Market Beats | Cloudflare Outage Takes Down Websites Worldwide; US Stocks Fall as AI Bubble Fears and $1.2 Trillion Crypto Crash Break Rally; Microsoft and Nvidia to Invest Up to $15 Billion in Anthropic; Meta Chief Revenue Officer John Hegeman Departs; Home Depot Cuts Full-Year Guidance as Consumers Pull Back; Paramount Skydance to Bid for Warner Bros. Discovery

—— Cloudflare Outage Takes Down Websites Worldwide; US Stocks Fall as AI Bubble Fears and $1.2 Trillion Crypto Crash Break Rally; Microsoft and Nvidia to Invest Up to $15 Billion in Anthropic; Meta Chief Revenue Officer John Hegeman Departs; Home Depot Cuts Full-Year Guidance as Consumers Pull Back; Paramount Skydance to Bid for Warner Bros. Discovery

1. Peter Thiel’s Hedge Fund Exits Nvidia Position

Peter Thiel’s hedge fund Thiel Macro LLC sold off its entire Nvidia Corp. stake in the third quarter, marking another retreat from the world’s leading artificial intelligence chipmaker.

The fund disposed of all 537,742 shares — worth about $100 million based on Nvidia’s Sept. 30 closing price. According to its latest 13F filing, Thiel Macro’s top holdings now include Apple Inc., Microsoft Corp., and a reduced stake in Tesla Inc.

The move comes amid growing concerns about an AI investment bubble that helped propel Nvidia to become the world’s most valuable company. Hedge fund manager Michael Burry has publicly taken bearish positions against Nvidia and Palantir Technologies Inc., while SoftBank Group Corp. announced in October that it sold $5.83 billion of Nvidia shares to fund other AI investments.

Thiel has been less bullish on AI than SoftBank founder Masayoshi Son, but both exited around the time Nvidia first surpassed a $5 trillion valuation. Nvidia shares — up about 2% since late September — slipped roughly 1% in pre-market trading.

An analysis of 13F filings from 909 hedge funds shows sentiment evenly split: 161 increased their Nvidia positions in the quarter, while 160 reduced them.

Investors remain divided on the long-term prospects of AI companies, which continue rapidly raising and spending capital but have yet to prove monetization models that justify their lofty valuations.

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2. Cloudflare Outage Takes Down Websites Worldwide

A sweeping outage across Cloudflare Inc.’s network disrupted websites globally on Tuesday, affecting everything from the chief US energy regulator and ChatGPT to New Jersey Transit and X (formerly Twitter).

Cloudflare said it was working to restore services and was “seeing services recover,” although many sites — including those of Moody’s Corp. — remained offline.

A spokesperson said the company detected a “spike in unusual traffic” around 6:20 a.m. ET, which triggered errors across part of its network. The cause remains unknown.

The company has suffered several high-profile outages in recent years. Cloudflare acts as a protective layer for hundreds of thousands of websites, helping shield them from attacks that flood networks with junk traffic.

The disruption comes a year after a faulty CrowdStrike software update crashed millions of Windows devices, causing widespread turmoil across airlines, banks and hospitals.

Cloudflare shares dropped 4% in premarket trading.

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3. US Stocks Fall as AI Bubble Fears and $1.2 Trillion Crypto Crash Break Rally

US stocks slumped Tuesday, putting the S&P 500 on track for its longest losing streak since August, as a six-month rally faltered amid a $1.2 trillion crypto wipeout and renewed concerns that artificial intelligence valuations have become unsustainable.

The S&P 500 dropped 1.2% as of 10:08 a.m. in New York, marking a fourth straight decline. The Nasdaq 100 sank 1.5%, while the Magnificent Seven fell 2.2%.

Nvidia — the face of the AI boom — slid another 3% ahead of earnings. Amazon and Microsoft each dropped more than 2% after a ratings downgrade. The Cboe Volatility Index spiked above 25 — its highest in a month — signaling heightened fear among traders.

Riskier corners of the market were hit hardest. A Goldman Sachs basket tracking unprofitable tech firms like Roku and Peloton tumbled nearly 2%.

Investors are now questioning whether the Fed will cut rates in December. Swaps imply less than a 50% chance of another cut, and several officials recently warned against easing — though Fed Governor Christopher Waller reiterated his support for lowering rates.

“Appetite for AI is under pressure from circularity worries and bubble fears,” said Ipek Ozkardeskaya of Swissquote. “The bad news is that some of the most bullish factors — AI enthusiasm, massive stimulus, dovish Fed expectations — are starting to fade.”

