Anthropic IPO filing revives the AI trade

Anthropic IPO filing revives the AI trade
(Cash-market closing prices are for Monday, 26 October, U.S. Eastern Time; futures, commodities and intraday European quotes are as of this edition; European stock prices are intraday, not closing prices.)

On Monday, the S&P 500 rose 0.70% to 7677.03 points, the Dow rose 0.28% to 52361.76 points, the Nasdaq gained 0.83% to 26169.38 points, and the equal-weight S&P ETF (RSP) rose about 0.35% to $217.29 (Reuters, as republished). The 10-year U.S. Treasury yield closed at 5.00%, broadly unchanged from Friday; Brent crude closed at $115.81, down 0.78%, and WTI closed at $101.76, down 1.46% (Reuters); spot gold rose about 0.5% to regain $4000 an ounce (Reuters); and the dollar index edged higher, moving above 102 (Reuters).

The market's main theme
On Monday, the market did just one thing: it treated Anthropic's prospectus as a “pricing anchor” for the AI trade, rather than a “risk checklist.” The filing gave the market two figures, one dazzling and one alarming—first-half revenue of $16.29 billion and a net loss of $80.7 billion—but investors chose to focus first on revenue growth and the operating loss of just $693 million. Chip stocks consequently led gains, and both the S&P and Nasdaq ended losing streaks. Meanwhile, four-party talks in Tehran produced only an agreement to “continue dialogue”; oil fell by less than $1, suggesting the war premium had eased but had not disappeared. The surprise Brazilian election result provided the opposite extreme on the same day: stocks and the currency both tumbled, reminding markets that this week's catalysts extend well beyond AI. Monday's rebound was a case of “rising first and waiting for earnings to validate it,” not “doubts resolved”: ahead of Wednesday's FOMC decision and Microsoft and Alphabet earnings on the same day, any single day's gains are still only a down payment.

I. Tehran: Four parties agree to continue dialogue, but Houthi attacks continued on Monday and the United States was not at the table

• The outcome of the talks can be summed up in one sentence: Saudi Arabia, Turkey, Pakistan and Iran issued a joint statement after talks in Tehran on Monday, agreeing to continue dialogue to strengthen cooperation among the four countries on regional peace and security; the Saudi foreign ministry said the visit was intended to open negotiation channels and “prevent a recurrence of military escalation” (Reuters, as republished). “Continue dialogue” is the weakest formulation of an outcome: it confirms that channels remain open, but offers no ceasefire commitment, no timetable and no signatures from the United States or Israel.
• The fighting did not cool in tandem: Reuters reported that the Houthis continued attacking Saudi targets on Monday, while Egypt approved defense support for Saudi Arabia; this was the first high-level contact between the three Mecca defense pact countries and Iran since the war widened (Reuters, as republished). The coexistence of talks and attacks is the fundamental reason Brent fell only from $116.72 to $115.81, rather than returning below $110.
• The transmission path to U.S. stocks remains unchanged: first watch for substantive results from the dialogue, then whether oil moves toward $120 or $108. The window is also narrowing: Israel's election on Tuesday and the U.S. midterms on 3 November could both reduce diplomatic room for maneuver. Monday's oil decline was an “easing of the premium,” not an “end to the risk.”

II. Bonds, the dollar and commodities: The 10-year yield is stuck around 5%; the Dallas Fed delivers a mix of “improving activity, slowing orders and still-hot prices”

• Monday's bond-market picture was a notch “milder” than Friday's, but none of its components truly turned: the 10-year yield closed at 5.00%, the 2-year at 4.68% and the 30-year at 5.31%, all broadly unchanged. Reuters' daily wrap said the U.S. 2-year Treasury auction was reasonably well received, although overseas demand fell and domestic demand surged (Reuters). Markets priced the probability of a Fed rate increase this week at just 12.7% (CME FedWatch, via Reuters) (Reuters, as republished). A hold this week is almost a consensus; the real question is whether Wednesday's statement and press conference will leave the door more open to or narrow the scope for a rate increase in December.
• The Dallas Fed's October survey was Monday's data set most worth a close read: the general business activity index rose from 9.8 to 13.4, beating the market forecast of 7.0, but the production index slowed sharply from 29.5 to 15.8, the new orders index plunged from 30.7 to 9.3, and the raw materials price index stood at a high 55.3, nearly twice its historical average of 28.1 (Dallas Fed, via Dow Jones Newswires). Activity is improving, orders are slowing and costs are rising—data that support neither an “economy collapsing first” nor “inflation under control,” placing the Fed precisely where its decision is hardest.
• Europe followed the rebound on Monday: the pan-European STOXX 600 rose 0.4% intraday to 638.45 points, energy stocks fell 1.5% and travel and leisure stocks rose 1.6%; Germany's Ifo business climate improved more than expected in October, and the German benchmark index rose 0.9% (Reuters, as republished). Falling oil prices first eased European inflation expectations, while improving German business sentiment provided a second support for the rebound.

