now obviously this doesn't mean that AI financing is the next housing crisis, but if we keep seeing headlines like this, I can see investors get more and more nervous about the AI trade. There is a difference between Google, Meta, Microsoft and Amazon spending their own cash flow on AI and Wall Street creating an entire new credit market so companies can borrow hundreds of billions of dollars to buy more GPUs. But look, from Nvidia's perspective, this is obviously great for them because the easier it is for their customers to borrow money and finance their GPUs, the more likely these customers are gonna buy more of their GPUs. And Nvidia may have some skin in the game here too because the company says they could backstop up to 25% of individual loans, which would help borrowers get better financing terms. And I think that's what makes people nervous. I mean, there's already concerns about circular financing and AI with Nvidia investing or financially supporting companies that then turn around and spend that money on Nvidia's products. So headlines like this are only gonna add to those concerns. Now there is an important caveat here. There is still a ton of unknowns on the details of this $500 billion deal. Apparently Nvidia has only signed a memorandum of understanding and not actual contracts. And we still don't have information on rates or borrowers or timing. So all of that still needs to be worked out. I'm not gonna lie. I feel like Nvidia is getting pretty risky here. And look, maybe the AI demand keeps exploding and all of this debt is completely justified. But if there is ever a slowdown in demand, we could end up in a situation where there's a lot of Nvidia hardware that isn't worth as much as Wall Street expected sitting behind a lot of debt. I don't know about you, but that kind of sounds a little 2008-ish, doesn't it? Let's just hope that Michael Lewis doesn't end up writing a book about this. Let me know in the comments on what you guys think. Do headlines like this make you nervous or bearish about the AI trade, or do you think that all of this is justified? Let's shift gears and talk about Anthropic, because we have an update on their IPO plans. According to the Wall Street Journal, Anthropic is targeting September or early October to go public, and the company has already started meeting with potential investors ahead of the IPO. Now, there are some more interesting nuggets in this Wall Street Journal piece. Apparently, Anthropic has had to play defense in these meetings because investors are pressing management about three big risks. One is competition from cheaper Chinese AI models. Two is Anthropic's tensions with the Trump administration. And three is the growing backlash against the massive AI data centers being built across the country. I think those are all legitimate risks, especially given the fact that Anthropic was last valued at $965 billion. So, you know, Anthropic is going to have to say all the right things and show the growth to justify that valuation. Anthropic set back and made that their annualized revenue run rate has topped $47 billion. So I bet Anthropic will end up IPO-ing at a trillion dollar valuation because there's a ton of investors that want access to one of the frontier labs. But you know, with SpaceX's poor post IPO performance, I wonder if some investors are going to be a bit cautious jumping in, especially because of the risk that I just highlighted earlier. I also feel like there's been a vibe shift recently with OpenAI stealing some of Anthropic's thunder again. Speaking of OpenAI, they don't plan to IPO until sometime next year. Let's talk about some stocks making moves today.