If you were hoping for a calm week after the recent turbulence, you may as well just take vacation instead. This week is likely to be every bit as eventful as the last one.
NVIDIA (NVDA) announced this afternoon that its board will launch an independent investigation into reports that CEO Jensen Huang became a target of foreign intelligence activity. The matter casts a shadow over the outlook for this central figure in the AI world. NVIDIA also said: "The board has no reason to believe that national security or NVIDIA's trade secrets have been compromised." But once an investigation of this kind begins, no one can predict where it will lead. Congress will conduct its own inquiry into the same matter in parallel. Buckle up, there is more drama to come.
Meanwhile, my colleague Valida reports that Anthropic is expected to kick off its IPO roadshow for institutional investors next week. Given the recent sharp market swings, speculation has emerged over whether the AI company might delay its listing, but the project is still moving ahead as planned. Even so, just how high a valuation Anthropic can ultimately command remains uncertain, and many major investors are skeptical about its ambition to reach a $1.5 trillion valuation target. OpenAI will not be absent either: the AI company is expected to hold an investor call next week to release third-quarter results. Perhaps it should patch the media into the call too, to save everyone the trouble (especially us).
As this string of events unfolds, investors in emerging cloud providers should brace for another volatile week. The best-known of them, CoreWeave, Inc. (CRWV), is scheduled to release its third-quarter report on Tuesday. CEO Michael Intrator will use the occasion to reassure investors and prove the company can withstand pressure in an increasingly tight AI financing environment. Another emerging cloud provider, Iren, already disclosed its earnings on Thursday and cut its capital expenditure forecast for fiscal 2027 (ending next June). As Iren chief commercial officer Kent Draper told me on Friday: in the financing market right now, "funding supply is tight and funding costs are rising." Beyond what CoreWeave, Inc. (CRWV) says in its earnings report about financing and computing capacity expansion, the market will also focus on the latest data on its order backlog. CoreWeave, Inc. (CRWV) previously expected revenue growth of more than 150% year over year; S&P Global Market Intelligence data shows analysts expect its cash burn this quarter to reach $10.7 billion, far above $5.7 billion in the second quarter. The heavy spending is a reminder to the market that the company is highly dependent on continuing to secure new financing. Over the past month, CoreWeave, Inc. (CRWV) shares fell about 50%, a decline similar to those of Nebius and Iren; it closed Friday at $46.40, just $6.4 above its IPO price and far below its post-listing high of $183 set last June. The euphoria that once drove the stock higher has long faded. The focus now is whether Intrator can win back investor confidence and push the shares back toward their former highs.
Unity Software Inc. (U) Game Business M&A Rumors Another main thread this week is that game engine and advertising company Unity Software Inc. (U) has received a potential acquisition offer. Reports say a consortium made up of Saudi Arabia's Public Investment Fund (PIF) and Silver Lake has approached Unity Software Inc. (U) with an acquisition proposal. If the deal goes through, it would in effect combine Unity Software Inc. (U) with Electronic Arts (EA), after PIF, Silver Lake and Jared Kushner's Affinity Partners acquired gaming giant EA for $52 billion in August this year. The Unity Software Inc. (U) story is a compelling one. It was long unloved on Wall Street, with sluggish growth; when software stocks sold off sharply this winter, it suffered even more, with its share price cut in half. But it rebounded afterward: thanks to rapid growth in its new AI advertising business, the stock climbed from a February low of $17 to $40 last Monday. Last week Unity Software Inc. (U) delivered strong earnings showing growth in its AI advertising business, and combined with the acquisition rumors, the stock closed Friday at $52.60. At that price, Unity Software Inc. (U) has a market value of $23 billion. That is a clear recovery from its low point over the past year, but shareholders probably want a higher offer still. They will argue that the fast-growing advertising business supports a higher valuation. The difficulty is that, measured by earnings multiples, Unity Software Inc. (U) is already valued significantly above its main rival in the gaming advertising space, AppLovin; AppLovin is also growing quickly and has higher cash flow margins, so in theory it should command a valuation premium. As a result, unless the acquirer sees enormous synergy value from combining Unity Software Inc. (U) with EA, it will be hard for PIF and Silver Lake to make too high an offer. There is another complicating factor: Silver Lake itself is Unity Software Inc. (U)'s largest shareholder with an 8% stake, effectively standing on both the buy side and the sell side at the same time. More news on this front may land this week.
Other Briefs According to people familiar with the matter, Microsoft has decided not to renew its agreement to lease cloud servers from Oracle, gradually ending the cooperation the two cloud providers reached in 2023. CME Group's plan to launch NVIDIA (NVDA) GPU rental rate futures has hit another obstacle, with approval delayed by 60 days to January next year. Elon Musk posted on X on Thursday evening: Tesla plans to stop producing the Cybertruck around mid-next year, freeing up capacity to mass-produce the Cybercab autonomous taxi. Amazon has added a text-message interaction channel to Alexa's shopping feature, allowing users to text the AI shopping assistant directly. Text messaging is becoming the standard way to interact with intelligent agents, with Meta's Muse, Instinct and DoorDash delivery all already supporting text conversations. Meta chief strategy officer Dave Wehner confirmed he will leave on Friday to become chief financial officer of AI inference startup Fireworks AI, as demand for inference is rising rapidly. SpaceX disclosed in a Friday filing that veteran director Donald Harrison has resigned. The timing of the resignation coincides with Musk's push to merge SpaceX and Tesla.
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