Pizza Losing Value War As Cash-Strapped “Proteinmaxxing” Consumers Flock To Chicken
Domino’s Pizza shares fell 3% in the early US cash session after the quick-service restaurant chain reported weaker-than-expected same-store sales growth in the US and internationally, despite earnings and revenue that beat Bloomberg Consensus estimates.
US same-store sales rose .3%, below the .72% Bloomberg Consensus estimate. International comparable sales rose only 0.2%, missing expectations of 1.19% growth.
The dismal earnings results lead us to Bloomberg reporter Ann Gehan’s note on how budget-conscious consumers and the “proteinmaxxing” trend have shifted consumer tastes from pizza to chicken.
Gehan adds more color:
Pizza chains including Domino’s, Papa John’s International Inc. and Pizza Hut, now owned by private equity firm LongRange Capital, face an uphill battle as budget-conscious consumers eat out less and, when they do, increasingly favor chicken amid the “proteinmaxxing” trend.
Gehan provided a chart showing pizza QSR chains struggling while chicken-focused QSR chains and Cava report stronger same-store sales growth so far this year.
The divergence suggests chicken- and protein-focused meals are capturing a larger share of spending at select US QSR chains. For budget-conscious consumers, the combination of affordability and the “proteinmaxxing” trend may be shifting meal preferences toward chicken. Then again, take a GLP-1 to curb cravings.
Useless Without Transmission: DOE Backs $581 Million TVA Grid Expansion
On the same day we asked how much of the grid’s bill is really AI’s, the Department of Energy offered a partial answer.
@TVAnews and @ENERGY are supporting readily-available, affordable energy that powers Tennessee and the nation. @POTUS is lowering costs for over 2 million families and businesses while bringing new innovation and employment to the Volunteer State to the tune of 800 jobs.
On Tuesday, DOE said it plans to help the Tennessee Valley Authority fund 84 transmission and distribution projects across eight states to add about 2.5 gigawatts of grid capacity. The award totals roughly $581 million, with $250 million in federal money and $331 million from TVA.
“America’s electric grid cannot become a roadblock to economic growth,” said Katie Jereza, who heads DOE’s Office of Electricity.
Deputy Energy Secretary James Danly went further, blaming “years of misguided energy policies under the previous administration” for leaving the bulk power system “less robust than it should be.”
From $250 Million To $10.5 Billion
The announcement for TVA support from the DOE is alongside the ongoing SPARK program under the GRIP program… If the acronyms are starting to blur together, here is the simple version:
Tuesday’s award is for $250 million, written to TVA and its local power companies.
SPARK, DOE’s acronym for “Speed to Power through Accelerated Reconductoring and other Key Advanced Transmission Technology Upgrades,” is the bigger, nationwide program. It puts $1.9 billion of federal money, plus $3.35 billion in cost share, into 31 projects in 26 states that will reconductor or rebuild more than 1,500 miles of existing lines and free up over 23 GW of capacity. TVA’s slice is about $80 million to upgrade roughly 125 miles of lines in Tennessee, Alabama and North Carolina with advanced conductors, adding about 1,900 MW.
GRIP, the Grid Resilience and Innovation Partnerships program, is the even bigger $10.5 billion pot created by the 2021 infrastructure law, and it pays for both SPARK and the new award announced Tuesday afternoon.
Add TVA’s two awards together and it has nearly $741 million in planned grid investment for more than 4,300 MW of added grid capacity.
The Real Bottleneck
As we just covered, the hyperscalers are fighting over how much of the grid’s bill is theirs, with one telling Senate staff that shared upgrades provide a “system benefit which should be shared among all ratepayers.”
Tuesday’s award is that argument in practice, with taxpayers and utility customers splitting the cost of wires everyone uses, on a national grid where, by the senators’ own count, about a third of transmission and half of distribution infrastructure is “near or beyond its useful life.”
You can build all the combined-cycle gas plants, reactors and geothermal wells you want, and line up every data center and electrified factory in the country to buy their output. If the grid can’t carry the power from one to the other, none of it matters.
“there is currently a 3.7-year wait in the US just to get permission to connect to the power grid. Before a single cable is laid or transformer is purchased, AI data centers are stuck in a massive traffic jam.” – Goldman it’s ok, hyperscalers can just recycle electricity, same way they do revenue
PJM has already blatantly exposed where the real problem is, as they cried desperately about a need for emergency power. When Constellation showed up with the Three Mile Island reactor restart, PJM told the once-connected nuclear plant to wait patiently for a few years while they set up the connection.
TVA is about to learn that lesson, at scale. Its new long-term plan suggests the region will need 11 to 32 GW of additional generation by 2040. TVA already has 4,120 MW of new capacity under construction, floated as much as 26 GW of new gas in its June draft, and was picked last December for a $400 million DOE award to deploy a newly-licensed GE Vernova Hitachi BWRX-300 small modular reactor at Clinch River.
Every one of those megawatts still needs a way to actually get transported from supply to demand. No amount of new generation fixes a lack of transmission.
Goldman: Power Is “The Primary Risk”
Goldman has been making the same point all year, and it has singled out Tennessee. In May, the commodities team flagged Tennessee as one of the markets “likely to see constrained data center additions since the market is already critically tight.”
In February, the same team told clients that local opposition to data centers was not the real threat: “Ultimately, we believe power tightness remains the primary risk that could slow the US in the AI race with China.” And Goldman now sees behind-the-meter generation powering a quarter of all data centers by 2030.
In other words, a quarter of the industry may simply stop waiting for the grid.
