AI stocks extend rally after Anthropic files for IPO

Technology stocks rose for a second straight session on Tuesday, October 27. Anthropic's public filing for an initial public offering eased investor fears that the AI boom was running out of steam. The Nasdaq Composite closed up 1.2% Tuesday after gaining 0.8% Monday, the day Anthropic filed, MarketWatch reported. The rally followed weeks of selling driven by worries about overspending and debt across the sector.morningstar.com

The filing is seen as a key test of whether AI can deliver profits, and a weak reception could cool enthusiasm, AFP noted.afp.com

What the filing showed

Anthropic, which makes the Claude chatbot, reported first-half revenue of $16.3 billion, up from $1.2 billion a year earlier. It posted an operating loss of $693 million and a net loss of $80.7 billion, according to Fortune. Most of that net loss came from a $72.4 billion non-cash charge tied to convertible debt, Yahoo Finance reported. The company plans to list on the Nasdaq ↘ 0.34% under the ticker "ANT." The filing also disclosed more than $500 billion in computing commitments, according to HDFC Sky.fortune.com+2

On Monday, the S&P 500 ↗ 0.56% rose 0.7% and the Philadelphia Semiconductor Index PHLX Semiconductor Index ↗ 3.65% gained 2.8%, while Nvidia ↗ 0.90% climbed 2.4%, Saxo said. On Tuesday, cloud provider CoreWeave ↗ 7.94% rose 8% and Nebius Group ↗ 11.22% jumped 11.2%. Dell Technologies ↗ 7.47% added 7.5%. "There's still ample appetite in the market from the investor's point of view to own this part of the business model," Celine Woo of Lazard Asset Management told MarketWatch.home.saxo+1

Asia gains, China lags

South Korea's Kospi rose 3.1%, helped by Samsung Electronics and SK hynix ↗ 1.92%. Japan's Nikkei 225 gained 1.7%, lifted by Advantest and SoftBank Group, Fortune reported. Hong Kong's Hang Seng Index fell 0.7%. Natixis economist Alicia Garcia Herrero said Chinese markets "sit outside the main U.S. AI supply chain." In Europe, Frankfurt's DAX closed higher, while London's FTSE 100 fell after HSBC ↘ 5.70% reported profits below expectations, according to AFP.afp.com+1

Earnings and the Fed

Investors now turn to quarterly results this week from Microsoft ↘ 0.24%, Alphabet ↗ 0.84% and Amazon Amazon.com, Inc. ↗ 1.61%. The Federal Reserve is set to announce its rate decision on Wednesday, October 28. The Fed is expected to hold rates steady, though CME Group's ↘ 4.73% FedWatch tool shows a 70% chance of a hike in December as inflation rises, AFP reported. IG analyst Chris Beauchamp said there is hope this rally will last longer than last week's, "with the caveat that there is still an abundance of macro risk to navigate this week."afp.com