Anthropic Opens Its Books, Meta Sells $95B in Stock, Tesla Bets on SpaceX, Brazil Crashes

Good evening. This is Trade and Ticker. Monday, October twenty-sixth, twenty twenty-six. Your evening company deep dive after the close.

Last week ended with the A-I trade on the ropes. This week started with a jolt in the other direction. We've got four stories tonight. First, Anthropic. The company behind the Claude chatbot finally showed the world its books, and that filing sent chip stocks like Nvidia, Micron, and Intel sharply higher. Second, Meta. It wants to raise up to ninety-five billion dollars by selling stock to pay for its A-I buildout, and investors pushed the shares lower again. Third, Tesla. It jumped more than five percent after Barclays upgraded the stock, and the reason has a lot to do with SpaceX. And fourth, Brazil. A surprise election result crushed Brazilian stocks, from Petrobras to Itau to Nu Holdings, and one brokerage lost about half its value in a single day. Let's get into it.

First, a quick look at the board. It was a solid day, led by technology. The S-and-P five hundred rose about seven-tenths of a percent. The Nasdaq gained a little more than eight-tenths of a percent. And the Dow added about three-tenths of a percent, or about one hundred forty-six points. The Russell two thousand, the small company index, rose about four-tenths of a percent. With today's gain, the S-and-P more than made up last week's loss, and it's now within about two percent of the record it set earlier this month.

The sectors tell the story. Technology was the clear leader, up about one and seven-tenths of a percent. Industrials and consumer discretionary stocks each rose more than one percent. At the bottom was communication services, down about one and a half percent. That group touched its lowest level since June of last year during the session. Charter fell almost six percent, Netflix fell about three, and Verizon fell about three and a half percent, even after it raised its profit forecast this morning.

Two things in the background helped. Oil eased. Brent crude, the global benchmark, settled at about one hundred fifteen dollars and eighty cents a barrel, down a little under one percent, and U.S. crude finished a little under one hundred two dollars. Friday's spike was driven by attacks on Saudi energy sites and reports of possible new strikes on Iran, so a calmer day for oil gave stocks some breathing room. And the ten-year Treasury yield held just under five percent. The market's fear gauge, the VIX, fell about five percent.

And this is a huge week. The Federal Reserve starts its two-day meeting tomorrow and announces its decision Wednesday afternoon. Markets see roughly a nine-in-ten chance the Fed holds rates steady this time, but investors don't expect it to stay on hold for long with inflation still running hot. More than a third of the companies in the S-and-P five hundred report results this week, including Microsoft and Alphabet on Wednesday and Amazon on Thursday. And the midterm elections are a week from tomorrow.

Now, the four stories.

Deep dive number one. Anthropic and the chip rally.

For months, Anthropic has been one of the most talked-about private companies in the world. It makes the Claude family of A-I models, which a lot of businesses use for coding and other work. Back in June it filed confidentially to go public. Today, it made that filing public, and investors finally got to look under the hood. It plans to list its shares on the Nasdaq.

Let's start with revenue, because that's the headline. In the first six months of this year, Anthropic brought in about sixteen-point-three billion dollars. In the same six months a year earlier, it was about one-point-two billion. That's roughly fourteen times bigger in one year. For all of last year, revenue was about four-point-six billion dollars. So the company did more than three times last year's revenue in just the first half of this year.

And the customers are big ones. Anthropic says more than nineteen hundred customers paid it at least one million dollars over the past year, and about two hundred fifty paid it at least ten million. Most of its money comes from businesses paying for how much they use its models, a bit like a utility bill for A-I.

Now the scary-looking number. Anthropic reported a net loss of about eighty-point-seven billion dollars for the first half. That sounds enormous, and it is. But you need to look at where it came from. About seventy-two billion dollars of that was an accounting charge. Anthropic raised money with convertible notes, which are loans that can turn into stock. As the company's value soared, the value of those notes on paper soared too, and the accounting rules make the company book that as a loss. No cash went out the door for that piece.

