Improved revenue and financing expectations for AI labs have driven a rebound across the supply chain, but the sustainability of revenue growth, the sharing of financing risk and chipmakers’ ability to meet the buy-side bar remain key questions.
Why is the AI supply chain rebounding again?
QQQ rose 1.3%, while semiconductors gained 3.9% and led the market for a second consecutive trading day; software rose just 0.35%. The report says the favorable reception to Anthropic’s S-1 filing, improving annual recurring revenue indicators for October, and several financing announcements eased two concerns that had recently weighed on semiconductor trading: lab revenue and financing.
AI cloud providers’ shares rebounded, with Nebius up 11% and CoreWeave and IREN each up 8%. CoreWeave’s five-year credit default swap spread narrowed from approximately 1188 basis points on 15 October to approximately 1071 basis points, but remained about 26% above its level at the end of September.
What can Anthropic’s revenue indicators tell us?
The report says Ramp data show related spending rose 25% month over month; extrapolating from the historical relationship implies approximately 76 billion to 78 billion dollars in annual recurring revenue for Anthropic. Spending remains below the peak that included a one-week surge in Fable usage, but is reaching new highs after excluding that peak.
This is a directional proxy: corporate spending changes slowly, and Anthropic derives 48% of its revenue from various platforms, so Ramp spending cannot capture all revenue. The report says the market’s expectation for the October revenue metric is approximately 75 billion to 76 billion dollars; a figure above 78 billion dollars would be viewed as a positive signal, implying organic growth had returned to the highs of June or July.
The report argues that stronger data could ease recent concerns about lab revenue, but would be unlikely to settle the debate over whether medium- and long-term growth can be sustained.
Why does improved financing also entail supplier risk?
Broadcom rose 4% as the market digested an Anthropic-related special-purpose vehicle financing of 63 billion dollars. The report says the financing gives bulls greater confidence that Anthropic can pay for chips, while also leaving Broadcom with more risk in facilitating the sale.
UBS estimates that the two transactions involve approximately 70 billion to 75 billion dollars in guarantees; if Anthropic cannot pay, Broadcom may have to cover the shortfall. Bulls point out that Broadcom does not currently have to pay this cash and that its exposure will gradually decline as payments are made over the five-year lease term.
Why were Seagate and NXP sold off despite delivering growth?
Seagate reported revenue of 4.23 billion dollars for the quarter ending in September, up 61% year over year and 17% sequentially. That exceeded the market consensus of 4.14 billion dollars but fell short of the buy-side bar of approximately 4.27 billion to 4.31 billion dollars; earnings per share of 7.68 dollars also exceeded market expectations but missed the buy-side bar. The company’s shares fell 6% after hours.
Seagate’s shipments were the main point of contention: total capacity was 220 EB, up only 1% sequentially and below market expectations of approximately 235 EB. Nearly all sequential revenue growth came from changes in pricing and product mix, implying that revenue per TB rose approximately 16% sequentially to 19.2 dollars. Western Digital reported sequential capacity shipment growth of 7% last week.
The midpoint of Seagate’s revenue guidance for the quarter ending in December was 4.8 billion dollars, with earnings per share of 9.20 dollars. Both were above market consensus but below the respective buy-side thresholds of approximately 4.9 billion to 5.05 billion dollars and 10 to 10.50 dollars. On the positive side, the company generated 1.48 billion dollars in free cash flow during the quarter, and the vast majority of its data-center nearline hard-drive supply has been allocated through 2028.
NXP’s third-quarter revenue was 3.79 billion dollars, up 19% year over year and slightly above market expectations. But the midpoint of its fourth-quarter revenue guidance of 3.85 billion dollars was below the market expectation of 3.87 billion dollars and below the sequential growth of 3% to 4% that the buy side had hoped to see. Annualizing the fourth-quarter guidance gives approximately 15.4 billion dollars; reaching the market’s revenue expectation of 16.1 billion dollars for 2027 would still require growth of approximately 4% to 5% from that exit level.