Two Emirati Ships Sink In Hormuz In Under 24 Hours As IRGC Claims 5-6 Vessels Targeted Nightly
Update(1240ET): While dozens of ships have come under attack by Iran in the Hormuz Strait and nearby areas since the war began, resulting in damage and fires aboard vessels, it remains much more rare for a tanker to sink at a total loss.
However, the WSJ has confirmed Wednesday that two have completely sunk in the last 24 hours, the first of which we reported on below. Here are the further details via WSJ:
Two Emirati cargo ships have sunk in the past 24 hours after being struck in the Strait of Hormuz, an escalation with little precedent as Iran ramps up attacks to levels not seen since the war started.
The GFS Pride and the Cape Dao have both gone down, said Pakistan’s National Hydrographic Office, which monitors maritime activities in Middle Eastern waters. Maritime security companies confirmed the two losses Wednesday and said this was the first such incident in months.
The sinkings came as the U.S. military has been successfully shepherding more Gulf oil through the strait while bottling up Iranian oil exports with a naval blockade and sanctions.
One of the ships that sunk had been in distress and apparently abandoned since being first attacked on September 23, according to UN shipping agency data.
Despite many attacks, the WSJ notes that the last ship sinking in the waters occurred back in March. It details, “The vessel was hit by a projectile that sparked a fire in its engine room, forcing the crew to abandon the vessel. A tugboat sent to rescue the ship was also struck. Four seafarers died and three were severely injured, according to the International Maritime Organization.”
On Wednesday Iranian state media has been widely circulating fresh footage of one of the sinkings:
🇮🇷 Iranian media has released footage of what it says is a container ship sinking in the Strait of Hormuz, after hitting a mine. Read more: https://t.co/4LfekmsNG4https://t.co/SRAiUVkpP7
Iran has quite obviously been surging its attacks on commercial shipping in the Strait of Hormuz in an attempt to wreak uncertainty and economic havoc for the Trump administration ahead of the November midterm elections, undermining a recent recovery in Persian Gulf oil shipments.
The attacks are now coming so frequently it is difficult to deep track. One source tallies of recent days, “Twelve vessels were attacked between October 5 and 11, including six on Sunday alone, and on Tuesday a tanker and a container ship were struck by unknown projectiles, according to UK Maritime Trade Operations (UKMTO), marking one of the most intense periods of attacks since the war began.”
Iran state media published images of a container ship sinking Wednesday.
Other outlets also confirmed the single day record of six attacks this past Sunday. It some time for confirmation of all these vessels’ status to emerge amid the fog of war in the contested strait.
The prominent and outspoken secretary of Iran’s supreme national security council, Mohsen Rezaei, has meanwhile affirmed that the IRGC was striking vessels nightly, and is likely to keep doing so.
“We target five or six of these every night,” he told state TV. “Hormuz is under the control of the Islamic Republic.“
While the US has been touting a successful naval escort mission to get unprecedented numbers (for wartime) of tankers through the strait, Rezaei described that the US is merely using small craft to smuggle Iranian oil on to larger tankers out at sea, and then doing ship-to-ship transfer.
Tehran has claimed further that American naval ships don’t dare come close to Iran’s shores, on fears of being hit.
On Wednesday, Iran’s military has announced yet another attack, this time on a container ship. Al Jazeera reports of the notification:
Iran’s Islamic Revolutionary Guard Corps says that a container ship “carrying contraband” and attempting to pass through “an unauthorized and dangerous route” in the Strait of Hormuz exploded and caught fire after striking a naval mine.
Footage published by the IRGC shows a container ship it calls “illegal” sinking south of the Strait of Hormuz with 2,500 containers aboard. https://t.co/lCgeztmHSp
Overall for the month of October we’ve seen at least 24 foreign vessels targeted and hit by Iranian forces. If this keeps up, oil prices are likely to be soaring by month’s end.
“At least 18 ships were hit between Oct. 1 and Oct. 11, according to the UKMTO, with another six attacks recorded by other European security sources, the Financial Times reported,” the NY Post comments.
A federal judge has extended his order forbidding President Donald Trump from excluding certain media outlets from accessing the White House.
U.S. District Judge Timothy Kelly issued a memorandum opinion on Oct. 13 granting a preliminary injunction sought by CNN, MS NOW, and Politico to maintain the block on the president’s press ban, finding that the plaintiffs were likely to succeed on their First Amendment discrimination claim.
Trump announced on social media last month that he was banning CNN, MS NOW, and Politico “as a result of their constant ‘reporting’ FAKE NEWS!”
After the outlets sued, Kelly ordered the White House to temporarily restore access on Sept. 24, ruling that the government likely violated their Fifth Amendment due process rights by abruptly taking away their press passes without notice or a hearing.
Attorney Theodore J. Boutrous Jr. told the court at an Oct. 8 hearing that Trump wanted to ban the outlets because of their viewpoints.
“He doesn’t like scrutiny of his policies, he doesn’t like the reporting, he wants more good press,” he said.
Department of Justice Senior Counsel Michael Velchik pushed back, telling the court that Trump was more concerned with media outlets allegedly fabricating quotes, splicing together interviews, and using anonymous sources.
“He doesn’t mind negative press stories if he deserves them. He has problems with trafficking verifiable falsehoods,” he said.
The government argued it was necessary to exclude those outlets in the name of national security and to prevent leaks of classified information.
But Kelly said, when originally ordering the White House to restore access, that there was no evidence on the record to back up that claim.
In his ruling on Tuesday, Kelly said Trump likely revoked their access to the White House press area “because he believes their coverage of him and his administration is generally inaccurate and biased,” rather than for legitimate government interests such as maintaining professional standards for journalists or protecting national security.
“Simply put, that is unlawful viewpoint discrimination,” the judge wrote.