The better number to watch is the operating loss, which is the cost of actually running the business. For the first half, that loss was about six hundred ninety-three million dollars. A year earlier, it was about two-point-one billion. So the business got much closer to breaking even even as it grew like crazy. The filing also says that in the second quarter, revenue grew more than thirteen hundred percent from a year earlier, while compute and infrastructure costs grew about three hundred percent. Revenue is growing faster than the bill for the chips and data centers. That's exactly what investors have been dying to see from A-I.

But there's a big catch, and it's the cost of staying in the race. According to Reuters, Anthropic has committed to more than six hundred billion dollars in spending with about eight partners over roughly a decade. That includes at least one hundred ten billion with Amazon, about one hundred fourteen and a half billion with Google, and almost forty-five billion with Microsoft for cloud computing. Many of those deals can't be canceled. And here's the twist. Amazon and Google are also two of Anthropic's biggest investors. Amazon has put in at least thirteen billion dollars, and Google has committed up to forty billion. So the same companies that fund Anthropic also collect a lot of its spending. That kind of circular money flow is something investors are watching closely across the whole A-I industry.

Then there's control. Anthropic is a public benefit corporation, which means it's legally required to balance profits with its mission of developing A-I safely. An independent trust elects a majority of its board. And the founders, as a group, will control a single special share that carries just over half the voting power on key matters. So if you buy this stock, you're buying into the growth, but you won't have much say in how the company is run.

What we don't know yet is the price. The filing doesn't set a share count or a price range. Reuters has reported that Anthropic could raise as much as one hundred billion dollars, and that some investors are valuing the company at around one-point-five trillion dollars. For reference, Anthropic raised money at a value of about nine hundred sixty-five billion dollars just this past May. Goldman Sachs and Morgan Stanley are leading the deal, and the debut is expected around the middle of November.

Now, why did all of this lift chip stocks? Because Anthropic's numbers are the clearest proof yet that A-I is turning into real revenue, not just spending. Every dollar Anthropic spends on computing ends up, one way or another, with the companies that make the chips, the memory, and the networking gear. After weeks of worry that the A-I buildout was getting ahead of itself, today's filing gave investors a reason to step back in.

The Philadelphia chip index rose almost three percent. Nvidia gained almost two and a half percent. Micron rose about three percent, A-M-D almost three, Broadcom more than two, and Intel about four percent. Arm jumped about six percent. Memory maker Micron also got a boost from Bank of America, which said its meetings with management confirmed memory supply looks tighter in twenty twenty-seven and twenty twenty-eight. And optical networking names Lumentum and Coherent were among the best performers in the S-and-P five hundred, up about eight and six percent.

Even the A-I cloud companies turned around. On Sunday, Elon Musk posted that more than two hundred of these smaller cloud companies, which rent out A-I computing power, would face what he called guppy-level death and consolidation. CoreWeave and Iren both opened lower but finished up about two percent. Nebius gave back an early bounce and closed down about three and a half percent.

Let's keep this in perspective. A strategist at RWA Wealth Partners put it well. He said today is all about the Anthropic release and the mood is a little more optimistic, but it will be interesting to see how things are received when the company actually lists. Chip stocks are still down almost twelve percent this month, even after today. And Apollo's chief economist, Torsten Slok, put out a note this weekend arguing that A-I has produced zero financial payoff so far for companies outside of tech. That's the debate in a nutshell. The A-I builders are growing fast. The question is whether everyone else is getting paid.

One more A-I name reported after the close. Cadence Design Systems, which sells the software engineers use to design chips, beat expectations. Revenue grew about twenty-two percent to about one-point-six-three billion dollars, and it raised its full-year forecast to about twenty-one percent growth, citing demand from A-I chip designs. It also added two and a half billion dollars to its stock buyback. The shares rose more than two percent after hours.

