Money in AI: A One-Way Street

The flow of investment into artificial intelligence remains robust despite recent volatility in AI-related stocks. This disconnect highlights a nuanced market sentiment, where venture capital and strategic partnerships flourish while public market investors exhibit caution.

In a significant strategic move underscoring this trend, Microsoft and Nvidia are poised to inject a combined $15 billion into Anthropic, positioning themselves at the forefront of the generative AI race. The deal, contingent upon Anthropic committing to procure substantial compute power from its new backers, reflects a symbiotic relationship often seen in the burgeoning AI landscape: tech giants investing in promising AI startups while simultaneously securing future revenue streams. This pattern, while seemingly self-serving, is a critical driver of innovation, fueling advanced AI model development and deployment.

However, the AI arena is not solely defined by strategic investments. Google’s unveiling of Gemini 3, the latest iteration of its AI model, signals a continued focus on technological advancement. According to Demis Hassabis, CEO of Google’s DeepMind, Gemini 3 is designed to elevate beyond superficial interactions, offering users genuinely insightful and substantive responses. This shift towards more nuanced AI capabilities speaks to the evolving demands of users who are increasingly seeking sophisticated solutions rather than mere conversational chatbots. The technical leap from prior versions reportedly includes enhanced contextual awareness and improved reasoning capabilities, addressing previous criticisms of AI models’ susceptibility to bias and lack of common-sense understanding.

Despite these advancements, investor sentiment toward AI remains guarded. Recent declines in major tech players like Nvidia, Amazon, and Microsoft have contributed to the S&P 500’s consecutive losing sessions, marking its most prolonged downturn since August. This suggests that the market is grappling with concerns about valuation and the long-term profitability of AI ventures.

Nvidia, often regarded as a bellwether for the AI sector, faces an imminent test as it prepares to release its latest earnings report. As CFRA’s Chief Investment Strategist Sam Stovall notes, Nvidia’s performance will be pivotal in determining whether the S&P 500’s downward trajectory persists. Market analysts will be closely monitoring Nvidia’s data center revenue, a key indicator of the demand for AI-specific hardware, as well as its guidance for future revenue growth, which will provide crucial clues about the overall health of the AI ecosystem.

The S&P 500 Endures Fourth Straight Day of Losses. Broader market indices also experienced declines, with Bitcoin prices briefly dipping below $90,000 before recovering. European markets mirrored this trend, with the Stoxx 600 hitting its lowest level in a month.

Anthropic Forges Strategic Alliance with Microsoft and Nvidia. Microsoft’s pledged investment of up to $5 billion and Nvidia’s commitment of up to $10 billion in Anthropic reportedly values the AI startup at approximately $350 billion.

Google Debuts Gemini 3, Accelerating AI Model Race. Alphabet’s CEO Sundar Pichai asserts that Gemini 3 will offer heightened responsiveness with reduced prompting. This update follows the release of Gemini 2.5 just eight months prior and is slated for phased rollout over the coming weeks.

U.S. Senators Demand Investigation into Crypto Firm with Trump Ties. World Liberty Finance, significantly owned and operated by the Trump family, purportedly sold tokens to entities including a North Korean hacking organization and an Iranian crypto exchange, according to findings from a corporate watchdog group.

[PRO] Identifying Potential Safe Havens Amidst the Tech Stock Downturn. Strategists have identified diverse global stocks and non-equity assets capable of withstanding recent volatility affecting U.S. tech equities.

Diplomatic Tensions Between Tokyo and Beijing Threaten Japan’s Precarious Economy

China has cautioned its citizens against traveling to Japan following comments made by Japanese Prime Minister Sanae Takaichi concerning Taiwan. This diplomatic rift has already impacted Japanese tourism-related stocks, raising concerns about potentially significant long-term economic ramifications.

Takahide Kiuchi, Executive Economist at Nomura Research Institute, estimates that the escalating tensions between the two Asian powers could result in a 1.79 trillion yen reduction in Japan’s GDP over one year, representing a 0.29% contraction in the country’s economic output.