Kelly also said the plaintiffs were likely to succeed in their claim that the administration denied them due process rights under the Fifth Amendment by revoking their access without prior notice.
The judge determined that the administration’s letters outlining the reasons for the hard passes revocation were inadequate because the outlets received the letters only after the ban was implemented.
The letters cited reports that the administration said “threatened national security and spread falsehoods,” including coverage of “‘top-secret’ construction details” about the East Wing bunker and funding for the White House ballroom.
The White House said the reports included detailed descriptions of how the Secret Service would invest in security improvements, according to the government’s Sept. 22 court filing.
The judge said there was no evidence that Trump had relied on the reported incidents cited in the letters when deciding to revoke the outlets’ hard passes.
The Epoch Times reached out to the White House for comment but did not receive a response by publication time.
Trump signaled on Sept. 21 that he expected the judge to rule in favor of the outlets and said his administration would appeal if that happened.
“In any event, I have an obligation to fight for the Success and Safety of our Country. FAKE NEWS IS A THREAT TO DEMOCRACY, and I will do whatever is necessary to make sure that the U.S.A. thrives,” he wrote in a Truth Social post.
“Its Going To Zero”: CoreWeave Implodes As Stocks Finally Notice What Credit Has Been Screaming For Weeks
Yesterday morning we first pointed out that amid the ongoing data center bond rout (which we have been discussing virtuallyeverydayfor thepastmonth), the G-spread of former bitcoin miner turned data center, CoreWeave, had breached the “distressed” level of 1,000bps on its bonds due 2032, as the yield on the same paper topped 15% for the first time ever (a yield that one would normally find in CCC-rated junk bonds or worse) with its bonds trading below 80 cents on the dollar, a level known as deep distress.
Data Center debt getting smoked today. Coreweave unsecureds tag 1000 g-sprd bps for the first time ever. Oracle unsecureds trading like deep junk. Even Meta’s Project Beignet about to hit record wide https://t.co/bcwfOwViRn
The observation caught the attention of Elon Musk who responded to us, stating that “It’s not that supercomputer data centers are not in high demand, as they definitely are. However, getting money to build complex hardware systems with massive power, cooling & networking is not the same as doing it.“
One day later, the stock market finally noticed, what credit has been screaming for months – and we have been warning about for weeks and weeks and weeks – with CRWV stock which Jim Cramer said is the only neoclouod he trusts…
Cramer is saying that $CRWV is the only neocloud he trusts.
Meanwhile their bonds just spiked to 15%+ and they’re sitting on $35 Billion of debt with interest eating ~25% of revenue in Q2. Yet $IREN and $NBIS have way cleaner balance sheets. Hmmmm 🤨 pic.twitter.com/HR63FuJF43
… cratering more than 15%, its third biggest drop on record, and just shy of all time lows at $60.
Sure enough, the same equity guys who were pumping the name every day for months even as its credit spread were blowing out, are now turning against it, and on Wednesday, D.A. Davidson analyst Gil Luria, who has correctly referred to CoreWeave as “the subprime tranche” of AI (although we would say Oracle is just the same, and far more important) warned on a podcast that the “equity value is going to zero” if the company becomes unable to pay its expensive debt obligations.
Luria’s radar went off when he realized that CoreWeave is borrowing money at around 9%, but it is earning returns of just 1% on its investments. Even the 4% to 5% he said the company is targeting would fall short of its borrowing costs. He compared it to taking out a loan at 9% to buy Treasury bonds yielding 5%, a strategy he argued would destroy value.
CoreWeave – – considered the original “neocloud”, a batch of cloud-computing providers many of whom were formerly bitcoin miners, now focused on the artificial-intelligence market – reported $640 million in second-quarter net interest expense, more than double the $267 million recorded a year earlier, alongside a $626 million net loss.
CreditSights analyst Jordan Chalfin told the Financial Times that CoreWeave had been “very creative” with its financing, but investors were worried about its long data-center leases and shorter customer contracts.
“If there’s an overbuild, why would [customers] renew their contract with CoreWeave?” he asked.
The yield on a Coreweave bond maturing in 2032 hit nearly 15 per cent on Tuesday, up by around 1.5 percentage points over the past week.
Helpfully, Bloomberg chimes in that in a severe restructuring, creditors would have priority over shareholders. Yes, it’s called a Chapter 11 bankruptcy.
That said, clearly Gil doesn’t think that happens soon: he still has a Neutral rating with a $100 price targe on the stock: about 50% higher than where it is trading today. In fact, of the 49 analysts covering CRWV, just 4 have a Sell/Reduce.
CRWV Co-founder Brannin McBee offered a sharply different view to the FT: “I don’t look at that as scary debt at all,” he said, arguing that borrowing allows CoreWeave to expand faster. (Narrator: the company’s debt is, in fact, debt).
The company is seeking cheaper financing from insurers to continue building AI infrastructure. Its combined debt and lease obligations stood at approximately $52 billion at the end of June. Visible Alpha consensus forecasts cited by the FT project $71 billion in cumulative negative free cash flow between 2026 and 2028.
The problem is that with the unsecured now trading above 15%, he won’t be able to find anything cheaper than its current capital structure. Unless, of course, the company files and there is a debt for equity exchange. Then yes – the new debt of the reorganized company would be far cheaper 🙂
McBee said CoreWeave as a whole could also reach investment grade within “a few years” even though analysts forecast negative free cash flow of about $25bn this year, $28bn next year and $18bn in 202. But McBee argued the spending reflects expansion rather than weakness in the existing business. “If we stop building today, [we’d be] immensely cash-flow positive,” he said, unintentionally exposing the biggest weakness of the entire AI bubble: the moment one stops “building”, it’s all over… and so instead of doing that, every company would rather to just layer itself with as much debt as it possibly can to delay the inevitable day when it does, in fact, stop building.
