CoreWeave surges on a third-quarter sales beat
The AI trade got a lift this week. CoreWeave jumped 24% in morning trading after it beat third-quarter sales estimates, as Yahoo Finance reported.
The AI trade needed good news. Still, one quarter does not settle the debate.
Panelists on the show pointed to two bigger tests. Nvidia reports earnings next week. Anthropic is also preparing for a potential IPO.
For a data center operator, the key metric is how much contracted revenue turns into cash. Growth matters less than funding costs. Investors should watch debt levels closely.
Analysts cut targets after the worst day in 19 months
Last Thursday hurt. The Nasdaq Composite fell 5.52% to 24,315.00. That was its biggest one-day drop since the April 2025 tariff announcement.
The S&P 500 fell 4.36% to 7,353.73. That erased about $3 trillion in market value, according to Yahoo Finance. Chip stocks led the selloff.
Analysts then slashed price targets on five stocks. Lower targets often lag price moves. Therefore, they confirm damage more than they predict the next leg.
For more context on the froth before this drop, see our earlier piece on 2000-style warning signs in the AI trade.
Hedge funds rotate out of big tech
October told a split story. The Nasdaq Composite fell about 5%. Meanwhile, the S&P 500 fell about 1%.
Yet the broader market did fine. The S&P 500 Equal Weight Index gained about 5%. Data Insights, in a Yahoo Finance report, described a sharp rotation out of the largest technology names.
Semiconductors took the worst of it. The SOX index fell roughly 16%. AI securities also struggled with credit concerns. Private credit exposure to AI data center lending drew particular worry.
This is the risk I would watch. Data center builds rely on borrowed money. If lenders pull back, growth slows fast.
AXT rallies 19.5% as the market bounces
Wednesday brought relief. AXT Inc. rose 19.49% to close at $46.97. The wafer substrate maker rode a broad rally in the three major indices.
The Nasdaq climbed 1.6%. AXT made the AI winners list, as Yahoo Finance noted.
Small suppliers swing hard in both directions. A 19% day is as much a volatility signal as a vote of confidence.
Insiders buy the dip at Alphatec
Insiders showed interest after the sell-off. Alphatec Holdings ranked tenth on a list of dip stocks that insiders are loading up on. The list followed November 5, the worst session in over a year.
Insider buying is a useful signal. However, it is not a guarantee. Executives can be early, and they can be wrong.
Risks and opportunities
Here is the short version.
- Risk: Nvidia earnings could reset expectations for chip names.
- Risk: Private credit stress could hit data center funding.
- Opportunity: Breadth is improving outside big tech.
- Opportunity: Strong sales beats show real AI demand.
Takeaways
The rebound is real. The test is not over.
- CoreWeave’s beat helps, but funding costs matter more.
- The sell-off was steep, so expect volatility to continue.
- Rotation favors the broad market over mega-cap tech.
- Watch Nvidia next week for the next signal.
