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Notes -
AI has been in the financial news a lot this last week, and the vibe shift feels like it might indicate a rotation out of the sector.
Coreweave is down 24% over the last five days, and its bonds briefly flirted with 16%. Other neoclouds like Nebius are taking similar poundings. Firmus, an Australian neocloud company, recently pulled its IPO offering from the Australian stock exchange after a tepid response from both institutional and private investors.
Farther down the stack, Nvidia and AMD are seeing fluctuations that might as well be noise, but Cerebras is having a bad time (down 35% this month).
Memory, represented by Samsung, Sk Hynix, and Micron, are seeing 15% or higher fluctuations over the week, but it's memory, and Koreans are involved, so who knows if that's even relevant.
With the exception of Oracle, hyperscalers are all seeing small 2.5%-3% hits to their stock prices. In contrast, SCHD, the most boring belt-and-suspenders ETF there is, is up almost exactly the same amount.
On the bond front, the Financial Times reports that Anthropic has secured a BB+ rating from KBRA, who issued the rating on incomplete financials that exclude free cash flow, and EBITDA. Kroll and Anthropic declined to comment for the story. The financial times also reports that Anthropic has privately issued a bond to Blackstone with a yield that exceeds 10% in order to secure a lease for Google TPUs.
On the consumer side, Accenture has announced a pullback on their token spend, with the default budget for employees now sitting at $29/month.
Anthropic itself (per The Information) has disclosed that 5-7% of its revenue comes from distillation attacks. This puts them in the unenviable position of having to choose between training their competition or hurting the top line number that's driving their IPO hype.
All together, this looks like the "smart money" is on its way out. Am I seeing an actual pattern here, or am I over fitting on noise?
If it's the former, where is the money actually going? I haven't figured that part out yet.
If it's the latter, how do you separate actual signal from noise in cases like this?
The AI rally gassed out in May. disappointing
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