Judging by the stock price, that day is coming fast, and as an aside, on Polymarket, traders are now assigning a 17% probability to CoreWeave announcing bankruptcy by December 2027, with approximately $50,600 traded. The odds rise to 27% by 2029.
Not everyone is waiting to find out if the skeptics are right: three of CoreWeave’s co-founders have sold about $2bn of shares this year, according to S&P Capital IQ. McBee said the founders were diversifying their personal wealth, but that most of it was still in CoreWeave shares.
“We could go off to a ranch and retire,” he said. “But you’re watching us show up every single day and put our time into this business.”
For now… yes, because the bond market is willing to let you show up every single day. Once it stops, we sure hope for McBee’s ranch has a moat to protect it from all of its not so happy shareholders.
Ukraine Attacks Two More Refineries After Trump’s Proclaimed ‘Energy Ceasefire’: Kremlin
The Kremlin on Wednesday indicated that work on the Trump-proposed energy truce with Ukraine is continuing, but in contradiction with recent Trump proclamations did not treat it as any kind of done deal currently in effect.
President Trump in a late in the day Monday exchange with reporters said that Ukrainian President Volodymyr Zelensky and Russian President Vladimir Putin must come together to end the war. He told the press at the White House that there had been violations of his proposed “energy ceasefire” by both Ukraine and Russia. Trump had previously stated that the warring sides agreed to an energy ceasefire, which Zelensky has balked at, saying specifics of when such a ceasefire is supposed begin must be shared with him.
That’s when Trump claimed: “Well, they agreed. You know why? Because I said: ‘you agree.’ That’s why. They agreed because I said they agreed.”
More evidence has emerged Wednesday that this supposed ‘agreement’ is still being violated almost on a daily basis. The Kremlin has announced two more oil refineries have just been attacked by Ukrainian drones:
Russia Deputy PM Novak says Ukraine attacked two refineries in Russia today; Ukraine are not showing any signs of moving towards an “energy truce”.
TASS has identified these as the Saratov and Ryazan refineries. These refineries have been targeted previously in the war, with Saratov in particular having suffered a full shutdown from damage in September 2025, during which time it was repaired. State media has been circulating the fresh reports:
Ukrainian drones attack two oil refineries in Russia’s Saratov and Ryazan regions today — Deputy PM Alexander Novak The Ukrainian side is not showing any movement toward an energy ceasefire, the official added https://t.co/L0dTRPqAox
Putin spokesman Dmitry Peskov has meanwhile issued a fresh press briefing wherein he said the government is committed to resolving the Ukraine conflict but that “The risk of sabotage by European countries does exist.” Ironically Europe is currently accusing Moscow of doing just this.
“The US, specifically its negotiators and President Trump, is making efforts to help steer the settlement of the Ukrainian crisis toward peace,” Peskov stated.
But then he lashed out at the EU and NATO, saying: “Europeans are taking a different approach: they are doing everything they can to ensure that this war continues.”
“There’s a lot of media hype around all of this right now, and much of it doesn’t correspond to reality; it’s pure fiction.” He was further quoted as saying:
Work on the possibility of an “energy ceasefire” is continuing.
But he also conceded: “There are no agreed-upon meetings on the agenda.” Peskov hinted at the usual backchannels, however: “This work is ongoing discreetly and it will continue discreetly,” he added.
As for Ukraine’s Zelensky, his first reaction to Trump earlier declaring an ‘energy ceasefire’ was to say it was “news to me” – strongly suggesting no such thing is in place. Both sides have continued to send wave after wave of devastating drone waves against the other, including against energy infrastructure.
Anthropic Opens Its Books To Wall Street As OpenAI’s $20 Billion “Gross-Net” Hole Hangs Over AI Trade
One number.
That is what an entire equity complex, by now worth tens of trillions across public and private markets, is waiting for today in San Francisco. As Bloomberg first reported, Anthropic invited a select group of institutional investors to its headquarters for a closed-door session with senior leadership ahead of what could be the largest IPO in history. According to CNBC, the company will use the meeting to release updated financials, and one figure matters far more than the rest: the revenue run rate.
“When word gets out about the revenue run rate, it will move the entire market,” said JonesTrading’s Mike O’Rourke. “The investment community wants to know whether Anthropic is going public from a position of strength or weakness.”
Anthropic: investor event in San Fran today. Anthropic will release updated financials to a group of institutional investors gathering at its headquarters this week…. Watch for ARR numbers after OpenAI lowered theirs last week from $70bn to $50bn.
Over in London, Goldman TMT specialist Sean Johnstone (available to pro subs) called today “a test just how bearish the market has become on AI and semiconductors,” adding that “the other thing that will drive sentiment in the space today” is the Anthropic event in SF, “where there is fixation on its ARR.” JPMorgan’s Market Intelligence desk lists “headlines regarding frontier IPOs” alongside tomorrow’s TSMC print as “the biggest near-term drivers,” and earlier this week JPM’s TMT specialist Brian Heavey flagged a “lot of focus on the pre-IPO investor meeting in SF on Wed (which may be creating a bit of anxiety).”
