Nvidia’s stock is under immense pressure as investors nervously await its earnings, set to be released on November 19. The stock is slightly down at the time of writing, trading about 1.75% lower at 183.34, which now puts it at about 11.4% lower than its October 29 peak, which had a closing price of $207.04.
Google CEO Sundar Pichai’s comments didn’t help the stock. Pichai shared with BBC what he thinks about the AI bubble bursting: “No company is going to be immune, including us. If you over-invest, you know, we’ll have to work through that phase.”
The AI skepticism is growing, and with his comment, Pichai just added fuel to that fire. Pichai’s comments also follow a chain of bad news for AI investors.
Michael Burry of the “Big Short” fame started this chain of bad news by shorting Nvidia and Palantir. Then, SoftBank Group revealed that it has sold all of its Nvidia shares (32.1 million), worth $5.8 billion, and decided to instead make an “all-in” bet on OpenAI, as reported by Reuters.
To make the situation worse, Burry also made a bombshell claim that AI hyperscalers are artificially boosting earnings.
With so much pressure, the latest Nvidia announcement, which occurred just a day before the earnings, appears to be a strategically timed press release. However, whether the announcement helps the stock depends on how skeptical you feel about the AI bubble.
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Nvidia, Microsoft, and Anthropic form partnerships
Microsoft (MSFT), Nvidia (NVDA), and Anthropic revealed new strategic partnerships.
Anthropic is expanding its partnership with Microsoft and will purchase $30 billion of Azure compute capacity and contract additional compute capacity up to 1 gigawatt.
Nvidia will help optimize Anthropic models for performance, efficiency, and total cost of ownership. Anthropic’s compute commitment will initially be up to 1 gigawatt of compute capacity, using Nvidia’s Grace Blackwell and Vera Rubin systems.
More Nvidia:
- Is Nvidia’s AI boom already priced in? Oppenheimer doesn’t think so
- Morgan Stanley revamps Nvidia’s price target ahead of big Q3
- Investors hope good news from Nvidia gives the rally more life
- Bank of America resets Nvidia stock forecast before earnings
- AMD flips the script on Nvidia with bold new vision
Azure AI Foundry customers will now be able to access Anthropic’s frontier Claude models, including Claude Sonnet 4.5, Claude Opus 4.1, and Claude Haiku 4.5. This partnership will make Claude the only frontier LLM model available on all three of the world’s most prominent cloud services.
Microsoft will continue to provide access to Claude across Microsoft’s Copilot family, including GitHub Copilot and Copilot Studio. Nvidia and Microsoft will invest up to $10 billion and $5 billion, respectively, in Anthropic.
Do these partnerships make AI bubble worries worse?
Whether this deal is a positive or a cause for concern will depend on your perspective regarding the AI market and your level of skepticism.
“Nvidia needs to prop up demand to keep the flywheel spinning, while Microsoft needs to hedge its reliance on OpenAI. This deal provides the financial firepower to make sure that AI is a robust, competitive marketplace, rather than being a one-player monopoly,” said long-time Wall Street analyst and TheStreet Co-Editor-in-Chief Todd Campbell.
The problem of circular financing in the AI bubble has already been raised by experts. Brian Mulberry, senior client portfolio manager at Zacks Investment Management, shared the following with TheStreet in an email about whether this deal increases circular financing risks:
“It is getting hard to keep track of the financial interests here. Anthropic technically is a competitor of OpenAI, but Microsoft has a 27% stake in OpenAI, and NVDA announced a $100 billion partnership with OpenAI. I fear that it’s no longer circular but a tangled web.”
“On the far side of this, once the scale of compute increases and revenues grow from AI agency – who makes what? Will there be a double or triple counting of the same dollar? It skews any rational way we would try to put a value on the AI market directly,” concluded Mulberry.
Related: Google CEO drops a bombshell comment on AI bubble
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