Nvidia Earnings and Anthropic IPO to Test AI Trade’s Resilience

Nvidia Earnings and Anthropic IPO to Test AI Trade’s Resilience

TREE NEWS reports: Next week brings a critical double-header for the artificial intelligence trade: Nvidia’s quarterly earnings on Tuesday and the highly anticipated IPO of Anthropic on Thursday. These events will test investor confidence in the AI narrative, which has been shaken by the sudden resignation of Nvidia CEO Jensen Huang amid a personal scandal and by Anthropic’s decision to slash its IPO valuation.

Nvidia shares fell about 13% this week, a milder decline than some had feared, and the S&P 500 posted its best weekly performance since August. Still, the AI trade faces mounting macroeconomic headwinds, including hotter-than-expected consumer inflation, rising expectations for further Federal Reserve rate hikes, and persistent geopolitical tensions in the Middle East.

Nvidia: Earnings to Validate Post-Huang Stability

Nvidia will report fiscal third-quarter results after the close on Tuesday, the first since Huang’s departure. Analysts expect revenue of about $109 billion and earnings growth of roughly 90% year-over-year. However, investors are more focused on management stability and strategic continuity.

CFO and interim CEO Colette Kress will lead the earnings call and is expected to reassure investors. A 13-year Nvidia veteran who previously worked at Cisco and Microsoft, Kress may lack Huang’s charisma but is seen as capable of providing steady leadership. Ian Buck, vice president of hyperscale and HPC, is reportedly an early favorite to become permanent CEO. Kress also needs to address a series of financing deals signed during Huang’s tenure that remain uncertain.

Alex Morris, CEO of F/m Investments, warned that given the uncertainty, “if results fall short, the market’s punishment will be magnified.” Some investors see the selloff as a buying opportunity. Nvidia shares have dropped over 30% in six weeks, with market cap shrinking from about $5.8 trillion in early October to roughly $3.9 trillion. Jeff Kilburg, founder of KKM Financial, bought January $200 call options this week when the stock was around $160, citing verified demand of $1 trillion and visibility extending to 2028. Dan Ives of Yorkville Ives & Co maintains a 12-month price target of $225, viewing the current price as a buying opportunity.

Anthropic: A Trillion-Dollar IPO as an AI Sentiment Barometer

Two days after Nvidia’s earnings, Anthropic, developer of the Claude chatbot, is expected to list on the Nasdaq Global Select Market on Thursday under the ticker “ANT.” The IPO price range is $70 to $78 per share, with 825 million shares offered, aiming to raise about $64.4 billion. Anthropic has cut its valuation target from about $2 trillion earlier this autumn to $1.2 trillion to $1.4 trillion.

Benjamin Black, head of investment at publicly traded fund Powerlaw Corp., called the move wise, noting that at an expected $100 billion annualized revenue by the end of 2026, the pricing implies about 12 times ARR, which is “not even expensive.” Anthropic CEO Dario Amodei said in a live conversation with JPMorgan CEO Jamie Dimon on Friday that he wants the company to “under-promise and over-deliver” on the IPO. Black noted he has never seen such high investor demand in the primary market and believes the pricing will perform well.

The IPO follows SpaceX’s successful listing in June at a valuation of nearly $1.75 trillion, raising about $75 billion. However, SpaceX’s stock has been volatile, falling from its IPO price of $135 to about $105 in August before recovering to around $139. Patrick Ryan, chief investment strategist at Madison Investments, warned that if Anthropic performs poorly post-IPO, “it could be another warning sign that investors are starting to feel more pressure on the AI trade.”

Key Takeaways for Investors

• Nvidia’s earnings are a test of leadership transition: Beyond the numbers, investors will scrutinize management’s ability to execute without Huang. Any misstep could trigger outsized selling given the stock’s recent volatility.
• Anthropic’s IPO pricing reflects a more cautious AI sentiment: The reduced valuation may be a smart move to ensure a successful debut, but weak aftermarket performance could signal broader fatigue with AI valuations.
• Macro risks are mounting: Sticky inflation and geopolitical tensions could amplify market reactions to any disappointment from these two events.
• Opportunity amid uncertainty: Some seasoned investors view the selloff in Nvidia as a buying opportunity, citing long-term demand visibility, but caution is warranted given the binary nature of next week’s events.