While investors parsed the implications of the Anthropic announcement, Alphabet announced it was raising some $80 billion of equity financing, including a $10 billion private placement with Berkshire Hathaway. The Alphabet stock price fell back about 2% after hours on that news.
We've already seen these hyperscalers raise tens of billions of new debt to fund their AI investments, but raising new equity is a twist. The wider debate is whether there's appetite for all this new equity at these sky-high valuations, or whether some indigestion will set in.
The numbers are staggering. Anthropic's latest funding round put its overall valuation at some $965 billion, above OpenAI’s, while SpaceX's planned $75 billion offering values it at $1.75 trillion.
The question is where that leaves the leaderboard of top companies, relative index weightings and the concentration of AI in overall equity benchmarks. It’s also good to remember that huge IPO waves in the past have sometimes marked the high watermark of speculative market frenzies.
Away from Wall Street, the real AI demand picture continues to pack a punch, with Europe's STMicroelectronics jumping 10% on Tuesday to its highest since 2000 after it doubled its data-center revenue forecast for this year to $1 billion.
How much the AI buildout and chip scramble is affecting input and consumer prices is also increasingly a concern, especially as investors parse a foggy picture on the energy front as U.S.-Iran peace talks sputter.
Brent crude prices unwound a little of yesterday's 5% spike after President Donald Trump indicated that talks with Iran would continue and potentially reach some conclusion this week. But we've been here before, and the fear on Monday was that military exchanges would continue and Iran would hold firm on its red lines.
While oil prices are off a bit today, year-end futures have been little changed over the past week and remain more than 30% higher than before the war started.
The combination of that and the AI story was distilled in a hot U.S. manufacturing reading from the ISM survey for May. While the headline factory activity index hit its highest in four years, there was some question about whether this was flattered by precautionary stockpiling. The input price component ebbed a bit but remains historically high.
Across the pond, euro zone inflation rose to an expected 3.2% in May, with a European Central Bank interest rate rise now widely expected later this month.
STMicro helped Europe's main stock indexes gain early on Tuesday, while Asian markets once again rode on the back of Monday's tech excitement on Wall Street.
Ahead of Tuesday’s bell, Wall Street stock futures had backed off Monday's latest record closing high, long-dated U.S. Treasury yields were a touch softer and currency markets remained quiet.
With that, onto today's column.