Here's what to watch. First, when Anthropic sets its price range, and how big the offering is. Second, whether the chip rally can survive the big earnings from Microsoft, Alphabet, and Amazon later this week. And third, whether the circular money flows between A-I companies and their backers become a bigger worry once Anthropic trades in public.

Deep dive number two. Meta and its ninety-five billion dollar stock sale.

Last Wednesday, Meta reported strong sales but told investors it would spend even more on A-I this year, and the stock dropped about seven percent the next day. This morning, we learned how Meta plans to pay for it. It's going to sell a lot of stock.

Here's the plan, in plain English. Right now, Meta is raising about thirty-five billion dollars. About twenty-two and a half billion of that is regular shares, sold through a structure where Meta doesn't get the cash right away. It can collect the money later, at any point up until November of next year. The other twelve and a half billion is a special kind of preferred stock that pays a dividend and automatically turns into regular shares by August of twenty twenty-nine.

Then there's the bigger piece. Meta plans a program to sell up to sixty billion dollars more in stock over time, directly into the market. That starts after a new class of Meta shares begins trading early next year. Those new shares come with no voting rights. Every existing shareholder will get one of them for each share they already own, and that change is set to take effect in January. Because the new shares carry no votes, Meta can sell a lot of them without weakening Mark Zuckerberg's control of the company. Add it all up, and it's up to ninety-five billion dollars, which Reuters says is Meta's largest equity fundraising ever.

There's one more detail that turned heads. Nvidia, A-M-D, and Broadcom said they're interested in buying up to five billion dollars of the Meta shares in this offering. That's not a firm commitment. But think about what it means. The chipmakers that sell to Meta would help finance Meta's purchases from them. It's the same circular money question we just talked about with Anthropic.

So why is Meta doing this? Because the A-I buildout is eating its cash. Meta expects to spend between one hundred thirty-five and one hundred forty-five billion dollars on capital projects this year, things like data centers and chips. In the third quarter, it burned through about two-point-one billion dollars in free cash flow. That was its first negative quarter for free cash flow in more than a decade. At the end of September, Meta had about eighty-two billion dollars in cash and securities, only a little more than its long-term debt. And Reuters says the company has committed to roughly eight hundred twenty-five billion dollars in future spending.

To be fair, Meta is still a money machine. It says it generated ninety-seven billion dollars in operating cash flow in the first nine months of the year. Revenue grew twenty-six percent last quarter. And it says three-point-six-four billion people use at least one of its apps every day. Meta's argument is that A-I is already paying off in better ads and more engagement, and that stock is just one more way to pay for the next stage, alongside cash flow, borrowing, and partnerships.

But here's why investors didn't cheer. When a company sells new stock, every existing share owns a slightly smaller slice of the company. That's called dilution. And a company like Meta selling stock to fund spending is a big change in tone. For years, the giant tech companies used their extra cash to buy back stock. Now one of them is doing the opposite. Analysts at William Blair said they expect investors to keep questioning the financing and the potential for more capital raises down the road, though they also said the deal shows Meta's confidence in long-term returns from A-I.

The stock fell almost two percent today, adding to last week's losses.

Here's a useful contrast from the same day. Microsoft took a very different route to paying for A-I. It offered voluntary buyouts to around sixty thousand employees, roughly a quarter of its workforce, as it tries to balance its own heavy A-I spending with keeping its finances strong. Microsoft stock rose about one and a half percent. So on one day, you had two of the biggest A-I spenders showing two different ways to pay the bill. Meta is asking shareholders for money. Microsoft is cutting costs.

Here's what to watch. First, the pricing of Meta's offering, and how much demand there is for it. Second, whether other big tech companies follow Meta's lead and start selling stock to fund A-I. And third, Microsoft, Alphabet, and Amazon on Wednesday and Thursday. Investors will want to know how much they plan to spend and how they plan to pay for it.

