Tesla TSLA shares fell close to 2% on Thursday, extending their losing streak to four sessions as a broader technology sell-off and speculation about a potential merger with SpaceX weighed on investor sentiment.

The electric vehicle maker’s shares have declined around 18% this year, with investors assessing the company’s ambitious artificial intelligence plans, upcoming product announcements and the possibility of a major corporate restructuring under CEO Elon Musk.

Attention has now turned to the prospect of Tesla combining with SpaceX, a move that could bring Musk’s automotive, space and AI ambitions closer together.

SpaceX-Tesla merger could be announced in december

Barclays analyst Dan Levy said Thursday that a merger between Tesla and SpaceX could be announced before Tesla’s annual meeting on December 6.

According to Levy, such a transaction would represent another step in Musk’s broader artificial intelligence ambitions. SpaceX is expected to be the likely acquirer, with the deal potentially structured as an all-stock transaction in which Tesla shareholders receive shares in SpaceX.

Based on the current valuations, SpaceX has a market capitalization of around $2.1 trillion, compared with approximately $1.5 trillion for Tesla.

Musk would own about 37% of the combined company under a transaction based on those valuations, while retaining roughly 57% of its voting power, according to Barclays.

Musk has recently hinted at the possibility of combining the businesses, saying that Tesla overlaps “on so many fronts with SpaceX.”

A merger could bring together Tesla’s electric vehicles and robotics operations with SpaceX’s space technology and the companies’ wider AI ambitions.

Tesla’s Roadster reveal in focus

Tesla is also preparing to unveil its long-promised Roadster sports car on Thursday at a SpaceX test facility in Texas.

The company is expected to demonstrate a version of the vehicle capable of flying, adding to the anticipation surrounding the long-delayed model.

Musk previously described the planned debut as an event that “might be one of the most spectacular demos ever.”

Despite the attention surrounding the announcement, questions remain about the Roadster’s potential commercial impact and whether the launch can materially change investor expectations for Tesla.

Andrew Rocco, a stock strategist at Zacks Investment Research, said the product could generate considerable excitement but may not significantly affect the company’s financial performance.

“It’s going to be an exciting product. Likely, it’s going to build a lot of hype, but I don’t think that it’s going to be a needle mover,” Rocco told Bloomberg. “Musk loves to build hype around the brand.”

The upcoming reveal therefore represents another test of Tesla’s ability to translate product announcements and ambitious demonstrations into sustained investor confidence.

Broader tech sell-off adds pressure

Tesla’s decline also came against a difficult backdrop for technology stocks, as concerns about AI spending and financing costs weighed on companies associated with the industry.

Investors have been reassessing the scale of investment required to build AI infrastructure and whether those commitments can generate sufficient returns, adding pressure to valuations across parts of the technology sector.

The Philadelphia Semiconductor Index declined for a seventh consecutive session with the Nasdaq composite also in red.

The broader macroeconomic environment has added to the uncertainty. US wholesale inflation accelerated in September to its highest level since 2022, raising concerns that price pressures could persist and limit the Federal Reserve’s room to ease monetary policy.

Earlier in the day, UBS projected another Federal Reserve rate increase in March 2027, extending its forecast for the central bank’s tightening cycle.

Higher interest rates can weigh on equity valuations by increasing borrowing costs and making bonds more attractive relative to stocks. The prospect of prolonged monetary tightening has therefore added another source of pressure for growth-oriented companies.

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ServiceNow shares NOW rose 6.2% in trading on Thursday after TD Cowen raised its price target on the enterprise software company to $165 from $140 and reiterated its Buy rating.

Analyst Derrick Wood expects a strong third-quarter performance, supported by customer upgrades, growth in security products and demand from US federal agencies.

The gains came as investors rotated into enterprise software stocks amid a broader sell-off in semiconductor shares and concerns about heavily indebted artificial intelligence companies.

The shift lifted several software names, with Salesforce gaining almost 4%, Adobe rising more than 3% and Oracle climbing 2.8%.

The iShares Expanded Tech-Software Sector ETF (IGV) added about 1.05%, while the VanEck Semiconductor ETF (SMH) fell 2.11%, heading for its eighth consecutive losing session.

