Markets
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Luke Kawa

Microsoft, Nvidia investing in Anthropic; Anthropic to buy $30 billion in Azure computing capacity

Well, this is the Platonic ideal of a circular AI deal.

In a joint press release, Microsoft, Nvidia, and Anthropic (maker of the Claude genAI) announced a strategic partnership that includes a slew of 10- and 11-digit investment plans:

  • Anthropic will purchase $30 billion of computing capacity from Microsoft’s Azure.

  • Anthropic’s commitment includes up to 1 gigawatt in computing capacity that will be served through Nvidia’s Grace Blackwell and (yet to be released) Vera Rubin systems.

  • Microsoft is investing up to $5 billion in Anthropic.

  • Nvidia is investing up to $10 billion in Anthropic.

That’s revenues for Microsoft and Nvidia, and two high-profile investors for Anthropic.

Bank of America analysts have argued that these circular-seeming deals are a way for leaders in the space to beef up their potential addressable market that “could multiply future benefits.”

Anthropic announced its foray into data centers last week with plans for $50 billion in custom-built locations in partnership with Fluidstack. The company is targeting $70 billion in revenues by 2028, which would help it support this capex binge.

Despite the massive numbers being tossed around here, Anthropic said that Amazon’s AWS would remain its primary cloud provider, per Bloomberg.

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Luke Kawa

Nvidia briefly pares losses after Jensen Huang says Vera Rubin chips are in full production

Nvidia briefly erased its daily drop in postmarket trading after CEO Jensen Huang announced that its Vera Rubin chips are in full production.

“If Vera Rubin is going to be in time for this year, it must be in production by now,” he said during his keynote address at the CES in Las Vegas. “And so today I can tell you that Vera Rubin is in full production.”

This is the new generation of AI GPUs for Nvidia, the successor to its Blackwell line.

“The power of Vera Rubin is twice as high as Grace Blackwell,” said Huang, adding that it can be cooled by water at a temperature of 45 degrees Celsius, eliminating the need for water chillers at data centers. “We’re basically cooling this supercomputer with hot water, it is so incredibly efficient.”

Most of Huang’s presentation in was focused on physical AI, especially autonomous vehicles, but what pays the bills for Nvidia is developing new flagship GPUs and getting them into the hands of hyperscalers and everyone else who wants them.

“Our ecosystem will be ready for a fast Rubin ramp” said CFO Colette Kress following Nvidia’s Q3 earnings report in November.

Tasha Matsumoto
7h
Stocks climb higher, led by energy

Energy and defense stocks surged amid geopolitical tensions.

Sunset Bull
markets
Matt Phillips

Nuke stocks up as Venezuela intervention boosts political uncertainty

Shares tied to nuclear fuel and experimental forms of nuclear energy surged Monday, with a backdrop of geopolitical uncertainty in the wake of President Trump’s intervention in Venezuela and new Department of Energy funding likely driving the gains.

Nuscale, Oklo and Nano Nuclear — all makers of unproven, not yet fully approved smaller nuclear reactors (SMRs) that the industry is pushing as the next generation of atomic power — jumped double digits.

Nuclear fuel companies like Lightbridge, Critical Metals, Centrus Energy and Energy Fuels also posted solid gains after the Department of Energy detailed the recipients of $2.7 billion in funding over the next decade to boost domestic capacity for enriched uranium.

Centrus is to receive $900 million of the funds, according to Bloomberg. But with little other company-specific news on the stocks in question, it’s tough to conclusively explain the move in prices of nuclear power assets, though Trump’s intervention in Venezuela is likely playing some role as well.

The imprisonment of Maduro could disrupt the deal the US has struck with China — a key Venezuelan ally — on access to rare earth metals, including uranium, making supplies tighter and prices higher. Prices of some rare earths in China, including lithium, rose sharply on Monday.