Deep dive number three. Tesla.

Tesla was the best performer among the biggest tech stocks today. It rose about five percent to close near three hundred ninety-two dollars, and during the day it hit its highest level in more than three months.

The spark was an upgrade from Barclays. Analyst Dan Levy raised his rating to overweight, which is Wall Street's way of saying buy, from equal weight. He also raised his price target to four hundred fifty dollars from three hundred seventy dollars. That's about twenty-one percent above where the stock closed on Friday.

The main reason is SpaceX. Last week, on SpaceX's earnings call, Elon Musk said both companies have formed special committees to discuss combining, and he said there's a lot of merit to the idea. Levy wrote that with a combination heavily expected, and with some expected premium to Tesla's stock, that should drive the shares higher. In other words, if SpaceX buys Tesla, Tesla shareholders would likely be paid more than the stock is worth today. Barclays thinks the most likely deal is SpaceX buying Tesla with its own stock.

Levy also made an interesting point about risk. If investors expect a deal with a premium, few will want to bet against Tesla stock ahead of an announcement. So the merger talk doesn't just add upside. It can also help limit the downside.

There's a reason this matters to Musk personally. He has said he wants to own about a quarter of Tesla, up from roughly a fifth today. Musk owns about forty-eight percent of SpaceX and controls about eighty-two percent of its votes. So folding Tesla into SpaceX would give him a much bigger say over the combined company. Barclays estimates Musk could hold around fifty-three percent of the votes. But there's a high bar. Any deal would need approval from more than half of each company's total outstanding voting power. Barclays called that a high hurdle, and Musk has acknowledged it too.

Now, Levy was careful to say this isn't only a merger story. He pointed to three things in Tesla's own business. First, cars. After two years of falling sales, Tesla's auto business is on track to grow this year, with more growth expected next year from demand tied to its self-driving software and more exports from its Shanghai factory. Second, energy. Tesla has said its energy storage business is nearly sold out for twenty twenty-seven, largely because of demand from data centers. Barclays thinks shipments there could grow more than fifty percent. And third, robotaxis. Levy said Barclays has seen a sharp jump in robotaxi miles driven in recent weeks, which gives him more confidence Tesla can compete with Waymo.

Even after today's jump, Tesla stock is still down for the year. Before today, it was down more than seventeen percent. And Wall Street is still split. Of the forty-nine analysts who cover it, twenty-five say buy and twenty-two say hold.

There's also a SpaceX angle to the A-I story. Musk said over the weekend that SpaceX closed a forty billion dollar debt deal to buy A-I chips. So the company that may one day own Tesla is also becoming one of the bigger buyers of A-I hardware. SpaceX stock slipped less than half a percent today.

Here's what to watch. First, any formal word from the special committees at Tesla or SpaceX. Second, how the deal would be structured, and whether Tesla shareholders would actually get a premium. And third, whether the robotaxi and energy numbers keep improving even if the merger takes longer than people expect.

Deep dive number four. Brazil's market crash.

On Sunday, Brazil held its presidential runoff. President Lula, the left-leaning incumbent, won a fourth term with about fifty-two percent of the vote, beating Senator Flavio Bolsonaro, who had about forty-eight. It was a historic comeback. Bolsonaro actually won the first round three weeks ago, and this is the first time since Brazil returned to direct presidential elections in nineteen eighty-nine that someone won the runoff after losing the first round. Bolsonaro refused to concede and said he would seek to have the result thrown out.

Markets had bet heavily on the other outcome. When Bolsonaro won the first round, investors piled in. They expected a more business-friendly government, tighter control of public spending, and room for lower interest rates. The big U.S. fund that tracks Brazilian stocks jumped about twelve percent in a single day after that first-round result.

