Three of the biggest companies in artificial intelligence said Tuesday they formed a partnership featuring tens of billions of dollars in spending, adding to an investment spree that is aimed at supercharging AI model development. Under the partnership, Nvidia and Microsoft will invest up to $15 billion in Anthropic, a competitor to OpenAI whose models are popular with coders and businesses. Anthropic, in turn, said it would buy $30 billion of computing capacity from Microsoft Azure running on Nvidia AI systems. The chip company will work with Anthropic on design and engineering. The alliance is the latest sign in the global AI race that the biggest players must work with one another despite potential business rivalries and policy disagreements. Microsoft is an investor in Anthropic’s rival, OpenAI, and offers its models to customers, while Nvidia Chief Executive Officer Jensen Huang and Anthropic CEO Dario Amodei have clashed over chip exports and the number of jobs lost to AI. Anthropic is unique among AI companies in that it isn’t heavily reliant on Nvidia chips because it works closely with Amazon.com and Google.

On Tuesday, the Swiss stock market was unable to escape the continuing downward trend on global stock exchanges. The SMI fell by 0.9 percent to 12,482 points. Of the 20 SMI stocks, 19 lost ground and one gained. A total of 24.35 (previously: 16.77) million shares were traded. Roche shares rose 6.8 percent. Good news about the drug pipeline drove the price up. Otherwise, bearish sentiment dominated. UBS shares dropped 1.9 percent. ABB declined 4.1 percent. The updated financial targets are not very impressive and are unlikely to drive consensus estimates upwards, according to Vontobel analyst Mark Diethelm. The group's target for organic sales growth remains unchanged, with consensus already at the upper end of the range. “As competitors have recently raised their growth targets, ABB's unchanged revenue target is likely to be a slight disappointment for the market,” he added. Zurich Insurance shares dipped 1.8 percent after the capital markets day. Nestlé and Novartis shares shed 0.8 and 3.6 percent, respectively.

Europe
European stock markets pulled back again on Tuesday as investors worried about the high valuations of US tech companies, as well as the health of the US economy and the Federal Reserve's interest rate policy. The Stoxx Europe 600 index fell 1.7% to 561.9 points. In Paris, the CAC 40 and SBF 120 dropped 1.9% and 1.8%, respectively. In Frankfurt, the DAX 40 lost 1.7% and the FTSE 100 shed 1.3% in London. AMUNDI (-3.6%): the asset management subsidiary of the Crédit Agricole group unveiled its roadmap for 2028 on Tuesday. The company also announced the acquisition of a 9.9% stake in Intermediate Capital Group (ICG), an asset manager specializing in private assets (private equity, private debt, etc.). EUTELSAT (+3.3%): the satellite operator unveiled on Tuesday the launch of the first of two capital increases it plans to carry out by the end of the year. CREDIT AGRICOLE SA (-2.1%): The listed arm of the Crédit Agricole group is targeting net income attributable to the group of more than €8.5 billion by 2028, compared with €6.9 billion at the end of 2024, according to its new strategic plan for 2028 presented on Tuesday. TOTALENERGIES (-1.9%): The oil giant is the subject of a complaint for “complicity in war crimes” in Mozambique filed on Monday by the European Center for Constitutional and Human Rights (ECCHR), according to a statement released Tuesday by the German NGO on its website.

United States
U.S. markets dropped for a fourth straight session, as both highflying tech stocks such as Nvidia and old-economy companies like Home Depot came under pressure. The S&P 500 and Dow industrials both extended their losing streaks, while the VIX volatility index climbed 7%. The Dow has dropped 1.1%, nearly 500 points. Chip stocks such as AMD, Marvell and Micron sank, weighing on the Nasdaq composite. The tech-heavy benchmark slid 1.2%, while the S&P 500 retreated 0.8%. Lofty valuations and a pile-up of debt to build data centres have led some investors to question the price of AI-linked stocks. A new survey found 45% of fund managers see an AI bubble as the top “tail risk” for markets, and a surge of concern that companies are overspending, chiefly on AI-related projects. Ahead of Thursday’s delayed September jobs report, new data from ADP suggested private-sector job losses moderated heading into November. Meanwhile, Labor Department figures showed weekly initial jobless claims stood at 232,000 in mid-October. Home Depot cut its annual outlook due to the continued downturn in home-improvement activity. Home Depot stock fell 6%, its largest daily decline since February 2023. Lowe’s, another big-box retailer, is due to report earnings on Wednesday, as is Nvidia.

Asia
Asian indexes diverged for the Wednesday trading session. The Nikkei 225 index is down slightly to 48,681 points. On the Chinese stock markets, Shanghai sees a slight decline, while Hong Kong's HSI drops by 0.6 percent. In Seoul, the Kospi lost half a percent. Here, the share prices of Nvidia suppliers SK Hynix and Samsung Electronics decreased by 1.4 and 1.2 percent, respectively. In Tokyo, however, technology stocks such as Advantest and Softbank Group recovered marginally from the sharp declines of the previous day. Among other individual stocks, Xiaomi plunged 5.3 percent in Hong Kong. The technology giant reported mixed third-quarter results and warned of rising memory chip costs.

Bonds
U.S. government debt yields recovered from early lows but not enough to avoid a second consecutive daily decline, as markets worry about lofty stock valuations and the path of interest rates. Delayed official data showed an increase in jobless claims in mid-October. Future markets’ price nearly equal odds of a hold or a cut by the Fed in December, CMD data show. The 10-year yield slipped 0.012 percentage point to 4.12%, while the two-year declined 0.029 p.p. to 3.58%.

Analysis
Target price Zurich: Barclays rises to CHF 580 (575) - Equal Weight
Target price Richemont: JPMorgan upgrades to CHF 190 (170) - Overweight
Target price Swiss Re: Goldman Sachs lowers to CHF 138 (142) - Neutral

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