Investors rotate into enterprise software

The sector’s relative strength came as fresh inflation data reinforced concerns that prices and borrowing costs could remain elevated for longer.

US producer prices rose 1.3% in September from the previous month, more than double economists’ forecast of 0.5%, according to the Bureau of Labor Statistics.

Annual producer price inflation reached 6.3%, against expectations of 5.3%, marking the largest increase since December 2022.

Core producer prices, which exclude food and energy, increased 0.7% month over month and 5% year over year.

The consumer price index released on Wednesday also came in hotter than expected, with headline inflation reaching 3.7%, compared with forecasts of 3.6%.

Against this backdrop, investors appeared to favour established enterprise software businesses as concerns about debt exposure weighed on AI-related companies.

ServiceNow offers exposure to enterprise AI through its software products, while TD Cowen’s analysis points to its comparatively modest debt burden.

TD Cowen expects strong third-quarter results

Wood’s channel checks indicate that customers are upgrading to ServiceNow’s IT service management (ITSM) Prime tier and purchasing more of its other core products.

He also expects the company’s Armis security business and US federal operations to outperform expectations.

TD Cowen sees scope for a modest acceleration in growth in current remaining performance obligations (cRPO), which measure contracted revenue expected to be recognised over the next 12 months.

According to Wood, one partner reported that around half of renewal discussions now result in AI upgrades, typically to Prime.

These upgrades can increase average selling prices by roughly 30%, providing another potential source of revenue growth.

ServiceNow is scheduled to report its third-quarter results on October 28.

The earnings release will offer investors an opportunity to assess whether the anticipated improvement in cRPO growth is materialising.

Wood also sees the company’s stronger security positioning and growth in AI-related contracts as potential supports for further valuation gains.

Valuation and debt remain in focus

ServiceNow shares have gained more than 55% since the company reported its second-quarter results.

TD Cowen’s revised $165 price target is based on approximately 24 times enterprise value to projected 2027 free cash flow, compared with around 20 times at current prices.

The analysis also places the stock’s valuation at roughly 40% below its five-year average of about 40 times next-twelve-month free cash flow.

The firm estimates ServiceNow’s net debt at approximately $3.8 billion, against a market value of $144.7 billion.

Its annual contract value tied to AI has also surpassed $1 billion, according to TD Cowen.

However, the analyst’s identified risks include ServiceNow’s dependence on IT service management and its reliance on large, multimillion-dollar deals.

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Anthropic reported third-quarter revenue of $16.8 billion as growth slowed from the previous quarter, raising questions about its planned IPO valuation.

US wholesale inflation accelerated to 6.3% annually in September, strengthening concerns about persistent price pressures and the Federal Reserve’s interest rate outlook.

CoreWeave shares rebounded as BNP Paribas highlighted the risks associated with its financing structure, while gold prices climbed as a weaker dollar and lower Treasury yields supported the precious metal.

Anthropic’s revenue growth slows ahead of IPO

Anthropic’s revenue rose 45% quarter over quarter to $16.8 billion in the third quarter, while the Claude developer told prospective investors it was profitable on an adjusted basis.

However, the growth rate slowed compared with earlier quarters.

Revenue increased from approximately $4.7 billion in the first quarter to $11.6 billion in the second, representing growth of well over 100% before the latest advance.

The company is targeting a valuation above $2 trillion, while analysts who met executives estimate its annual revenue run rate could reach around $110 billion by year-end.

However, uncertainty remains over whether its reported revenue reflects gross or net sales, given its cloud partnerships.

Anthropic’s challenge will be sustaining revenue growth as models become cheaper and competition intensifies.

US wholesale inflation accelerates to 6.3%

US producer prices rose 1.3% month over month and 6.3% year over year in September, according to the Bureau of Labor Statistics.

Both readings exceeded economists’ expectations of 0.6% monthly growth and 5.5% annually. The annual increase was the largest since December 2022.

Goods prices surged 2.6%, their largest monthly increase since the series began in December 2009. Energy prices jumped 10.8%, accounting for more than 80% of the increase in goods costs, while gasoline prices climbed 20.3%. Food prices rose 1.2%.

Services prices increased 0.8% after advancing 0.2% in August. Trade services margins rose 1.4%, contributing nearly half of the increase in services prices.

