Chips Roar Back as CoreWeave Revives the AI Trade

The close

Closing values as of 4:00 PM ET.

What happened

One earnings report flipped the mood. After two rough days for AI stocks, CoreWeave raised its 2026 revenue outlook to $13 billion to $13.3 billion and said on its call that it has “10x as much qualified demand as available capacity through the end of 2027.” The stock jumped about 24%.

That was enough to pull the whole chip complex off the mat. The Philadelphia Semiconductor Index rose about 7%, with every one of its members higher. Marvell, Micron, Intel and Sandisk were among the big gainers, and Nvidia rose about 3% after losing hundreds of billions in market value over the prior two sessions.

The rally was narrow, though. The Nasdaq gained 1.6% while the Dow rose only half a percent. Money moved out of defensive groups like health care and consumer staples and into last week’s AI losers.

Demand isn’t the question, financing is

CoreWeave’s demand story is strong. Revenue was $3.66 billion in the third quarter, and its backlog is about $133 billion. The balance sheet is where the risk sits.

• Interest expense: $846 million in the quarter, more than twice adjusted operating income of $379 million.
• Capex: $9.44 billion in cash spending in the quarter, nearly three times a year earlier; management put total capex at $14.5 billion.
• Next quarter: the company expects interest of $1.05 billion to $1.15 billion.

In plain terms, CoreWeave is borrowing heavily to build capacity it says customers already want. That works if the revenue arrives on schedule and rates cooperate. Today’s rally priced in the first part. The second part is getting harder.

Rates and the Fed

Tuesday’s hot October CPI is still setting the tone. Traders are fully pricing a quarter-point hike in December, with roughly a 13% chance of a half point, according to CME FedWatch. Dallas Fed President Lorie Logan said Tuesday that the Fed needs “at least two more 25-basis-point rate increases” and that it “may be possible to move more rapidly this winter.” Governor Michelle Bowman added today that there is “still work to do” on inflation.

That’s the tension under today’s rally: the stocks that just bounced are the ones most exposed to higher borrowing costs.

Other markets

• Dollar: up about 0.6% against major currencies as hike expectations firmed.
• Gold: down about 1.2%, back near $4,000 an ounce.
• Oil: up about 2.4%, with Brent near $94 a barrel.

What to watch

• Thursday: Cisco reports after the close, the next read on AI networking demand.
• Anthropic’s IPO: terms set Tuesday at a valuation of up to $1.4 trillion, with trading possible as soon as late next week.
• CoreWeave’s credit: whether its bonds recover along with the stock.