Rising prices or tightening supplies of nuclear fuel could boost the potential value of new, more efficient forms of nuclear power, such as SMRs, and nuclear fuel suppliers like Centrus. It may also increase the chances that the US takes further direct stakes in American producers of sensitive metals, like Energy Fuels, a Colorado-based miner of uranium and other metals, as it did over the summer.

All of this comes against the backdrop of growing electricity demand related to AI, which was already expected to boost uranium prices and nuclear power usage in the coming years.

Max Knoblauch

Airlines climb as market prices in medium-term oil supply relief amid US-Venezuela tensions

US airlines are climbing on Monday, despite higher oil prices amid escalating US-Venezuela tensions following the US’s capture of Venezuelan leader Nicolás Maduro and his wife, Cilia Flores.

The price action follows a weekend of disrupted travel for airlines, as the FAA ordered carriers to avoid large swaths of Caribbean airspace following US strikes. The agency’s restrictions expired on Sunday.

Delta Air Lines, which reached an all-time high on Monday, said it had “proactively added more than 2,600 seats through extra flights across its Caribbean network for Monday, Jan. 5.” The carrier expects flights to the region to normalize by Tuesday. American Airlines said it’s added about 7,000 extra seats to temporarily boost its capacity.

While crude futures rose on the US-Venezuela tensions (West Texas Intermediate crude futures were up 1.7% Monday afternoon), the market appears to be pricing in some medium-term relief due to the possibility of Venezuela’s reserves getting more developed. US oil companies are similarly rising in Monday trading.

markets
Matt Phillips

Duolingo jumps following BofA upgrade

Duolingo shares are down over 60% since hitting their peak last May, as slowing quarterly growth in key metrics like daily active users prompted analysts to sharply cut their long-term estimates for the company’s growth potential.

“We disagree,” Bank of America analysts wrote in a note Monday upgrading the stock to “buy” — from “neutral” — and slapping a $250 target on the stock.

They elaborated:

“Why? Because Duolingo’s value proposition extends beyond education into entertainment — a market investors have largely ignored. With gamified mechanics that rival top casual games and a growing portfolio of fun-first courses like Chess and Music, Duolingo taps into the large audience of mobile users seeking engaging ways to fill idle time. This dual positioning creates a long growth runway.”

In other words, they think addictiveness of the app has more in common with platforms like Roblox or the various iterations of Microsoft’s “Candy Crush” saga than the market currently understands. And that means that Duolingo can, perhaps, sustain higher long-term growth than investors seem to grok. In short, they argued that Duolingo deserves a more game-like valuation, which it will get as it surprises on growth in the coming years.

“We note that Duolingo’s financial forecast is similar to Roblox, but its multiple is significantly lower, despite its high mix of annual subscription customers,” they said.

Bank of America’s target for the shares is 30% higher than where the stock was trading Monday morning, despite the fact that Duolingo shares were having their best day in about three months. But even if it were to hit $250, the stock will still be more than 50% below its record closing high of $540.68 set last year on May 14.

“Why? Because Duolingo’s value proposition extends beyond education into entertainment — a market investors have largely ignored. With gamified mechanics that rival top casual games and a growing portfolio of fun-first courses like Chess and Music, Duolingo taps into the large audience of mobile users seeking engaging ways to fill idle time. This dual positioning creates a long growth runway.”

In other words, they think addictiveness of the app has more in common with platforms like Roblox or the various iterations of Microsoft’s “Candy Crush” saga than the market currently understands. And that means that Duolingo can, perhaps, sustain higher long-term growth than investors seem to grok. In short, they argued that Duolingo deserves a more game-like valuation, which it will get as it surprises on growth in the coming years.

“We note that Duolingo’s financial forecast is similar to Roblox, but its multiple is significantly lower, despite its high mix of annual subscription customers,” they said.

Bank of America’s target for the shares is 30% higher than where the stock was trading Monday morning, despite the fact that Duolingo shares were having their best day in about three months. But even if it were to hit $250, the stock will still be more than 50% below its record closing high of $540.68 set last year on May 14.

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