The report followed September’s hotter-than-expected consumer inflation figures.

Initial jobless claims, meanwhile, edged up by 1,000 to 199,000 in the week ended October 10, remaining below economists’ forecast of 200,000.

The data strengthened expectations that the Federal Reserve could keep rates higher for longer. Traders assigned roughly a 27% probability to an October rate hike, according to CME FedWatch data, while markets priced in an 89.5% probability of an increase in December.

CoreWeave shares rebound even as financing risks remain

CoreWeave shares rose nearly 5% on Thursday, recovering from earlier losses as bond yields rebounded from earlier levels and BNP Paribas assessed the company’s financing structure.

Analyst Daniel Wang maintained an Overweight rating and a $169 price target, distinguishing between CoreWeave’s AssetCo and ParentCo debt structures.

Wang said AssetCo obligations appeared to carry relatively limited principal repayment risk because underlying cash flows were expected to exceed debt obligations as assets reached full revenue capacity.

Those cash flows would cover operating expenses, interest and principal repayments, with remaining free cash flow potentially available to ParentCo.

However, Wang identified ParentCo leverage and the company’s continued reliance on external financing to expand capacity as the more pressing concerns.

He said some unsecured obligations had implied yields as high as 15%, potentially making traditional ParentCo debt financing increasingly uneconomic.

Convertible debt and equity issuance could therefore become the primary sources of additional corporate capital until credit investors gain confidence in CoreWeave’s ability to fund itself.

Wang said stronger free cash flow from active capacity and newer contracts could help, but the stock remains increasingly sensitive to credit-market sentiment.

Gold rises as dollar and Treasury yields fall

Gold prices climbed on Thursday, recovering from a one-week low as the US dollar weakened and Treasury yields declined, despite the latest inflation data.

Spot gold rose 1.66% to $4,173.2 an ounce, while US December gold futures settled 2.1% higher at $4,194.2.

The dollar index fell 0.5%, and the benchmark 10-year Treasury yield reached a three-week low, supporting demand for the non-yielding metal.

Investors awaited comments from Fed Chair Kevin Warsh at the International Monetary Fund’s annual meeting.

Other precious metals also advanced. Spot silver gained 2.5% to $57.05 an ounce, platinum rose 1% to $1,622.40, and palladium climbed 3.4% to $1,131.25.

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US stocks ended mostly higher on Thursday as investors shifted away from some artificial intelligence-related stocks and into healthcare, consumer, and other defensive sectors amid concerns about elevated borrowing costs and persistent inflation.

The Dow Jones Industrial Average gained 556 points, or 1.08%, while the S&P 500 rose 0.33%.

The Nasdaq Composite added 0.08% as weakness in semiconductor stocks limited gains in technology shares.

Investors assessed September producer price data showing the strongest annual wholesale inflation increase since December 2022.

The figures followed hotter-than-expected consumer inflation data released on Wednesday, strengthening concerns that the Federal Reserve could raise interest rates again before the end of the year.

Dow leads gains as investors favour defensive stocks

Healthcare and consumer companies supported the broader market, with Eli Lilly, UnitedHealth and Walmart gaining following rating upgrades from Deutsche Bank.

Walmart shares climbed nearly 2%, while Nike advanced more than 5%.

The gains reflected a shift towards companies outside the technology sector as investors reassessed the risks associated with expensive AI infrastructure investments and higher financing costs.

The S&P 500 remains up approximately 13% in 2026 after reaching a record high last week, with much of its advance driven by AI-related stocks.

However, the index was trading at around 19 times expected earnings, its lowest valuation level since 2023, according to the supplied report.

The change in market leadership came as Treasury yields remained near multiyear highs despite retreating on Thursday.

The 10-year Treasury yield has been a focus for investors concerned that persistent inflation and elevated oil prices could keep borrowing costs high.

Higher financing costs could affect businesses across the economy, including companies investing heavily in data centres and AI infrastructure.

Semiconductor stocks extend losses amid AI concerns

Technology stocks remained under pressure as investors scrutinised AI companies with substantial debt obligations and questioned whether the sector’s growth expectations were sustainable.

The Philadelphia Semiconductor Index fell for a seventh consecutive session.

