002062

By Mark DeCambre

The AI giant now trades at a discount to the S&P 500, by one measure. Plus, CoreWeave's answer to its debt problem and a Veterans Day breather for bonds.

Thank you for your service, veterans.

👋🏽Happy Veterans Day! Here's what I'm thinking about this morning: falling knives and rate hikes.

My father-in-law will occasionally accost me: "How's your guy in the White House doing?" Or, during particularly volatile markets: "When will these stocks stop losing money?" He might add: "Is it time to buy?"

I never quite know how to respond. As editor in chief of MarketWatch, I'm not allowed to dole out investment advice, and I'm pretty sure he's trolling me anyway. Lately, I've never been more thrilled to have that excuse to fall back on.

After a withering stretch, some of the biggest names in artificial intelligence are starting to look downright cheap. On paper, anyway.

Take Nvidia. Its shares trade at just 11.77 times expected earnings over the next 12 months. Put another way, investors are paying less than $12 for every $1 of anticipated profit. That's its lowest valuation by that measure since 2011, according to FactSet data. By comparison, the S&P 500 as a whole was most recently around 18 times expected earnings.

So is Nvidia's stock a bargain? Or are investors beginning to doubt the earnings forecasts that make it look cheap? Its shares were already falling before the scandal surrounding CEO Jensen Huang erupted. Now his tenure at the helm has become another question mark for investors.

Tuesday's trading offered another cause for caution. The 2-year Treasury yield BX:TMUBMUSD02Y - a closely watched gauge of where investors think Fed interest rates are headed - posted its biggest one-day jump since April 2025, after a hotter-than-expected inflation report raised the prospect of bigger interest-rate hikes.

Interestingly, the AI boom might itself be helping fuel the inflation that's making borrowing for the sector pricier.

Federal Reserve Vice Chair for Supervision Michelle Bowman warned Tuesday of a bigger danger. AI-related debt is on track to exceed $800 billion this year, and the companies fueling the boom are increasingly entangled through loans, investments and financial guarantees.

If the enormous bets on artificial intelligence don't pay off, the damage may not be confined to the AI industry. It could reach consumers and businesses far beyond Silicon Valley.

Sign up here to get Need to Know daily.

Three stories worth your time ...

• Nvidia could soon face tougher export rules, making it harder to sell chips to China after the Huang scandal
• Could the bond market's misery represent a buying opportunity?
• A new warning for millions taking weight-loss drugs

Wall Street is open for business this Veterans Day, but the bond market gets special dispensation after Tuesday's inflation-driven selloff.

Stocks, meanwhile, are trading on a more upbeat note, with Nasdaq-100 futures climbing sharply, suggesting that beaten-down tech shares could be headed for a rebound.

The temperament of cash-traded bond investors will have to wait until Thursday, but exchange-traded funds such as iShares 20+ Year Treasury Bond ETF TLT and iShares Core U.S. Aggregate-Bond ETF AGG might offer some indication while fixed-income traders are off for the federal holiday.

• Follow Wednesday's real-time coverage of the market.

CoreWeave's debt fix ...

CoreWeave (CRWV) has been at the center of Wall Street's concerns about the AI industry's borrowing binge. Now its shares are surging after the company unveiled a new financing strategy, which includes prepayments. Has it found a sustainable way to ease one of investors' chief worries?

• Meanwhile, AMD's stock AMD came under pressure Tuesday as investors weighed whether Nvidia's turmoil will mean lasting wins for the rival chip maker.

Tips and tipsy ...

Most Americans are hesitant to open up about their finances. But add a little wine ...

Don't Short Yourself columnist Genna Contino recently threw a "money party" where friends shared savings and investment tips and opened up about their budgeting and spending habits.

Fight or flight ...

What's the point of paying extra for priority boarding if there's still no room for your carry-on? One frustrated traveler wants to know whether the airlines are taking passengers for a ride. The Moneyist weighs in.

Will the Fed go too far?

Consumer prices were up again in October - and rising at an uncomfortable pace.

October's inflation numbers came in hotter than expected, opening the door for the Fed to act more aggressively on rate hikes.

Now one prominent economist is warning that a zealous Fed could be a big risk for stocks headed into 2027.

Investigating Jensen ...

Joon H. Kim previously investigated former New York Gov. Andrew Cuomo.

Nvidia tapped Joon H. Kim, a former federal prosecutor who previously investigated Andrew Cuomo, the former New York governor, to look into allegations involving CEO Jensen Huang.

Here's what else we know about the man leading the Huang investigation.

About me

Mark DeCambre is editor in chief of MarketWatch. He has spent more than 20 years covering Wall Street, markets and personal finance, and writes Need to Know, drawing on the award-winning analysis and journalism of the newsroom.

-Mark DeCambre

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.