AI Stocks Rebound as Funding Fears Ease; Intel to Buy Quantum Firm Classiq
AI stocks rebounded Tuesday, led by Nasdaq's 1% gain, as funding worries eased; Intel agreed to buy Classiq.
CNBC's Investing Club said in its Homestretch update that the market was feeling somewhat better about the AI funding worries that roiled markets last week. The Dow was flat, held back by a more than 9% drop in Boeing after the company said it would not significantly ramp up 737 Max production until late next year.
The AI rebound followed several financing developments this week: Anthropic's IPO filing, Meta Platforms upsizing its common stock offering to $25 billion, and Broadcom securing $63 billion in financing for Anthropic to buy its XPU AI accelerators and networking solutions, the Investing Club said.
The next catalyst for the AI buildout trade will be hyperscale earnings and management commentary on capital expenditure. Alphabet and Microsoft report after Wednesday's close, followed by Amazon on Thursday. According to the Investing Club, AI bulls will want to hear executives discuss returns on AI investments and plans to keep investing in infrastructure to meet demand.
Intel announced the Classiq agreement late Monday. The chip giant said the deal combines Classiq's automated quantum algorithm synthesis platform with Intel's existing quantum software platform, scalable silicon spin-qubit technology and advanced semiconductor manufacturing expertise. Intel said the combination would allow it to become a full-stack quantum solutions provider. Reports said Intel is paying about $2.3 billion for Classiq. Intel shares were up 3.5% on Tuesday.
The Investing Club said buying a quantum computing platform was not how it would prefer Intel to use proceeds from its $20 billion common stock offering in August. It said it wanted the money to go toward expanding Intel's manufacturing capacity to support new foundry customers for its next-generation 14A production process. The club also said CEO Lip Bu Tan is a disciplined operator who spent considerable energy repairing Intel's balance sheet, and it trusts he would not spend that type of cash on an acquisition if it were too speculative.
Intel reports earnings Thursday evening. The Investing Club said announcing an external customer for 14A would help the market put more value on Intel's foundry business. In the interim, strong demand for CPUs in data centers should be enough to support earnings, it said.
Other companies scheduled to report include Visa, Baker Hughes, Seagate, Robinhood and NXP Semiconductors, with SK Hynix reporting overnight in a result that could influence fellow memory chip maker Micron. Before Wednesday's open, GE Vernova, GE Healthcare, Boston Scientific, Vertiv and VF Corp are due to report. The Investing Club had no portfolio earnings after the bell.