Tech Weekly: Revenue and Funding Questions Rattle AI Stocks

This week's tech sector performance

Tech stocks led a rally on Monday (October 5) after a weaker-than-expected September jobs report led traders to scale back bets on another US Federal Reserve rate hike this month. Falling oil prices added to the lift.

The Nasdaq Composite (INDEXNASDAQ:.IXIC) closed at a record 27,477.31 that day, with NVIDIA (NASDAQ:NVDA) hitting a record high after Foxconn Technology (TPE:2354,OTCPL:FXCOF), its Taiwanese partner and a key server manufacturer, reported third quarter revenue of 3.03 trillion New Taiwan dollars.

Cerebras Systems (NASDAQ:CBRS) shares also jumped after OpenAI CEO Sam Altman called the chipmaker a close partner. Long-term bond yields kept climbing, however, and that remained the main worry under the rally.

The Nasdaq posted its second straight record close on Tuesday (October 6) as government bond yields fell from multi-year highs and oil prices sank again. Advanced Micro Devices (NASDAQ:AMD) and Constellation Energy (NASDAQ:CEG) led the gains. However, the run stalled on Wednesday (October 7). Minutes from the Fed’s September meeting show officials were worried that higher costs tied to energy and artificial intelligence (AI) investment could feed longer-lasting inflation, adding to bets that the central bank will raise rates again this year.

Stocks fell on Thursday (October 8) after the Atlantic reported that the White House has asked the Pentagon for options to strike Iran before the midterm elections, which are scheduled for November 3.

Oil jumped, and the 10 year Treasury yield touched its highest level since 2002 before easing. Oil came off its highs after US President Donald Trump said the US would not attack Iran before the midterms.

Chip and AI stocks were hit hardest after the Financial Times reported that OpenAI’s revenue is well below the figure widely circulated last month. NVIDIA, CoreWeave (NASDAQ:CRWV) and Nebius Group (NASDAQ:NBIS) were among the decliners. Taiwan Semiconductor Manufacturing Company (TSMC) (NYSE:TSM), Broadcom (NASDAQ:AVGO) and Micron Technology (NASDAQ:MU) were also lower. Wolfspeed (NYSE:WOLF) bucked the trend, and Palantir Technologies (NASDAQ:PLTR) rose after Goldman Sachs (NYSE:GS) upgraded the stock to "buy."

The Nasdaq closed down 1.25 percent at 27,193.34. After the bell, Verizon (NYSE:VZ), T-Mobile (NASDAQ:TMUS) and AT&T (NYSE:T) fell on news of a SpaceX (NASDAQ:SPCX) spectrum deal.

Tech stocks rebounded at Friday’s (October 9) open after Bloomberg reported that OpenAI expects its yearly revenue pace to reach US$70 billion or more by the end of 2026. NVIDIA and Micron gained. Apple (NASDAQ:AAPL) and supplier Skyworks Solutions (NASDAQ:SWKS) fell after Nikkei Asia reported that Apple cut component orders for its iPhone 18 Pro lineup. SpaceX shares rose on its spectrum deal and a new "buy" rating from Barclays (NYSE:BCS).

3 tech stocks moving markets this week

This week's top tech stock movers, according to TradingView data, were:

1. Astera Labs (NASDAQ:ALAB)

Astera Labs led with a gain of 21.53 percent.

2. Strategy (NASDAQ:MSTR)

Strategy followed with a weekly gain of 16.13 percent this week.

3. Cadence Design Systems (NASDAQ:CDNS)

Cadence Design Systems saw a gain of 15.68 percent.

Top tech news of the week

AI funding

Questions are growing over how the AI buildout is being paid for.

The biggest tech companies, including Amazon (NASDAQ:AMZN), Oracle (NYSE:ORCL) and NVIDIA, are tapping debt markets and raising equity to pay for AI infrastructure, Reuters reported.

Bridgewater Associates founder Ray Dalio called AI a “classic bubble” on Wednesday, while Panmure Liberum's Joachim Klement told Bloomberg it will burst in 2027 or 2028.

Broadcom is helping finance custom AI chips for both Anthropic and OpenAI. The company will reportedly lend Anthropic US$42 billion to fund purchases of chips that Broadcom co-developed with Alphabet (NASDAQ:GOOGL). The loans are the senior part of a US$60 billion package, and the remaining US$18 billion would carry no Broadcom backing, says the Financial Times. Separately, the Wall Street Journal reported that Broadcom is arranging more than US$50 billion in financing for a custom chip it is developing with OpenAI, and has approached Apollo Global Management (NYSE:APO) and Blackstone (NYSE:BX) as possible lenders. None of the companies have confirmed either deal.

Elsewhere, SpaceX is in early talks to raise about US$40 billion in debt to buy NVIDIA chips, the Financial Times said. The cost to insure its debt against default hit a high on Wednesday, its highest since the contracts began trading in June.

NVIDIA-backed cloud company Lambda is raising up to US$4 billion ahead of a planned listing, the Wall Street Journal reported. Meanwhile, Australian data center company Firmus, also backed by NVIDIA, has shelved its initial public offering and is exploring a US$3 billion private raise instead.

Waymo, Alphabet’s self-driving unit, closed a US$5 billion loan, its first debt raise.

New models and products

OpenAI began rolling out GPT-6 to ChatGPT users on Wednesday, with a screen that changes based on what users ask. Anthropic released Claude Haiku 5.5, which it calls its cheapest small model yet.