Broadcom and Nvidia declined after Taiwan Semiconductor Manufacturing Company (TSMC) expressed caution about its outlook for 2027, despite reporting a sixth consecutive quarter of record profits supported by AI demand.

Dell Technologies and Hewlett Packard Enterprise also remained under pressure following the previous session’s losses linked to concerns about borrowing costs.

Memory-related stocks faced additional headwinds from worries about a potential supply glut and increasing competition from China.

Seagate Technology, Western Digital and SK Hynix extended their declines during the week.

Anthropic’s latest revenue figures added to questions about the pace of AI growth.

The Claude developer generated $16.8 billion in third-quarter revenue, although the increase from the previous quarter was slower than its earlier expansion.

Not all AI-related stocks declined.

CoreWeave gained around 3%, recovering from a fall of more than 15% in the previous session, while Micron Technology rebounded from earlier losses to finish nearly 1% higher.

Inflation data raises Fed rate hike expectations

US producer prices rose 1.3% month over month and 6.3% year over year in September, marking the largest annual increase since December 2022.

The figures exceeded economists’ expectations and indicated that inflationary pressures were spreading across goods and services.

The report followed September consumer price data that also came in hotter than expected, increasing concerns that the Federal Reserve might need to tighten monetary policy further.

According to CME FedWatch data, traders priced in a 67% probability of a rate increase by the Fed’s December meeting, up from 62% on Wednesday.

Elsewhere, Rocket Lab shares fell after the company delayed the first launch of its larger Neutron rocket until next year. FMC also tumbled after sharply reducing its third-quarter outlook.

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Top real estate companies are rallying today. Zillow Group stock jumped 11%, while Better Home & Finance and Opendoor surged 33% and 17%, respectively. Other major names, including UWM Holdings and PennyMac Holdings, also traded in the green.

Zillow Group, Better Home, and Opendoor jumped as bond yields fell

While these stocks jumped, they remain well below their highs for the year. Zillow has dropped by 62%, while Better Home & Finance and Opendoor have slumped by 85% and 72% in the last 12 months. 

The rebound coincided with the retreat in bond yields. Data show that the ten-year yield dropped to 5.06%, while the five-year fell to 4.86%. The two have dropped substantially from their highest points this month. 

US bond yields dropped even after the US published strong consumer inflation data. The report showed that the headline Consumer Price Index (CPI) jumped to 3.7% last month. Core inflation rose 2.6% in September. Another report released today showed that the producer price index (PPI) rose from 0.5% in August to 1.3% in September, higher than the expected 0.6%. 

Despite these numbers, market participants don’t expect the bank to hike interest rates this month. Odds of the bank leaving interest rates unchanged moved to 72%. Most analysts expect the bank to hike interest rates by 0.25% in the December meeting. 

The falling bond yields have led to a brief retreat in mortgage rates. The average mortgage rate dropped slightly to 7.3%. Despite this, these rates have remained at the highest level in nearly three years. 

Lower mortgage rates would boost companies like Zillow Group, Opendoor, and Better Home & Finance. Indeed, the rising mortgage rates explain why these stocks have plunged by double digits this year. 

Mortgage rates have impacted these companies

The soaring mortgage rates explain why these stocks have been under pressure this year. Zillow, the biggest portal, has suffered substantially this year as demand for homes has done. SimilarWeb data shows that its website traffic dropped by 11% in September to 317 million. 

Its recent results showed that its revenue rose by 18% to $772 million, while its net loss jumped to $4 million. Analysts expect the upcoming results to show that its revenue rose 11% to $754 million, a sign that its business is slowing.

Opendoor’s business has been one of the most pressured companies because of the rising mortgage rates. In a recent statement, the company’s CEO clarified that the company was not near its breakeven point. She said: 

“The worsening housing market at the end of August pushed us roughly six to eight weeks behind on our Adjusted EBITDA guidepost, meaning the twelve-month window in which we expect to be adjusted EBITDA profitable now starts this quarter rather than last quarter.”

Better Home & Finance has also come under pressure as higher interest rates have led to a dip in originations. While its second quarter had strong growth, the estimate is that its revenue will grow by 12% to $50 million. Looking forward, these stocks will remain under pressure once the ongoing dip-buying ends.

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