The AI Rebound Gets an Audit: Who Earns, Who Borrows

Dear readers,

The hot inflation reading left investors with a question: what are earnings worth if rates rise? The AI trade is now answering it by checking who actually makes money and who lives on borrowed capital. CoreWeave swung sentiment with a strong quarter. Nvidia’s slide shows how quickly confidence erodes when visibility disappears. Below, we sort the field by earnings quality.

CoreWeave: Growth Is Strong, Returns Remain Unproven

CoreWeave grew third-quarter revenue 168% to $3.66 billion, well ahead of the roughly $3.55 billion consensus. Its backlog swelled to $132.5 billion, and full-year revenue guidance rose to $13.0 billion to $13.3 billion.

The stock jumped about 15% in premarket trading and changes hands this afternoon around $55. That is still a long way from its 52-week high of $138.25.

The operating side impressed. Adjusted operating income came in at $379 million, against company guidance of $200 million to $260 million. The adjusted operating margin doubled to roughly 10%. Even so, the GAAP net loss was $709 million, and the adjusted loss came to $0.95 per share.

The balance sheet remains the problem. Net debt stands at about $41 billion, and 2026 capital spending is planned at $37 billion to $39 billion. Short seller Jim Chanos puts the pretax return on capital at just 2% to 3%. The company promises no new unsecured debt through 2027 but does not expect adjusted profitability until the first half of 2028.

Analysts reflect the dilemma. Citi raised its price target to $149, Jefferies cut its to $90, and Morningstar trimmed its fair value estimate from $108 to $98. Buying CoreWeave means betting on the backlog and accepting the financing question. Despite the jump, the stock is still down about a third since the start of the year. Nebius and IREN rose in sympathy, but they too are financing stories as much as growth stories.

Anthropic vs. OpenAI: Loss Per Revenue Dollar Is the Metric

Anthropic’s planned IPO is setting the yardstick for the sector. The offering covers 825 million shares at $70 to $78, raising up to $64.4 billion at a valuation of about $1.4 trillion. Pricing is expected around Nov. 18, with trading possibly starting Nov. 19. Bankers are reportedly weighing a valuation of $1.5 trillion or more.

The contrast with OpenAI is striking. Anthropic generated roughly $17 billion in third-quarter revenue with an operating loss of just $567 million. OpenAI reported $10 billion in quarterly revenue for the first time, up about 50% from the prior quarter.

But its operating loss widened from $10.1 billion to $10.9 billion. Its adjusted operating margin improved from minus 150% to minus 109%, which is better but still deeply negative. OpenAI has pushed its IPO to 2027 and is raising private capital at a $1.25 trillion valuation.

That is the real lesson. The market appears willing to pay trillion-dollar valuations for growth only when costs don’t explode alongside it. Anyone subscribing to the Anthropic offering will be buying on that loss ratio, not on growth rates alone.

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

Nvidia: Political Risk Meets Analyst Doubt

Nvidia closed Tuesday at $168.89, down 5.5%. That leaves the stock just above its 52-week low of $164.27. Over two sessions, roughly $430 billion in market value evaporated, triggered by the affair involving CEO Jensen Huang and an alleged Chinese spy.

The board has hired the law firm Wachtell Lipton for an independent investigation. Three House committee chairs also want Huang to testify on Nov. 18. In premarket trading, the shares recovered about 5%.

An operational warning adds to the political risk. The argument is that supply constraints obscure visibility into 2027 data-center demand. Capital spending at the big cloud providers could then grow by only 40% or less. Morgan Stanley has removed Nvidia from its list of top picks after the stock lost more than 25% following its addition on Oct. 2.

Nvidia reports on Nov. 17, and expectations are for earnings of $2.48 per share on revenue of $109.17 billion. Good numbers may not be enough if the 2027 outlook stays vague.

Chip Stocks: A Bounce After a Deep Fall

The rebound is reaching across the supply chain, but the starting point is weak. SK Hynix gained 5.4% in Seoul, yet it sits far below its June high and is down about 20% over the past month.

Micron trades around $771 and has lost roughly 30% over 30 days, though it is still up 154% since January. AMD and ASML have fallen 15% and 12%, respectively, over the past month.

That points to a counter-move rather than a trend change. The year’s gains remain in these shares, and so does the worry about hyperscaler spending plans. Intel, meanwhile, is down about 44% over the month. Anyone tempted to buy the dip should wait for Nvidia’s numbers.

Siemens Energy and BASF: Order Books vs. Margin Stress

Outside the AI names, Siemens Energy shows relative strength. The stock rose 9% in Frankfurt after the company raised its long-term revenue targets and set a margin goal of up to 22% by 2030. That is a concrete, verifiable outlook, and it helps explain why the DAX, above 26,500 points, sits near its 52-week high.

BASF supplies the counterexample. Jefferies cut the stock from Hold to Underperform with a price target of €44. The analysts expect 2027 adjusted EBITDA of €7.4 billion, 5% below consensus. The market rewards companies with visible orders and punishes cyclicals with cost problems.

Outlook

Producer prices for October are due Friday, but the dates that matter for AI stocks fall next week. Nvidia reports on Nov. 17, Huang is slated to testify on Nov. 18, and Anthropic’s IPO is expected to price around Nov. 18, with trading possibly starting Nov. 19. Until then, the rebound will hold only for companies whose earnings power shows up in the numbers.

Best regards,
The StocksToday.com Editorial