Markets steady after AI selloff, with CoreWeave earnings next

Asian shares rebounded and US equity futures edged higher on Monday, according to Reuters' Morning Bid, after the Democrats' midterm win set off a chaotic week of AI-trade unwinding. Reuters calls the calm fragile, and this week's tech earnings and US inflation data are the next tests.

The mood has improved partly because Wall Street ended Friday on a higher note. Reuters says dip buyers may have returned ahead of a light week for major macro events. It also says it's too early to say markets are out of the woods.

What rattled AI stocks

The trigger was the election. The Democratic victories raised the possibility that governments could force pauses in construction of more data centers, according to an Associated Press report carried by Global News. That would mean fewer chip purchases, and less demand for electricity and other supplies.

On Thursday, Nvidia fell 7.5 per cent and Advanced Micro Devices dropped 14.6 per cent. Neocloud firms, which rent out AI computing power, took the heaviest hits. CNBC reported Nebius down 15%, Iren down 17% and CoreWeave down 10% that day.

Sources differ slightly on CoreWeave. The AP put its Thursday fall at 12.1%, while Benzinga, via TradingView, cited 9.8%. The direction is the same; the exact figure depends on the source and timing.

The week ahead

CoreWeave is the main event. Reuters describes it as a poster child for investor worries about AI profitability, given its heavy build-out costs and debt. Applied Materials and Cisco also report this week.

The report date is less clear. Investing.com says CoreWeave is scheduled to report on Tuesday. A separate Benzinga piece says Monday, so check the company's own announcement.

Debt is the pressure point. Benzinga puts CoreWeave's debt at over $35.1 billion, with some bonds yielding more than 15%.

Nvidia adds a new unknown

Reuters says Nvidia's board probe into reports that CEO Jensen Huang was targeted by Chinese intelligence could add volatility. CNBC reports Huang told staff in an email that he had an affair, and that the board opened an independent investigation.

NBC News says the board has no reason to believe national security or company secrets were compromised. The allegations come from reporting by The New York Times and the Financial Times, and the board's inquiry hasn't produced findings yet.

Rates and oil

Reuters says Tuesday's US consumer price report is in focus after last week's jobs report beat estimates. It says markets now price an 80% chance of at least a 25-basis-point Fed hike next month. CME FedWatch puts the odds at nearly 80% for the December 8-9 meeting, after the Fed's first increase in three years in September.

Oil is a small relief. Reuters says prices calmed after President Donald Trump said on Sunday he was highly unlikely to order fresh attacks on Iran while talks to end the conflict made progress.

Who this affects

Investors in chipmakers and neoclouds feel it first. Anyone else exposed to US index funds is affected too, since AI names carry heavy weight. Investing.com notes all three major US indexes still finished last week lower.

Opinion: I'd treat Monday's bounce as a pause, not a recovery. Rate-hike odds, CoreWeave's debt and the Nvidia probe could all cut against it, and I think CoreWeave's numbers will probably set the tone for the neocloud group.

What happens next

CoreWeave reports this week, followed by Applied Materials and Cisco. Tuesday's inflation data comes before the Fed's December meeting. Nvidia's board has said it will provide further updates as appropriate.