The two markets that trade Anthropic in real time are already voting. Polymarket odds that Anthropic goes public by Nov 30 have slid from around 70% earlier this month to a coin flip, as we pointed out this morning:
Today Anthropic is meeting prospective investors on Oct. 14 in preparation for its initial public offering. Meanwhile odds of its IPO going live before the end of November are sliding. https://t.co/vxkjo9Y9Km
At the same time, the price of the thing Anthropic actually sells keeps falling. According to Ornn, the Anthropic Token Price Index just dropped to a new all-time low of $0.84. That is roughly half its mid-September level and about 64% below the mid-August spike, and we flagged it as “one reason for the skepticism”:
Put differently, investors are getting less sure the IPO happens on schedule just as the company’s unit price hits a record low. And that is before the run-rate number even lands. Anxiety may be an understatement. Here’s why.
The Last Time A Frontier Lab Showed Its Numbers…
Regular readers will recall what happened last Thursday, when the FT reported that OpenAI had told investors its annualized revenue was roughly $50 billion at the end of September, some $20 billion below the ~$70 billion figure that had been circulating for weeks. The Nasdaq promptly tumbled: the NDX fell 139bps, semis slid 3.4% and Goldman’s desk saw “a heavy wave of selling of Semis / AI / Megacap tech… ($1bn+ in net supply) following the midday OpenAI headlines.” Oracle dropped as much as 6%, and its 5Y CDS closed at a record 261bps.
By Friday morning came the damage control. Bloomberg reported that OpenAI now expects to “reach or exceed $70 billion” of annualized revenue by year-end and blamed the confusion on “differences in how OpenAI and Anthropic calculate comparable revenue,” which was enough to spark a tech rebound. As we put it at the time: “it wasn’t actual… it was projected.”
The Goldman TMT desk’s post-mortem (also available to pro subs) is worth quoting at length, because the same accounting question will hang over every number Anthropic shows today:
Gross vs net – the source of the gap: Anthropic reports closer to gross revenue (full customer spend through cloud partners, partner cut booked as a cost). OpenAI has reported closer to net (mainly its own share). When some investors tried to put the two on a like-for-like basis by grossing up OpenAI’s figures, they produced the higher ~$40bn (August) and then ~$70bn numbers. OpenAI’s own investor update used its more conservative framing and landed near $50bn at end-September.
The distinction has been out there for sometime but these are not listed entities… In theory most should know the difference BUT these names are not listed and many do not adjust… The episode highlights how sensitive the complex has become to the precise trajectory of two private companies that use different reporting conventions.
Translation: OpenAI’s underlying progression was “nearer $30bn to $50bn than $40bn to $70bn,” per Johnstone, which is still roughly 70% growth, though well short of what the market had priced. We charted the gap in last weekend’s look at neocloud rents:
Goldman’s Delta-One head Rich Privorotsky shrugged it off as “largely a question of accounting definitions,” but added the part that matters for today: “the reaction suggests more length and increasing sensitivity in these pockets.” And Byrne Hobart of The Diff explained why Anthropic’s numbers carry even more weight than OpenAI’s: “once Anthropic files an S-1, they’ll set a standard for what disclosure looks like, and more analysis of OpenAI will be explicitly benchmarked to how Anthropic reports things.” Note the irony: the gross basis that made Anthropic’s run rate look so much bigger than OpenAI’s is now the yardstick for everyone.
In other words, today Anthropic’s number gets judged against its own history and against the market’s patience with private-company math, both at once.
Seven-Fold In Seven Months
And that history is staggering. Anthropic’s run rate went from $87 million in January 2024 to $1 billion at the end of 2024, roughly $9 billion at the end of 2025, then $14 billion in February, $19 billion in March and $30 billion in April. By the end of July, Bloomberg reported that the company had told investors its annualized revenue had hit $65 billion, seven times where it ended 2025. Last month the NYT reported that Anthropic is expected to finish the year with more than $100 billion in annualized revenue.
Hence the problem. With a print above $65 billion already in the market for over two months, today’s figure has to show the curve is still compounding toward $100 billion, or the “strength” narrative cracks. Recall Brad Gerstner’s mid-September framework, which Goldman’s desk resurfaced last week: the top three labs (Anthropic, OpenAI and SpaceX/xAI) were at a combined ~$100 billion run rate in July and need to reach $180-200 billion by year-end “to keep the AI trade intact.” Anthropic, booked gross, is carrying the biggest share of that load.
The price tag assumes it can. Prospective buyers have floated a valuation of $1.8 trillion to $2 trillion, roughly double the $965 billion post-money of its May round. Reuters Breakingviews did the napkin math: take the $16 billion of revenue Anthropic booked in the first two quarters, hold it steady, and you get “just shy of $40 billion” for 2026, which puts a $2 trillion valuation (less ~$120 billion of net cash) at roughly 47x revenue, above even SpaceX’s ~42x. Independent research shop New Constructs went further, branding the deal “the most ridiculous IPO of 2026.”
Then again, if the year-end run rate really clears $100 billion, that multiple drops to about 19x in a hurry. That is exactly why Anthropic will want to talk about the run rate today, and leave trailing revenue for the footnotes.
The Bear Case Has Charts Too
So what could go wrong? According to Goldman’s Johnstone, plenty, and most of it has to do with the price of what the labs sell:
Competition and technology risks are adding to the uncertainty. New models from Meta and Google, cheaper open-weight Chinese models and falling token prices are increasing pressure on frontier labs and compressing pricing power at the model layer. Bears worry that weaker model economics could eventually reduce spending on high-end GPUs and ASICs…
The competition is visible in real time. Meta’s newly released Muse Wonder reportedly ranks behind only Claude Opus 5.5 on Artificial Analysis’ Intelligence Index, beats it on SWE-Marathon (57.5% vs 46.3%) and is priced at $4/$20 per million input/output tokens. And Google’s Gemini 4 Argon dropped this morning.
