Anthropic’s IPO Price Talk Is Rising: 8 Key Items Shaping the Stock Market Wednesday

These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to a strong start to the trading day.

1. Despite market bets on a de-escalation in the Iran war, new evidence has emerged in recent days of strikes on tankers in the Strait of Hormuz and on energy infrastructure in the Middle East. (Reuters)

Iran will not allow even a single particle of enriched nuclear material to leave the country and there will be consequences in the event of any new U.S. ‌strikes on the Islamic Republic, Iranian security chief Mohsen Rezaei said in televised remarks. (Reuters)

Oil prices rose on Wednesday after falling to two-month lows in the previous session, as the market swung between hopes for a de-escalation in the Iran war and concerns about ongoing attacks on shipping in the Strait of Hormuz. This is challenging the market thought that a peaceful settlement between the U.S. and Iran is more likely, but we’ve seen those expectations vacillate before. We will also want to monitor flows from other countries following data that suggests a normalization is underway in the energy markets that could lead to lower crude prices in the coming months.

2. Goldman Sachs forecast a 25-basis-point Federal Reserve rate increase in March on Tuesday after hotter-than-expected October inflation data prompted it to change its call for an end to the hiking cycle in December. The U.S. lender joins Deutsche Bank, which expects an additional quarter-point rate hike in January on top of increases in December and March. (Reuters)

Following Tuesday’s hotter-than-expected October CPI report, we discussed the increased probability that the Fed would need to do more to tamp down inflation pressures, but we also shared why what happens between now and early December with oil prices could swing the size of the expected policy hike. Friday’s October PPI report will bring another piece of the inflation puzzle and more insight on companies announced plans to boost output prices to preserve margins and their bottom line.

3. CoreWeave said on Tuesday it would become profitable on an adjusted basis in the first half of 2028, as the AI cloud company sought to reassure investors that strong demand and customer commitments will support its debt-fueled expansion… Easing some jitters, CoreWeave said it would not tap unsecured debt markets at current yields and that it had enough cash flow from existing customer commitments to repay current debt and any additional borrowing needed to fulfill those contracts… CoreWeave’s revenue backlog stood at $132.5 billion at September-end, rising from $104 billion at the end of June. At the same time, its quarterly capital spending jumped to $14.5 billion from $9.4 billion in the prior quarter. That spending is necessary to bring capacity online to meet the surging demand, CoreWeave said, as it is largely sold out of capacity through ⁠the next year, with about ten times as much demand as available capacity. (Reuters)

While CoreWeave (CRWV) management has a spotty track record when it comes to its earnings call, what it delivered on Tuesday night is bringing some needed reassurance to the market about AI and AI infrastructure. The demand comment should also help investors start to look past the allegations and related headlines for Nvidia (NVDA) CEO Jensen Huang and focus on the business fundamentals. It’s still to be determined what’s next for Jensen, but the demand versus capacity comment bodes well for chip demand, not only at Nvidia, but from Broadcom (AVGO) and Marvell (MRVL). It also sets the stage for quarterly results from Applied Materials (AMAT) after Thursday’s market close.

Also bringing some assurance to AI and AI infrastructure…

4. Anthropic’s bankers are weighing plans to increase the AI group’s initial public offering price after receiving heavy demand from investors, less than a day after disclosing that it would target a $1.4tn valuation when it lists next week. Bankers have indicated they expect to raise the share price above the $70-$78 range announced in a filing early on Tuesday, which could increase the valuation target to $1.5tn or more in the coming days, according to five people familiar with the matter. (FT)

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In a note to Pro members on Tuesday, we shared our view on why Anthropic’s (ANT) pending IPO could be a positive catalyst for AI and AI infrastructure stocks, and upsized demand for the offering reaffirms that thinking. And we have to think Anthropic’s announcing functionality that fosters greater uses of its paid platforms was well timed. The announcement of that Office-like offering is weighing on the shares of Microsoft (MSFT) on Wednesday morning, but Microsoft is firmly entrenched in the enterprise. We’d look to see market share data in the coming months and quarters rather than make the mistake of overestimating the impact to Microsoft.

5. OpenAI’s quarterly revenue hit $10 billion for the first time in the three months ending in September, according to people familiar with the matter, driven by strong demand for its latest artificial intelligence software. The ChatGPT maker’s revenue increased nearly 50% from the prior quarter and almost threefold from the same period a year earlier… (Bloomberg)

OpenAI told investors Tuesday that its adjusted operating margin improved from minus 150% to minus 109% from the second to the third quarter, according to documents viewed by The Wall Street Journal. Even so, the company’s adjusted operating losses ticked up slightly from $10.1 billion to $10.9 billion, based on those figures. (WSJ)

That strong revenue ramp along with the figures we discussed from Anthropic’s S-1 go quite a way to confirming that AI adoption and usage remain on the rise. Backing up that view, OpenAI also shared the number of paying users on ChatGPT grew to roughly 100 million, or 8.5% of total weekly active users. That percentage is slightly higher than what OpenAI reported for the previous quarter, suggesting progress in its effort to increase paying subscribers while Anthropic does the same. We continue to see rising adoption but really widening usage being the driver behind AI infrastructure demand.

6. Shares of Costco Wholesale Corp. (COST) gained overnight after the retailer announced a record $30-per-share special dividend, totaling about $13.3 billion. The announcement sparked bullish retail sentiment, with investors celebrating the massive payout and calling it an early Christmas gift for shareholders… Along with the dividend announcement, Costco’s directors approved a fresh authorization allowing the company to repurchase as much as $4 billion worth of its common shares. The new arrangement will remain effective through November 2030. Costco’s new buyback plan takes the place of its 2023 program, which was due to end in January 2027. The company has already used $3.1 billion of the earlier $4 billion budget to repurchase shares. (Yahoo! Finance)

Over the last few quarters, there has been much speculation about when Costco (COST) would announce its next special dividend. On Tuesday night, the company answered that call and in a big way. The $30 per share special dividend is twice the size of its last special dividend paid in January 2024. This speaks to the power of the company’s membership business model. What was also a positive surprise was the new buyback authorization, which combined with the upsized special dividend should bring the spotlight on Costco’s cash flow even as it accelerates its warehouse expansion plans. We see that expansion feeding membership growth, which in turn drives volume through the locations and supports a steady step up in the company’s pre-tax income.

7. Economic data today per TipRanks: OPEC Monthly Oil Market Report (November), MBA Mortgage Applications (Weekly).

8. Companies reporting today per TipRanks: AM – CGI (GIB), E.ON (EONGY), Ginkgo Bioworks (BGSI), ICL Group (ICL), RWE (RWEOY), Rumble (RUM), Siemens Energy (SMERY), Vestas Wind Systems (VWDRY). PM – CAE (CAE), Corteva (CTVA), Digi International (DGII), EnerSys (ENS), Franco-Nevada (FNV), OR Royalties (OR), Teekay Tankers (TNK), Tetra Tech (TTEK).

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At the time of publication, TheStreet Pro was long AMAT, AVGO, COST, MRVL, MSFT and NVDA.