As if it faced an urgency to raise funds before liquidity dried up, Anthropic (ANT) announced its IPO. The filing had 240,000 words. The risk section accounted for nearly 70,000 words. The length of the document is disconcerting. It implied that the AI chatbot giant obscured relevant assumptions like sustained profitability.
The IPO did not cause last week’s AI bubble to deflate so quickly. Intel (INTC) lost 24.38% last week. NVIDIA (NVDA) fell by 3%, whereas Texas Instruments (TXN) and Oracle (ORCL) gained for the week.
The selling on strong volume might gain momentum. That would put AI names at risk of deflating further. Readers will not call firms trading at a low price-to-earnings multiple like Micron Technology (MU), SanDisk (SNDK), or SK Hynix (SKHY) as “bubble” stocks. Similarly, Alphabet (GOOGL), which lost 12.6% last week post-earnings, traded at a P/E in the teens.
The sustained revenue growth against rising costs is the fundamental unknown for AI firms. Volatility is highest for suppliers to the AI data center buildout. Lumentum (LITE) traded in the low $700s, bounced back to nearly $1,000, but then closed at $840.70 on Oct. 30.
Optical network firms like Ciena (CIEN) are trending lower, while Coherent (COHR) gave up its recent gains.
Your Takeaway
The mega-cap firms with a market capitalization of over $1.5 trillion had a good run. But Tesla (TSLA), Amazon (AMZN), Microsoft (MSFT), and Alphabet shares risk pulling back. Apple (AAPL) is relatively safe, since it did not bet heavily on AI.