“Can’t remember a time when the frontier was quite so competitive,” Goldman’s Delta One head wrote overnight, noting that “you now have Anthropic, OpenAI, Google and Meta all genuinely in contention.” Prediction markets agree: in the Polymarket chart Privorotsky circulated on Monday (first published by ZeroHedge), Google had leapfrogged Anthropic as the favorite to have the best model at the end of 2026, 43% to 42%, after Anthropic spent most of the summer above 60%.
More competition means cheaper tokens, which is exactly what the Ornn index at the top of this post shows. The bulls will say it doesn’t matter, since cheaper tokens mean more tokens (Jevons, etc.). Goldman’s Bobby Molavi flagged Ramp data showing API token usage hit a record above 700 (indexed from 100 in January) in September, yet token spend was down 5% on the month “in spite of it being their peak token consumption month.” Volume up, revenue flat (or down) is a great outcome for users and the infrastructure landlords, but less so for a company whose IPO is priced on revenue growth.
Recall also that 83% of Anthropic’s 2025 revenue came from metered consumption, per the prospectus details reported by Reuters, up from 75% in 2024. As Breakingviews put it, those customers “can cut usage quickly if budgets tighten or cheaper, alternative models emerge.”
The $518 Billion Tab
Which brings us to the other side of the ledger. According to the confidential prospectus seen by Reuters, Anthropic posted a $42 billion net loss in 2025 (about $34 billion of it an accounting charge tied to financing that could eventually convert into shares) on revenue of $4.6 billion, with an operating loss of more than $8 billion and $7.33 billion spent on compute. Going forward, it expects to spend at least $518 billion over roughly a decade with six partners, and “about 80% of that sum is non-cancelable or requires payment regardless of usage”:
“If our actual spend falls short, we must pay Google the difference,” the prospectus says. Amazon gets the same terms. And the single biggest line item, $161.2 billion of Broadcom-related equipment leases, is being financed by the debt market: Broadcom’s $60 billion chip-financing package for Anthropic (“APCHIP 2.0″ in Goldman’s IG credit desk shorthand) began syndicating at the start of the month, with banks marketing a $42 billion senior-secured Class A tranche and Blackstone leading an $18 billion junior piece, as we detailed in “The Crowding Out Effect Is Immense” last Thursday.
Goldman credit strategist Alisha Pasi (available to pro subs) called it “the $150bn question“: the announced chip-financing pipeline now spans “AVGO/Anthropic ($60bn), AVGO/OpenAI ($30–50bn), SPCX/NVDA ($40bn), AMZN/NVDA ($8.5bn) and an additional ORCL/NVDA transaction,” and “AI is increasingly its own credit cycle.” The spread between Goldman’s 30Y hyperscaler basket and its ex-hyperscaler comps widened another 7.4bps last week, to the widest since July. Johnstone put the equity angle bluntly:
Funding and returns is a major concern. Investors are questioning how much chip demand depends on loss-making frontier labs such as OpenAI and Anthropic, while debt-funded data-centre projects, higher borrowing costs and large spending commitments have increased fears around circular financing and credit risk.
How much depends on them? Jefferies’ Chris Wood answered that in his latest quarterly, which we covered on Saturday: of the ~$2.3 trillion in contracted backlog across Microsoft, Alphabet, Amazon and Oracle…
… “about half is owed by OpenAI and Anthropic,” which in Wood’s words amounts to “concentrated unsecured loans to what, for now at least, are cash-burning tenants.”
Hence the one question that matters for strength vs. weakness: is Anthropic raising as much as $100 billion because it can, or because $400+ billion of non-cancelable bills say it must? As we tweeted the night Bloomberg first reported the pre-Thanksgiving timeline, Anthropic is “in a far bigger rush to reload capital” than OpenAI:
BBG report of a pre-Thanksgiving IPO by Anthropic sent odds the company goes public by November to 70%. Ant is in a far bigger rush to reload capital unlike OpenAI which is now happy to wait well into 2027 https://t.co/SebNhAXPXN
Two weeks later, as shown above, the same market has slumped to a coin flip.
Wrong Time To Be A Price-Taker
The timing doesn’t help either. In Tuesday’s Goldman flow and positioning note, the bank’s Tony Pasquariello forecast “$600bn of primary issuance, which includes $175bn of IPOs,” while “lockup expirations could bring $1.7tr of supply to market” and “net US equity supply could increase the most since the year 2000.” That is the same supply wall Paul Tudor Jones warned about on CNBC this morning, when he said he’ll be “short the whole year” in 2027. One Bear Traps PM pointed out that the Mag 7 fell 15% in the 29 trading days into the SpaceX IPO, and with the S-1 due publicly 15 days before the roadshow, all eyes are on a public filing around Oct 25 for a mid-November debut.
Meanwhile, the cost of money for anyone financing $518 billion of compute just went up again: this morning’s hotter-than-expected CPI put an October hike “firmly on the table.” Privorotsky, who remains “fundamentally bullish on the technology,” spelled out the real risk in his overnight note (available to pro subs):
The issue is whether the cost of capital and physical bottlenecks prevent that demand from translating into actual spending… Competition among the labs may compress model economics without necessarily undermining the infrastructure owners. So fundamentally bullish on the technology and the acceleration towards the next leg of intelligence. But increasingly conscious that the limiting factor may not be demand, but our willingness and ability to finance and deliver the supply.
Even Broadcom’s Hock Tan, whose own credit is paying for many of the chips, warned at the weekend that capital may now be a bigger constraint than chips or power, and that “a lot of investors have no clue what they are investing in.”
