Disappointing Tech Earnings Dampen AI Excitement

Artificial Intelligence giant Anthropic kicked off a jam-packed week by filing its initial public offering (IPO) registration statement with the SEC. The filing included audited financials, risk factors, ownership information, and a planned ticker symbol, “ANT”. The company could debut as early as mid-November, in what is expected to be the largest IPO in history. SpaceX, which went public just four months ago, currently holds the title, having raised $86 billion in June. Anthropic is projected to raise up to $100 billion, with an overall valuation of between $1.5 trillion and $2 trillion. However, profits remain relatively small. Anthropic reported just $2.7 billion in adjusted net income for the first half of 2026.

And Anthropic could be launching during a rough stretch for AI and technology stocks. Microsoft’s first-quarter revenue increased 19% on strength in Azure and Microsoft 365, but tech stocks took their cues from Google parent Alphabet. Growth remained strong, but earnings and revenue both missed Wall Street expectations, and search growth decelerated. The stock plunged 12% Thursday, erasing $500 billion in market value.

The tech sell-off continued Friday, with disappointing earnings from Intel and Amazon dragging the Nasdaq index down nearly 3%. Intel shares slid a whopping 28%. The company’s data center business showed strong growth, but a weak fourth-quarter forecast sent the stock tumbling. Meanwhile, Amazon saw its free cash flow turn deeply negative, as it spent heavily on AI infrastructure. Amazon Web Services grew 39% to $46 billion, but Amazon’s debt also grew, reaching $173 billion, up from $66 billion at year-end.

On the earnings plus side, strong results from Eli Lilly and GE Healthcare pushed healthcare stocks higher. Eli Lilly’s revenue surged 39% year-over-year, amid continued strong demand for its obesity drugs. Lilly raised its full-year earnings guidance, and shares jumped 9%. GE Healthcare also raised its guidance, as margins expanded and revenue climbed. Its shares jumped 7%.

The earnings avalanche largely overshadowed the Federal Reserve’s latest interest-rate announcement. Despite continued inflation pressure, as evidenced by PCE inflation increasing 0.5% month-over-month and 3.6% year-over-year, the Fed kept its benchmark interest rate unchanged. The vote was not unanimous (10-2), but a majority were willing to wait for more data before making a move. And that move may come sooner rather than later, with odds of a rate hike in December sitting at 71% at week’s end.

Next week brings highly anticipated earnings from Apple, which could set a better tone for the market when it reports after the close on Monday.