Among individual names, Home Depot fell 2.8% after cutting its profit outlook, saying consumers are delaying big-ticket purchases. Target and Lowe’s report Wednesday, followed by Walmart and Gap Thursday.

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4. Microsoft and Nvidia to Invest Up to $15 Billion in Anthropic

Microsoft Corp. and Nvidia Corp. are committing up to $15 billion in new funding for Anthropic PBC, further tightening the AI developer’s ties with two of the biggest financial backers of its rival OpenAI.

The investment will be included in Anthropic’s next funding round, according to a person familiar with the matter. At the same time, Anthropic has agreed to purchase $30 billion worth of computing capacity from Microsoft’s Azure cloud platform, the companies said Tuesday.

The arrangement is the latest example of the AI industry’s expanding use of “circular deals,” where cloud and semiconductor giants invest in AI startups, which then spend those funds buying cloud and compute services from the same companies. The structure has raised investor concerns that the sector is entering bubble territory.

For Anthropic, the deal deepens its alignment with Microsoft — which has invested over $13 billion in OpenAI and was instrumental in its rise.

But Microsoft and OpenAI have increasingly become competitors, and this move signals Microsoft’s determination to diversify its influence across the AI landscape.

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5. Meta Chief Revenue Officer John Hegeman Departs

Meta Platforms Inc. Chief Revenue Officer John Hegeman is leaving the company after 17 years, marking one of several leadership changes as Meta faces mounting pressure to justify its costly AI investment strategy.

Hegeman, who took on the CRO role in December, is departing to start his own company, a Meta spokesperson said. His responsibilities will shift to longtime Meta executive Andrew Bocking.

Clara Shih, who joined last November to lead Meta’s Business AI unit, is also leaving to step back from work following the unexpected death of her father. Meanwhile, Guy Rosen — who has overseen the company’s “integrity” efforts since the aftermath of the 2016 US election — will take on a new role focused on integrating AI into Meta’s operations. Rosen will remain chief information security officer but hand off integrity responsibilities to deputy Nima Khajehnouri.

The shake-up comes as Meta continues to grow its core advertising business while facing rising investor skepticism over its massive AI spending plans. While Meta posted stronger-than-expected revenue last quarter, its pledge to significantly increase spending in 2026 rattled investors. The stock has dropped roughly 20% since the earnings report.

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6. Home Depot Cuts Full-Year Guidance as Consumers Pull Back

Home Depot Inc. lowered its full-year earnings outlook, warning that some shaky consumer sentiment is causing shoppers to delay major home-improvement projects.

The world’s largest home-improvement retailer now expects adjusted earnings per share to fall 5% from last year — below its previous projection. Profit and comparable sales both missed expectations last quarter as the weak housing market and lack of storm activity hurt demand in categories like roofing and generators. Shares fell as much as 5% Tuesday. The stock is down 8% year-to-date through Monday, compared with a 13% gain for the S&P 500.

The gloomy forecast is another sign of weakening US consumer demand at a time when official economic data is unavailable due to the government shutdown. Earnings reports from Target and Walmart later this week will offer further clues as to whether a cooling job market, layoffs and inflation are pushing Americans to cut back on spending.

“We had expected demand to begin accelerating gradually in the back half of the year as interest and mortgage rates eased,” Chief Financial Officer Richard McPhail said in an interview. “But what we see is ongoing consumer uncertainty and continued pressure in housing disproportionately impacting home improvement demand.”

The US housing market remains frozen for multiple reasons. Even with mortgage rates lower than a year ago, high home prices and cost-of-living concerns are making purchases difficult. Elevated interest rates have also halted plans to buy and renovate homes.

Many consumers are instead focusing on small DIY projects like painting and gardening that don’t require borrowing — weighing on sales at Home Depot and other industry players.

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7. Paramount Skydance to Bid for Warner Bros. Discovery

Paramount Skydance Corp. is working with a consortium of Middle Eastern sovereign wealth funds on a $71 billion offer for Warner Bros. Discovery Inc., Variety reported, citing people familiar with the talks.

The group includes Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority and the Abu Dhabi Investment Authority, with RedBird Capital also backing the effort. The offer values Warner Bros. Discovery at about $28.65 per share and is reportedly being largely financed by the Ellison family. Each sovereign fund would contribute $7 billion, while Paramount Skydance would provide about $50 billion.

Warner Bros.’s board has already rejected previous offers from Paramount of up to $23.50 a share, Bloomberg has reported. The company has formally put itself up for sale, with a Thursday deadline for bids. In addition to Paramount, Netflix Inc. and Comcast Corp. are expected to bid for select assets such as the film and streaming division.

Paramount remains the only party seeking to buy the entire company.

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