This week on the stock market: the Anthropic IPO and Nvidia’s earnings
- NVDA
- SPCX
Buckle up – this is going to be a massive week for the markets. Between the Anthropic IPO and Nvidia‘s (NASDAQ: NVDA) Q3 earnings report, volatility’s practically guaranteed.
If you’re a growth investor like me, you can expect these events to have a material impact on your portfolio. Even if you’re not heavily invested in growth shares, the ripple effects could still impact your ISA or Self-Invested Personal Pension (SIPP).
The Anthropic IPO’s going to be huge
Anthropic’s IPO – which is scheduled to take place on 19 November – is going to be a blockbuster event. While it won’t be the largest IPO of all time (SpaceX will hold on to that title), it’s going to be huge as the company’s expected to command a market-cap of up to $1.3trn.
For reference, there are only nine companies in the US with larger market-caps today. At a valuation of $1.3trn, Anthropic would be bigger than the likes of Berkshire Hathaway, JP Morgan, and Walmart.
Will the IPO be a success? I think that depends on the time frame we’re looking at.
My prediction is that the stock will pop on day one of trading due to high levels of investor demand. But looking further out, I think it would see weakness in the months ahead as the IPO hype dies down and the fundamentals (eg high compute costs) are examined more closely.
It’s worth noting that this IPO – which arrives at a fragile moment for tech sentiment – is widely viewed as the ultimate bellwether for the AI trade. If it doesn’t pop on day one, it’s not a good sign, and maybe even the wider market as a whole.
I’m optimistic it’ll rise initially. At a valuation of $1.3trn, a little bit of meat has been left on the bones for IPO buyers.
Nvidia’s earnings will be closely watched
Turning to Nvidia’s earnings, (being posted after the market closes on 17 November), I expect these to be strong. Because demand for the company’s GPUs remains sky-high.
In terms of forecasts, Wall Street’s looking for revenue of around $109bn and earnings per share of $2.47. These figures are both about 90% higher than the respective figures in Q3 last year.
The big question for me is – will the company do anything to reassure investors after the resignation of Jensen Huang. For example, will we see a monster buyback?
If it doesn’t go the extra yard to reassure investors, the stock (and the market) could be volatile, because there’s a lot of leadership uncertainty here.
Note that Nvidia’s earnings could create volatility in other AI stocks. For example, if interim CEO Colette Kress was to signal slowing demand for GPUs, memory stocks such as Micron and SK Hynix could take a hit.
