Anthropic’s IPO Meets a Fed Week That Prices Another Hike

Dear readers,

The AI industry wants fresh money just as money gets more expensive. Anthropic has formally filed for its IPO, Meta wants to raise up to $95 billion through equity, and the Federal Reserve decides on Wednesday. Wall Street is still trading slightly higher, with the S&P 500 about 2 percent below its early-October high.

Last week’s question was whether the cloud giants can turn spending into cash. This week asks who will finance the next round.

Anthropic: A Stress Test for AI Capital

According to reports, Anthropic plans to list on the Nasdaq under the ticker ANT in mid-November, no earlier than November 19 or 20. First-half revenue came to $16.3 billion, up from $1.2 billion a year earlier.

The company reportedly aims to raise up to $100 billion at a valuation of roughly $2 trillion. Against that stand about $430 billion in non-cancelable commitments for computing power.

The market is splitting in two. Chip stocks such as Nvidia, AMD and Micron are rising at the start of the week, because every dollar Anthropic raises becomes a chip order. Debt-financed AI cloud providers are under pressure. CoreWeave and Nebius each lost about a third in October, and IREN hit a new 52-week low on Monday. Elon Musk has warned of credit cutoffs for some 200 pure-play AI cloud providers.

Apollo chief economist Torsten Slok adds a sobering note: outside the tech sector, the financial return from AI has so far been zero. The IPO will therefore show whether the market will absorb paper of this size at these valuations. Investors may be better off with the suppliers of chips and software than with the debt-funded middlemen.

The Fed: Wednesday Matters Less Than December

Hardly anyone doubts that the Fed will hold at 3.75 to 4.00 percent. Futures markets put the odds of a pause at about 90 percent. For December 9, however, they price a further hike at roughly 80 percent.

Inflation leaves little room: US consumer prices rose 3.7 percent year over year in September. On Thursday, data on gross domestic product (expected at 3.2 percent annualized) and core inflation (expected at 3.1 percent) follow. The ten-year Treasury yield sits near 5 percent.

What counts is the tone of Fed Chair Kevin Warsh, not the decision itself. Morgan Stanley strategist Michael Wilson expects the correction to end after the midterm elections on November 3, and names 7,100 to 7,200 as a tactical downside target for the S&P 500. RBC warns of a pullback to somewhere between 7,000 and 7,400. Microsoft and Alphabet report on Wednesday, Amazon on Thursday, adding fuel to the debate.

Europe has a firmer tailwind. The ifo business climate index rose for the sixth month in a row, to 90.2, its highest since May 2023. The DAX is up about 1 percent and above 25,000 points. Ahead of Thursday’s ECB meeting, though, France’s ten-year yield of 5.07 percent, the highest since 2002, is a reminder of the strain in bond markets.

Consumer Finance: SoFi, Robinhood and Coinbase

This is where this week’s concrete setups lie. SoFi reports Tuesday before the open. The stock trades at $14.62, just above its 52-week low of $13.86, and is down 44 percent year to date. Consensus calls for earnings of $0.17 per share on revenue of $1.25 billion. Adjusted earnings per share were $0.12 in the second quarter.

The analysts disagree sharply. KBW sees a hit of more than $1 billion from valuation effects on the balance sheet as rates rise, and rates the stock a sell with a $15 target. Monness initiated coverage on Monday with a buy rating and a $20 target, and StoneX with a buy and $25. The options market implies a move of about 9.7 percent in either direction.

Should investors sell immediately? Or is it worth buying Anthropic?

Robinhood follows Tuesday after the close. Analysts expect earnings of $0.55 to $0.56 per share on revenue of about $1.43 billion, and options imply a move of roughly 10 percent. Coinbase reports Thursday, and its stock has already shed about 17 percent this month.

All three are bets on retail risk appetite. Anyone buying ahead of the numbers takes on interest-rate and crypto risk on top of company risk.

Verizon shows how the market is reading results at the moment. The company earned an adjusted $1.31 per share in the third quarter, up from $1.17 a year earlier, and raised its full-year guidance. The stock is slipping anyway, because revenue missed expectations.

Chip Design Software: A Fight Over Customer Data

On Monday, Cadence unveiled “Maestro,” a family of AI models for chip design. It builds on Nvidia’s open Nemotron model and runs in the cloud or in the customer’s own data center. Customers can retrain it on their own designs.

Cadence cites preliminary gains of up to 30 percent in quality and up to fivefold in efficiency compared with general-purpose models. First customers get access in the fourth quarter. Cadence also opened a “sovereign” AI data center in Munich to meet EU data requirements.

Rival Synopsys is betting on a partnership with OpenAI. Its model runs on OpenAI infrastructure but is not trained on customer data. The competition thus turns on a simple question: who owns the design data, and who may use it? Synopsys shares are rising on Monday to $442.92, still well below the May high of $539.48.

Bitcoin: The $80,000 Floor Is Wobbling

Bitcoin trades around $79,500 (about €71,000), slightly below the round mark. October is on course to end with a loss of about 4 percent. US Bitcoin ETFs saw outflows of $772 million on Thursday and Friday, and Thursday’s daily outflow was the largest since June.

The new factor is shrinking stablecoin liquidity. The total supply of these dollar-pegged digital currencies fell by $1.9 billion last week and by $4.8 billion over 30 days. That helps explain why money for purchases is scarce. Strive bought 6,182 bitcoin for $511.4 million anyway, and Galaxy Digital considers the bear market over since June.

Analysts name $76,000 to $75,000 as support and $82,000 to $83,000 as resistance. On Friday, options worth $11.1 billion expire, with the weight at $78,000 to $79,000. Coinbase’s results on Thursday and the Fed decision will likely tip the balance.

The Takeaway

The week runs on a tight schedule. Tuesday brings SoFi, Robinhood and SK Hynix. Wednesday brings the Fed, plus Microsoft and Alphabet. Thursday adds core inflation, growth data, Amazon, the ECB and Coinbase. Friday closes with the Bank of Japan and options expiry. The midterm elections follow on November 3.

The week will show whether a December hike becomes a certainty. If it does, the Anthropic IPO becomes an even tougher test of the market’s appetite for risk. Until then, companies that fund growth from their own cash have the better hand, while those that depend on the capital markets are exposed.

Best regards,
The StocksToday.com Editorial