Bottom Line
Goldman’s Johnstone laid out what the bulls need: “The clearest positive catalyst would be evidence that total compute demand—token volumes multiplied by compute intensity—continues to accelerate despite greater competition and lower inference costs.” A blowout run rate today, say on track for the $100 billion the NYT reported, would do exactly that, and given how much negativity is priced into semis (Johnstone notes discussions are “increasingly focused on who can make the most negative case”), a squeeze is entirely plausible. JPM’s desk is already flagging “a possible squeeze post-CPI.”
But even the best possible number answers only the demand question. It says nothing about whether ~$400 billion in non-cancelable commitments, the widest hyperscaler credit spread since July, half of a $2.3 trillion backlog and an all-time low token price add up to a company going public “from a position of strength.” Having pounded the table on AI’s debt problem since last October, we lean toward the second half of O’Rourke’s question: a lab growing this fast that still needs $100 billion of new equity, on top of $150 billion of chip debt, to pay its landlords is going public from a position of need. Need and strength can coexist, of course… until the cost of capital decides which one gets priced.
And if anyone is wondering who is on the hook if today’s number disappoints, here is the latest map of who owes whom in the biggest circular financing diagram ever seen:
Bill Gates returned to the Sunday-show circuit this week with a fresh round of alarms about artificial intelligence, telling CNN’s Jake Tapper that the technology is “more dangerous than any” cars, planes, or drugs and that “grim possibilities” await if society fails to maintain control.
Speaking on State of the Union, the Microsoft co-founder and described AI as “the most dangerous technology humans ever invented.” He predicted that “over the next year, primarily in the cyber area, we are going to have a lot of negative surprises” once “bad people” strip safeguards from the latest models.
The real near-term danger, he said, is not AI “getting out of control” – that remains “years away” – but criminals using the tools for extortion, stock-market disruption, or similar schemes that already have proven business models.
Just as we regulate planes, cars, and medicines, we need safeguards that help us realize AI’s incredible potential while reducing the risks. They won’t eliminate every harm, but they can help prevent misuse by bad actors. We’re not where we need to be yet – and this deserves much more of our attention.
Tapper pressed him on earlier statements in which Gates had called AI “aliens created in a lab” that could “evolve almost as a species of its own” and become to humans “what we are to dogs or cats,” labeling the shift an “evolutionary event.”
? Bill Gates says AI is the “most dangerous technology humans ever invented” and “over the next year it will become quite obvious” regulations are needed https://t.co/gvfkYJUDLO
Gates replied that the arrival of AI is “fantastic” for health care and new tools, yet “this changes the world more than all previous technologies… and we got to get everyone on the same page about what a big deal this is.”
When Tapper raised OpenAI CEO Sam Altman’s warnings against “the trap of doomerism,” Gates answered that “all responsible AI leaders, including Sam Altman, including Dario Amodei, they are telling the world, ‘This is very concerning.'”
He conceded that claims of imminent existential risk can go “too far,” but insisted the comparison to regulated domains still holds: AI is more dangerous, and the middle ground of sensible oversight has not yet been found. On the absence of an FAA- or FDA-style body, he said, “I think, over the next year, we will move beyond self-governance… it’s clear we’re not doing enough.”
He added that he has “heard from a number of politicians” and is “hopeful” for a meeting with President Trump.
Gates has repeatedly flagged bioterrorism as a parallel risk. In the CNN interview he noted that the chance of a bioterrorist attack is now “50 times the risk of a natural pandemic” and that safeguards against it can currently be stripped out the same way cyber protections can.
Days later, MI5 Director General Sir Ken McCallum issued a parallel warning in his annual threat assessment. He said AI is “already supercharging the cybersecurity contest between attackers and defenders” and that “the misuse case to which I’d attach greatest weight” is AI’s “potential to change the stakes on existing or even new bioweapons.”
BREAKING: MI5 chief warns artificial intelligence ‘may lead terrorists to develop deadly biological weapons’. https://t.co/2GbFWVV2fb
McCallum added that the threat is “not yet realised” but that comparatively low-sophistication actors could gain a capability uplift if guardrails fail, giving them access to knowledge about chemical, biological, or radiological weapons that has long been hard for terrorists to obtain.
He announced a new AI Threat Assessment Centre inside MI5 to track both the opportunities and the risks. GB News reported that AI is “supercharging” security threats to the UK while MI5 deals with a fourfold increase over the past decade in cases involving hostile states, primarily from Russia, Iran and China.
AI ‘supercharging’ security threats to the UK.GB News’ @forster_k MI5 is dealing with a fourfold increase over the past decade in cases involving hostile states, primarily from Russia, Iran and China. ?? GB News on YouTube: https://t.co/Wa58gYGZwFhttps://t.co/sCmYia41Dh
The appearance fits a pattern established weeks earlier. In a September Meet the Press interview, Gates told Kristen Welker that AI is “certainly powerful enough to drive events that, you know, cause a billion deaths” and that “there’s never been a weapon as powerful as the combination of people with ill intent using the latest AI tools.”
He rejected self-regulation outright: “No one thinks self-regulation is enough… You need law enforcement and the politicians to get into the discussion about what safeguards and monitoring look like.”
In other settings he has called AI “almost an evolutionary event” and “kind of like this alien intelligence,” arguing that governments are “way behind” and that an international organization modeled on nuclear inspections, aviation rules, and ozone treaties is required. Industry, he has said, should not police itself.
The timing overlaps with reporting that executives at OpenAI, Anthropic, and other labs have been privately gaming out “day after” scenarios for a catastrophic AI-linked event – most likely a cyberattack capable of disrupting financial services, internet connectivity, or power and water.
Axios reported that many insiders believe such an incident could occur within six to twelve months. OpenAI confirmed it runs preparedness exercises but said the scenarios are not treated as inevitable; Anthropic declined comment.
