Wall Street Lunch: Is AI More Important Than The Fed For Yields? (undefined:ANTHRO)

AI capex slowdown is easing inflation fears, as seen in bond market reactions despite hotter PPI and CPI data. Download this episode on Apple Podcasts/Spotify or listen below: Anthropic's revenue growth slows, raising questions about AI spending. (0:14) Wholesale inflation surges, but Treasury yields slide. (1:08) FMC plunges after slashing outlook. (2:24) The following is an abridged transcript: Anthropic's (ANTHRO) Q3 revenue rose 45% to $16.8B, a strong increase but notably down from the triple-digit growth seen in Q2. According to the FT, the company also told investors it was cash-flow positive, generating $1.70 in revenue for every dollar spent on computing power. Investors expect Anthropic to reach $110B in annualized revenue by year-end. The slowdown in revenue growth raised eyebrows and led to some initial selling in AI names at the open, although buyers stepped in later in trading. Menlo Ventures partner Matt Murphy said on CNBC, "there's a lot of talk about slowing, but the data doesn't suggest it." "Our data continues to show that Anthropic's gaining market share, not losing," he said, adding that while companies are experimenting with open-weight models to reduce costs, most will cap their usage at about 20% to 30% of tokens because "frontier intelligence matters" for delivering quality applications. As stock traders grappled with AI, bond traders faced another dose of hot inflation data. The Producer Price Index rose 1.3% in September, nearly triple the 0.5% rise expected. That's the largest advance since March 2022 and lifted the annual wholesale inflation rate to 6.3%. Core PPI, excluding food and energy, rose 0.7%, much higher than the 0.3% consensus. And prices for final demand goods rose 2.6% on the month, the largest increase since that figure was first calculated in 2009. Final demand energy prices surged 10.8%, with gasoline prices up 20.3%. But SoFi strategist Liz Thomas noted that even without the energy rise, headline PPI would have been up 0.6%. On the heels of Wednesday's hotter core CPI, it would make sense for Treasury yields (US10Y) to be rising. But instead, the prospect of Anthropic's revenue slowdown hitting AI capex is easing future inflation worries more than today's numbers are raising them. Conor Sen, founder of Peachtree Creek Investments, labeled the counterintuitive bond rebound "intellectually devastating for the Fed and tech supporters." And while he does not believe the AI expansion is over, the market's skittishness serves as a useful reality check, demonstrating that tech hyperscalers "bleed like anyone else." Among active stocks, agricultural sciences company FMC (FMC) is shedding a third of its value after slashing Q3 guidance, citing weaker-than-expected demand and moves to cut prices on certain products. CEO Pierre Brondeau blamed "challenging market conditions and elevated levels of higher-priced FMC products held in inventory by certain channel customers." Penske Automotive Group (PAG) is rallying after it struck a deal to be taken private by Motown Acquisition Corp., which is an entity owned by Penske Corp. and Mitsui & Co. Holders of Penske Automotive common stock, apart from the buyers, will receive $212 per share in cash. And Manpower Group (MAN) is plunging after quarterly sales fell short of Wall Street expectations, while investors also noted a sizable gap between adjusted and unadjusted EPS. Manpower also named chief strategy officer Becky Frankiewicz as the company's new CEO, succeeding Jonas Prising, who will transition to executive chairman. And in other news of note, as prices rise, that pricey repair job can wait. BofA cut earnings estimates for auto dealers like AutoNation (AN) and Group 1 (GPI), which are seeing more repair deferrals and softer dollar per repair order within parts and service. Parts and service accounts for half of gross profit. A BofA Auto Dealer Survey found that dealers are pricing certain services -- such as oil changes -- below independents but placing a premium on higher-cost jobs largely on higher labor costs. Wall Street Breakfast, Seeking Alpha's flagship daily business newsletter, is a one-page summary that gives you a rapid overview of the day's key financial news. It is designed for easy readability on the site or by email (including mobile devices) and is published before 7:30 AM ET every market day. Wall Street Breakfast's readership of more than 1 million subscribers includes many from the investment banking and fund management industries. Sign up here to receive the Wall Street Breakfast in your inbox every business day. While Q3 growth slowed to 45%, investors still anticipate ANTHRO reaching $110B in annualized revenue by year-end, reflecting continued optimism. ANTHRO is cash-flow positive, generating $1.70 in revenue for every $1 spent on computing power, signaling strong operating leverage. The prospect of slower AI capex, highlighted by ANTHRO's revenue deceleration, is easing future inflation concerns and supporting a bond market rebound despite hot inflation prints.

Wall Street Lunch: Is AI More Important Than The Fed For Yields? (undefined:ANTHRO) | Seeking Alpha

公司的其他新闻