Today, all of that came undone at once. Brazil's main stock index fell almost fourteen percent. That's its worst day since the start of the pandemic in March twenty twenty. The selloff was so fast that the stock exchange halted trading for thirty minutes right at the open, the first time it's had to do that in more than six years. The U.S. dollar jumped about eight percent against Brazil's currency, the real. And Brazil's Treasury canceled two government bond auctions planned for this week.

Here in the U.S., the damage showed up in Brazilian companies that trade on American exchanges. The U.S. fund that tracks Brazilian stocks fell about twenty percent. Brokerage firm X-P lost about forty-eight percent, about half its value. Banco Bradesco fell about twenty-eight percent. Itau Unibanco, Brazil's biggest private bank, fell about twenty percent. Nu Holdings, the parent of the digital bank Nubank, fell about seventeen percent. Petrobras, the state-controlled oil company, fell about fourteen percent. And MercadoLibre, the Latin American online shopping and payments company, fell almost eight percent.

So why such a violent reaction? It comes down to one word: spending. Investors worry that a fourth Lula term means more government spending and a bigger pile of public debt. More debt can mean higher inflation and higher interest rates for longer. That's bad news for banks and lenders, because higher rates can mean more customers falling behind on loans. It's bad for brokerages like X-P, whose business depends on investors feeling confident enough to trade. And it's bad for state-controlled companies like Petrobras, where investors fear the government could push the company to spend in ways that don't put shareholders first.

One economist at Pantheon Macroeconomics summed it up in a single line. Lula has won the election. Restoring fiscal credibility will be the harder task.

Notice who held up, though. Vale, the giant iron ore miner, fell only about three percent in New York, and its shares actually rose about four percent in Sao Paulo. That's because Vale sells most of what it mines overseas, in dollars. When Brazil's currency falls, an exporter like Vale can actually come out ahead.

And there's some history here worth remembering. Back in two thousand two, Brazilian markets crashed on fears that Lula would win his first term. He won, then appointed a market-friendly finance team, and investors spent years warming back up to Brazil. That's why the next few weeks matter so much. The single biggest thing investors want to see is who Lula picks as finance minister, and whether he offers a believable plan to control spending and stabilize the debt.

Here's what to watch. First, Lula's choice of finance minister. Second, whether Bolsonaro's challenge to the result goes anywhere, or fades. And third, whether these stocks find a floor. When a market falls this hard this fast, it can bounce sharply, but a real recovery usually needs a real plan.

Before we wrap, a few quick notes. Fair Isaac, the company behind the FICO credit score, fell about thirteen percent after Wells Fargo downgraded it over its pricing for mortgage credit scores. Surgery Partners jumped almost forty-eight percent after agreeing to be bought for twenty-three dollars and fifty cents a share in cash. Range Resources rose almost eighteen percent on E-Q-T's all-stock deal to buy it. Lockheed Martin rose about five percent after a Morgan Stanley upgrade. Instacart rose almost eight percent and DoorDash fell about six, after the Wall Street Journal reported the two are in talks about a deal. And JetBlue fell almost ten percent after the Journal reported that some of its lenders are working with a restructuring adviser.

So here's the picture after the close. Stocks started a huge week on the front foot. Anthropic's filing showed A-I revenue growing at a stunning pace, and chip stocks jumped. Meta showed the other side of that story, the enormous cost of keeping up, and its stock slipped again. Tesla rallied on the idea that SpaceX may one day buy it. And Brazil reminded everyone how fast a market can turn when an election goes the other way.

Here's what to watch into tomorrow. First, the Federal Reserve begins its two-day meeting, with a decision on Wednesday afternoon. Second, a busy morning for earnings, with Boeing, U-P-S, Coca-Cola, and PayPal reporting before the opening bell. And third, Visa and Seagate report after the close. Seagate's results will be a quick test of whether today's bounce in memory and storage stocks has legs.

We'll be back tomorrow morning with futures and the day's catalysts before the opening bell. Enjoy the rest of your night. Thanks for listening. I'm Trade and Ticker.