Anthropic asks to rent Meta’s compute, as chip stocks slide

Good morning. Here’s what happened overnight and what you need to know today.

1.

Spare compute: Meta is in talks to lease computing power to Anthropic for two years in a deal worth up to USD10 billion, The New York Times and CNBC reported, citing people familiar with the discussions. Anthropic pitched the arrangement in June, offering monthly payments and allowing either side to opt out. It would mirror a deal Anthropic has already struck with SpaceX to rent spare computing capacity for about USD1.25 billion a month. Leading AI developers are racing to secure processing power to meet demand and stay ahead of rivals, while companies behind less-used products, including Grok and Meta AI, may have spare capacity. A deal would create a new revenue stream for Meta and could ease investor concern over its heavy data-centre spending. Meta has said capital expenditure could reach USD145 billion in 2026. Chief executive Mark Zuckerberg told investors in May that companies were asking to buy access to Meta’s data centres “almost every week”. Separately, the Wall Street Journal reported the US Defense Department was discussing renting computing power from SpaceX. (NYT)(CNBC)

2.

Chip crash: Wall Street indices ended the week lower on Friday as chip stocks entered a bear market and investors questioned whether surging AI spending could be justified. The S&P 500 fell 1%, taking its weekly loss to 1.5%, while the Nasdaq dropped 1.5% on the day and 2.9% for the week. A semiconductor index closed 20% below its peak in late June, meeting the usual definition of a bear market. The release of open source Chinese AI model Kimi K3, reportedly a rival to Anthropic’s Fable, further rattled investors and sent AI-linked stocks lower. Nvidia fell 2.2%, Intel lost 2%, Meta Platforms dropped 2.8% and Alphabet declined 2.2%. The selloff spread beyond technology, with Netflix sliding 7.3% after its earnings disappointed investors and SpaceX off 5.4% after a failed launch. Brent crude rose 4.3% to USD87.86 a barrel, taking its weekly gain to 15%, as fighting between the US and Iran intensified. (Bloomberg)(WSJ)(Reuters)