Nicolas Hulscher highlighted the sequence on X, noting that Gates’s prediction of “a lot of NEGATIVE SURPRISES” from AI cyberattacks arrived days after the labs were revealed to be war-gaming public backlash.
BREAKING: Bill Gates claims “over the next year, we are going to have a lot of NEGATIVE SURPRISES” from AI cyberattacks.Just 2 days ago, OpenAI and Anthropic were revealed to be PRIVATELY WAR-GAMING the fallout from AI cyberattacks.AI false flag risk is now VERY HIGH. https://t.co/kP78qr7v3q
Gates has also floated taxing AI or robot usage and legally reserving certain roles – childcare, judges, jurors – for humans so that “human empathy remains relevant.” He continues to argue that the depth of understanding inside governments is too low and that only neutral public actors can set the required monitoring and non-removable safeguards.
At the same time, the Gates Foundation has committed a billion dollars over two years to expand AI tools in education, health, and agriculture in places markets would otherwise ignore.
The latest round of warnings arrives while the Trump administration has prioritized winning the AI race and has signed voluntary accords with leading companies rather than imposing the heavier statutory regime Gates prefers.
Gates himself says the extreme of “let’s completely stop this” is no better than no safeguards at all, yet his consistent message is that self-governance is already failing and that more centralized oversight must arrive within the next year. Security services are now publicly echoing the bioterror dimension of those warnings.
Whether those “negative surprises” materialize as ordinary cybercrime scaled by new tools, or as something the labs are already rehearsing responses for, the push for external control continues from the same quarters that previously framed AI as an alien intelligence requiring unprecedented global coordination.
A $20 billion Biden-era climate grant program remains frozen despite a federal appeals court ruling against the Trump administration’s efforts to cancel the funding. The case could wind up at the Supreme Court in a showdown over taxpayer spending and executive authority.
The U.S. Court of Appeals for the D.C. Circuit ruled 6-4 on Aug. 4 that the Environmental Protection Agency likely violated federal law when it attempted to terminate grants authorized under the Inflation Reduction Act.
However, the court subsequently agreed to keep the money frozen through Nov. 9 while the administration prepares a potential Supreme Court appeal.
EPA Administrator Lee Zeldin canceled the grants in March 2025, citing concerns about conflicts of interest and potential self-dealing among recipients. Climate United, the largest beneficiary, was awarded approximately $7 billion.
Jason Isaac, CEO of the American Energy Institute, urged the Supreme Court to intervene.
“The Biden administration rushed $20 billion in taxpayer money into the hands of politically connected organizations, creating what looks like a taxpayer-funded slush fund for its climate agenda,” Isaac told the Daily Caller News Foundation.
The grants were part of the Greenhouse Gas Reduction Fund, established to finance clean energy projects through nonprofit organizations.
Travis Fisher, director of energy and environmental policy studies at the Cato Institute, criticized the government’s reliance on subsidies.
“Resource-neutral permitting reform is superior to subsidies and grants because it advances energy projects without the government picking winners and losers,” Fisher said.
Environmental groups defended the program, arguing that withholding the money prevents investments that could reduce energy costs.
The legal dispute also follows Congress’ repeal of the provision establishing the program through the One Big Beautiful Bill Act.
Burning Container Ship Sinks In Strait Of Hormuz, As IRGC Proclaims ‘5 Or 6’ Vessels Targeted Nightly
Iran has quite obviously been surging its attacks on commercial shipping in the Strait of Hormuz in an attempt to wreak uncertainty and economic havoc for the Trump administration ahead of the November midterm elections, undermining a recent recovery in Persian Gulf oil shipments.
The attacks are now coming so frequently it is difficult to deep track. One source tallies of recent days, “Twelve vessels were attacked between October 5 and 11, including six on Sunday alone, and on Tuesday a tanker and a container ship were struck by unknown projectiles, according to UK Maritime Trade Operations (UKMTO), marking one of the most intense periods of attacks since the war began.”
Iran state media published images of a container ship sinking Wednesday.
Other outlets also confirmed the single day record of six attacks this past Sunday. It some time for confirmation of all these vessels’ status to emerge amid the fog of war in the contested strait.
The prominent and outspoken secretary of Iran’s supreme national security council, Mohsen Rezaei, has meanwhile affirmed that the IRGC was striking vessels nightly, and is likely to keep doing so.
“We target five or six of these every night,” he told state TV. “Hormuz is under the control of the Islamic Republic.“
While the US has been touting a successful naval escort mission to get unprecedented numbers (for wartime) of tankers through the strait, Rezaei described that the US is merely using small craft to smuggle Iranian oil on to larger tankers out at sea, and then doing ship-to-ship transfer.
Tehran has claimed further that American naval ships don’t dare come close to Iran’s shores, on fears of being hit.
On Wednesday, Iran’s military has announced yet another attack, this time on a container ship. Al Jazeera reports of the notification:
Iran’s Islamic Revolutionary Guard Corps says that a container ship “carrying contraband” and attempting to pass through “an unauthorized and dangerous route” in the Strait of Hormuz exploded and caught fire after striking a naval mine.
Footage published by the IRGC shows a container ship it calls “illegal” sinking south of the Strait of Hormuz with 2,500 containers aboard. https://t.co/lCgeztmHSp
Overall for the month of October we’ve seen at least 24 foreign vessels targeted and hit by Iranian forces. If this keeps up, oil prices are likely to be soaring by month’s end.
“At least 18 ships were hit between Oct. 1 and Oct. 11, according to the UKMTO, with another six attacks recorded by other European security sources, the Financial Times reported,” the NY Post comments.