III. Stock and sector moves, including earnings: Technology leads, communication services lags; Verizon shares fall 3.5% despite an earnings beat

• Sector divergence was Monday's clearest pattern: of the S&P 500's 11 sectors, 7 rose and 4 fell; technology led with a 1.5% gain, while communication services trailed with a decline of about 1.4% (Reuters). “Computing capacity and chips” rose, while “platforms that have to pay for computing capacity” fell—precisely the valuation redistribution brought by the Anthropic filing.
• Tesla led Monday's large-cap gainers: after Barclays upgraded it to overweight with a $450 price target, the stock rose 5.2% to $391.62, its highest close in more than three months (Barron's). Microsoft rose 1.5% after reports that it planned to offer buyouts to about 60 thousand employees, roughly 27% of its full-time workforce (Barron's). Ahead of Wednesday's earnings, Microsoft's story was “cost cutting” and Tesla's was its “rating”—both were talking about next year's costs and valuations, not current-quarter revenue.
• Verizon offered Monday's most memorable lesson: third-quarter adjusted earnings per share of $1.31 beat expectations of $1.27, and it raised full-year guidance, but revenue of $34.3 billion fell short of the $34.74 billion expected; shares closed down 3.5% (Barron's). From a 2.4% premarket gain to a 3.5% closing loss, the market spent the day delivering its verdict: subscriber growth can be rewarded, but a revenue miss must be punished first—that is this week's earnings-season grading standard.
• After-hours earnings also diverged: Cadence reported third-quarter adjusted earnings per share of $2.11, beating expectations of $2.05, and revenue of $1.63 billion, up 22% year on year. It raised its full-year 2026 revenue growth guidance to 21% and its full-year revenue guidance to $6.39 billion–6.42 billion; shares rose 2.4% after hours (Barron's). Nucor reported third-quarter net sales of $11.25 billion, up 32% year on year, and diluted earnings per share of $5.80, above $2.63 a year earlier; it expects fourth-quarter earnings to be broadly flat with or slightly above the third quarter (Nucor company announcement). Chip-design software tells an AI story through “orders in hand,” while steel tells a real-economy story through “prices and shipments”—both beat expectations, but they are not describing the same U.S. economy.

IV. AI headlines: Anthropic's filing combines explosive revenue, alarming losses and a valuation cut; Meta and SpaceX step up financing on the same day

• First, the filing itself: Anthropic's first-half revenue was $16.29 billion, up from $1.16 billion a year earlier; its net loss was $80.7 billion, primarily due to an increase in the fair value of convertible debt, while its operating loss was just $693 million. Full-year 2025 revenue was $4.59 billion and the operating loss was $8.06 billion (Reuters) (Reuters). Reuters also reported that some investors had cut their valuation of Anthropic from about $2 trillion to about $1.5 trillion (Reuters). On Monday, the market rewarded “revenue growth,” but the valuation cut suggests that nobody wants to pay $2 trillion for a balance sheet that has yet to prove it can make money.
• Chip stocks were direct beneficiaries: Nvidia rose about 2.4%, Micron about 3%, AMD about 2.8% and Broadcom about 2.3%; the Philadelphia Semiconductor Index rose about 3% but was still down nearly 12% for the month (Reuters, as republished). Neocloud providers reversed intraday losses, but their closing performance diverged: CoreWeave rose 1.8% and IREN rose 2.1%, while Nebius fell 3.5% (Barron's). “Chips with orders rise; cloud providers without revenue diverge”—the AI trade's selection criteria are shifting from “telling stories” to “calculating cash flow.”
• The financing race intensified the same day: Meta on Monday launched an offering of approximately $35 billion in common shares and convertible bonds, and separately filed for an at-the-market offering program of up to $60 billion, for a combined maximum of $95 billion to fund AI expansion (Reuters); SpaceX reached an approximately $40 billion AI-chip financing arrangement with an Apollo affiliate (Reuters). Meta shares closed down 1.9% (Reuters, as republished). On the same day, three companies presented combined financing needs exceeding one hundred billion dollars—the market may bid up chip stocks on Monday, but sooner or later it must ask where the money will come from and how long it will take to earn it back.
• Brazil was Monday's other extreme: after Lula won Sunday's runoff and secured a fourth term, Brazilian stocks plunged about 14% on Monday, putting gains accumulated when Bolsonaro led in the first round at risk of reversal; Reuters cited analysts saying investors wanted a credible commitment to fiscal discipline (Reuters). Among individual stocks, Petrobras fell 14% and XP fell 48% (Barron's). Brazil's lesson is the opposite of AI's: the market can rise for a month in anticipation of a policy shift, and give those gains back in a day when that shift fails to materialize.

V. Forward calendar (Hong Kong time)

• 27 October (Tuesday): Israeli election; first day of the FOMC meeting; 20:30 durable goods orders for September; 21:00 Case-Shiller home price index for August; 22:00 Conference Board consumer confidence for October, new home sales and Richmond Fed manufacturing index; Coca-Cola, Boeing and UPS before the market opens; Visa and Robinhood after the close.
• 29 October (Thursday), 02:00: FOMC decision (markets expect rates to remain at 3.75–4.00%, with no dot plot at this meeting; the probability of a rate increase this week is about 12.7%, and about 80% for December); 02:30 Fed chair's press conference; Microsoft and Alphabet after-hours earnings early the same day (after Wednesday's U.S. Eastern close).
• 29 October (Thursday): 20:30 preliminary Q3 GDP (market forecast annualized growth of 3.2%, above the previous 2.2%) and September PCE; 21:15 ECB rate decision; Eli Lilly and Mastercard before the market opens; Amazon and Intel after the close.
• 30 October (Friday): Bank of Japan decision; 20:30 employment cost index (market forecast 0.8%, below the previous 0.9%); Exxon Mobil and Chevron before the market opens.
• 31 October (Saturday): Further protests in France (called by unions and the Yellow Vests); 3 November (Tuesday): U.S. midterm elections; 5 November (Thursday): major strike by French unions.