1. Inflation and a 15% Bond Yield Hit AI Stocks
Nvidia (NVDA -1.84%) and Broadcom (AVGO -0.56%) both dropped over 3% on Wednesday as hot inflation dragged down the broader market. AI stocks took an extra hit when a viral chart on X showed yield on bonds issued by CoreWeave (CRWV +5.94%) — which borrows to buy Nvidia chips and rent them out — spiking to 15%, roughly triple government rates. The news reignited fears over AI debt, with Chamath Palihapitiya and Elon Musk taking to X to discuss whether a private credit bubble might be brewing.
- The debt piled up fast. CoreWeave's debt had reached about $52 billion by June, up from about $15 billion a year earlier.
- The skeptic's math. D.A. Davidson analyst Gil Luria estimates CoreWeave borrows at around 9% interest. If AI demand cools down, he warns, high debt costs could wipe out shareholders completely, leaving the company's equity worth zero.
- The selling started a day early. BlackRock (BLK +4.38%) downgraded U.S. stocks to Neutral on Tuesday. Its strategists said they were taking profits around the AI buildout.
Last week we wrote that borrowing costs were climbing and the borrowing continued anyway. This week bond buyers started demanding more for the risk. Nvidia and Broadcom sell to customers who borrow to buy. If that debt gets expensive enough, the orders slow down.
2. TSMC Beat, Raised, and Sold Off Anyway
Taiwan Semiconductor Manufacturing (TSM -1.80%) beat earnings expectations on Thursday with a 41% surge in year-over-year revenue and a raised fourth-quarter forecast — yet its stock still slipped in pre-market trading. It’s part of a bizarre week for earnings: two other tech players dropped despite posting strong numbers, while one actually rallied after a miss.
- Deo's read: stretched stock, sound business. Team Rule Breakers' Sanmeet Deo says a beat-and-raise selloff usually means "expectations have gotten way ahead of the fundamentals." He has no concerns about TSMC itself.
- Beat, raised, punished. Johnson & Johnson (JNJ -0.25%) lifted its full-year profit forecast and fell nearly 7%. Its medical device unit grew just 2.5%.
- A record nobody rewarded. Morgan Stanley (MS +0.33%) pulled in a record $232 billion of net new wealth-management assets. The stock fell about 3%.
- A miss went the other way. JPMorgan Chase (JPM +0.07%) missed profit estimates and rose anyway. Its core lending business hit a new high, and management raised its lending-income forecast for the year.
Top-line revenue and net income rarely tell the whole story. Investors looked past them to a specific number underneath, like J&J's device sales or JPMorgan's lending. Look beyond the main numbers to find the key metric the market is truly trading on.
3. JPMorgan and Domino's Can't Both Be Right
Gasoline averages $4.34 a gallon, up from $3.08 a year ago. Pump prices rose 9.1% in September. That spike drove most of the upside in the latest inflation numbers. Against that backdrop, two major retailers are interpreting the consumer very differently.
- One sees no strain. The other sees a drag. JPMorgan's card charge-offs fell to 2.91% from 3.15% a year ago. Domino's Pizza (DPZ +2.43%) CEO Joseph Jordan expects the economy to stay "an overhang on the consumer" through year-end. Domino's is a Dividend Investor recommendation.
- Apple raised prices. Apple (AAPL -0.28%) lifted the Apple TV 4K to $299 from $199. With memory shortages squeezing the industry, the move could test its pricing power. Team Hidden Gems and Team Rule Breakers both recommend it.
- Walmart got the upgrade. Deutsche Bank upgraded Walmart (NYSE: WMT) to buy Thursday, noting inflation could draw shoppers in. It rose nearly 3% while tech burned.
Fewer credit card defaults don’t prove the consumer is comfortable. People pay the card bill first and cut the pizza. If fuel holds near $4.30, the cheaper stores collect what's left after the gas station.
4. Neutron Slips to 2027 on a Flawed Dome
Rocket Lab (RKLB -6.64%) is building Neutron, a reusable rocket big enough to bid for larger commercial and national-security contracts. On Wednesday night, it said Neutron's first flight slipped to 2027. The trouble is a part called the propellant dome. Its manufacturing process left voids, or small gaps, in the carbon composite layers. Management says that might not have caused a failure. It doesn't want to find out.
- It told shareholders early. Rocket Lab put the news in a video instead of waiting for earnings. Shares fell 10% before Thursday's open.
- What the delay costs. Team Hidden Gems' Lou Whiteman had expected two or three revenue launches in 2027. Now he says investors will be lucky to get one. He sees estimates coming down by about $50 million per launch.
- Still ahead, even after this. The stock has outperformed the S&P 500 by 20% since the August 2025 Stock Advisor recommendation from Team Hidden Gems.
Whiteman concluded, "Nothing is certain, but the long-range risk/reward hasn't changed." The real question is whether this is a manufacturing problem or a design problem. Rocket Lab says manufacturing, and says it has a fix.
5. ASML, Atlassian, and Klarna: What You Pay Matters
Three recommendation updates made one point: a great business and a good price are different things.
- ASML: great business, steep price. David Gardner recommended ASML (ASML +0.45%) in Stock Advisor in July 2020 at $368.01. It's up 383%. It alone makes the machines that print leading-edge chips. Team Rule Breakers is still bullish but says that at roughly 59 times earnings, there's little room for stumbles.
- Atlassian: one business, two prices. Rule Breakers recommended Atlassian (TEAM +6.09%) in 2016 near 15 times sales, and that position is up more than 580%. Hidden Gems recommended it three times starting in 2021, closer to the peak, near 30 times sales. Those positions have absorbed the valuation's fall since. Revenue grew roughly 30% a year throughout.
- Klarna: falling price, improving business. Team Hidden Gems first recommended Klarna Group (KLAR +2.66%) at about $45 in September 2025. It turned a profit in the second quarter and trades near $13, just over $1 for each $1 of expected sales.
Atlassian shows entry price alone can split the returns on one business. On Klarna, Team Hidden Gems sees $61.55 within five years. For a laggard you own, ask whether the price fell or the business did.
6. Today’s Question!
When a company you own reports its best quarter ever and the stock falls anyway, what do you check first before you decide whether the market has it wrong?
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