OpenAI also said an unreleased model produced a broad range of new math results.

Free-to-download models have stepped up. Mistral previewed Mistral Large 4, which it says beats every US and European open model, and Reflection AI announced Beam, with a full release planned for later this month.

Google launched what it calls a universal agent for work inside Gemini, and partnered with Unity Software on a platform that builds video games from typed prompts. Microsoft (NASDAQ:MSFT) laid out plans for Windows that let its Copilot assistant do more work on the device itself, and opened preorders for a Surface laptop built on an NVIDIA chip.

Amazon launched Alexa tablets that run Android and the Google Play Store.

Elon Musk said SpaceX’s Grok will sometimes use rival AI models, including Anthropic’s, to answer requests. Meanwhile, Microsoft and Meta Platforms (NASDAQ:META) are cutting back their staff's use of Claude, the Information reported, with Microsoft trimming projected internal spending by a third.

Chips

Samsung Electronics (KRX:005930) is guiding for record quarterly operating profit on high memory chip prices, topping analyst estimates. TSMC’s September revenue rose more than 50 percent year-on-year.

Marvell Technology (NASDAQ:MRVL) set long-term targets at its investor day on Tuesday that call for revenue of US$70 billion to US$90 billion in its 2031 fiscal year.

AMD’s Su told reporters that demand is “even higher than our supply.”

Wolfspeed, a company that makes energy-efficient semiconductor chips and materials, said the US Department of War’s Office of Strategic Capital offered a conditional loan of up to US$1.5 billion.

Powering AI data centers

Google signed a 20 year deal with Constellation Energy that will fund upgrades at 11 existing nuclear reactors in Illinois, Pennsylvania and New Jersey. Constellation said the deal adds power without the wait of building new plants.

The Department of Energy offered Vistra (NYSE:VST) a conditional loan of up to US$4.2 billion on Monday to access more power from three existing nuclear plants.

Utilities are also moving to make data centers cover more of their own costs.

Duke Energy (NYSE:DUK) reached a settlement in North Carolina with Amazon, Google, Meta, Microsoft and others that requires large customers to pay upfront for grid equipment that only serves them. Black Hills Energy (NYSE:BKH) signed agreements to supply new gas-fired power for a Google data center in Wyoming.

Some companies aren’t waiting for the grid. Oracle is reportedly trucking natural gas to data centers to avoid pipeline delays. QuantumScape (NASDAQ:QS) unveiled a battery system that fits into standard data center power racks.

Policy and the Fed

San Francisco Fed President Mary Daly told Axios the scramble for AI chips could become a longer-lasting inflation problem, pointing to the risk that AI demand pulls chips away from makers of cars and appliances.

The US trade deficit widened in August as imports rose, including semiconductors.

The US suspended Microsoft, Adobe (NASDAQ:ADBE), Cognizant Technology Solutions (NASDAQ:CTSH), Infosys (NYSE:INFY) and four other firms from the Department of Labor's Program Electronic Review Management program, a step employers must complete to sponsor foreign workers for green cards.

Microsoft said most of its visa applications were for people already on staff.

SpaceX, Apple and other company news

SpaceX agreed to buy Grain Management's nationwide low-band wireless spectrum. Musk called it the last piece SpaceX needs to offer full phone coverage in the US with its satellites.

The deal needs Federal Communications Commission approval.

Apple named Steve Smith its new head of mergers and acquisitions, Reuters reported, citing an internal memo.

Meta, Google DeepMind and Isomorphic Labs are backing Biohub's Virtual Biology Initiative, which builds data for AI models that predict how biology works.

Canada

Canadian Prime Minister Mark Carney launched a National Council on AI on October 2 to advise on the government’s AI strategy, including national champions and sovereign AI infrastructure.

Cohere is opening an Ottawa office, and its AI agents will support Royal Canadian Navy maintenance and logistics through Thales Canada.

Tech ETF performance

Tech exchange-traded funds (ETFs) track baskets of major tech stocks, meaning their performance helps investors gauge the overall performance of the niches they cover.

This week, the iShares Semiconductor ETF (NASDAQ:SOXX) finished the week 5.04 percent higher, while the Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ) gained 4.18 percent.

The VanEck Semiconductor ETF (NASDAQ:SMH) gained 4.22 percent.

Tech news to watch next week

Markets in Canada are closed on October 12 for Thanksgiving, and the US bond market is closed for Columbus Day.

The International Monetary Fund (IMF) and World Bank hold their annual meetings in Bangkok all week, with the IMF's World Economic Outlook out on October 13, along with a briefing on its full Global Financial Stability Report.

With the Fed's next decision set for October 28, investors will watch September US consumer price index on October 14, followed by producer price index and retail sales data on October 15.

The Fed’s Beige Book is also out on Wednesday.

Earnings season kicks off with JPMorgan Chase (NYSE:JPM), Goldman Sachs and Wells Fargo (NYSE:WFC) on October 13, and Morgan Stanley (NYSE:MS) on October 14, giving a read on AI-related lending and deal making.

In tech, ASML Holding (NASDAQ:ASML) will report Q3 earnings on October 14, and TSMC will report the next day.

Apple is holding a smart home event on October 13.

Maninder Sidhu, Canada's minister of international trade, will lead a trade mission to India from October 12 to 17, with information and communications technology, including AI, cybersecurity and semiconductors, among its priorities.