Tech stocks slide as Anthropic revenue slows and TSMC margins dip

The second day of a sharp technology sector sell-off continued on Wednesday, driven by concerns over the financing structure of artificial intelligence infrastructure and slowing revenue growth at key players. While bond yields declined amid a flight to safety, equity markets remained under pressure, with the Russell 2000 down 11% from its highs and entering a correction.

A primary catalyst for the volatility was reporting on Anthropic, which Bloomberg stated generated $16.8 billion in third-quarter revenue and achieved adjusted profitability. However, analysts noted that quarter-over-quarter growth has slowed, a trend consistent with flat token spending data tracked by RAM. New York City Comptroller Mark pointed to these financial metrics and safety concerns in a letter urging Anthropic to pause its planned initial public offering, which reports indicate could begin marketing as early as the week of November 9.

In the semiconductor sector, Taiwan Semiconductor Manufacturing Company reported record third-quarter profits, with net income rising nearly 60% year-over-year and an operating margin of 58.7%. Despite the strong results, the stock remained down approximately 11% from its record close. Analysts attributed the weakness to fourth-quarter gross margin guidance of 67%, which fell slightly below previous quarters, and broader anxiety regarding the debt levels of customers funding AI data centers.

The market is increasingly differentiating between well-capitalized hyperscalers and "neo-cloud" providers such as CoreWeave and Nebius. CoreWeave's debt is trading at approximately 78 cents on the dollar, while DA Davidson's Gil Luria noted that companies borrowing at 9% face returns of only 5%. This financial strain coincides with hotter-than-expected consumer price data and producer price data released Wednesday, where final demand prices rose 1.3% month-over-month. The Federal Reserve's policy path remains uncertain, with CME FedWatch data showing a 33.8% probability of a rate change at the October meeting.

Amid the tech rout, Apple became the second company to close with a market capitalization above $5 trillion, a milestone attributed to its conservative balance sheet and lack of heavy data center debt exposure. Meanwhile, Tesla is set to reveal its new Roadster at 7:55 p.m. Central time in Waco, Texas, an event that has generated speculation about potential propulsion features.