Anthropic. The Information. The session before a long holiday weekend. It was a toxic combination that crushed chip stocks on Thursday. The market was closed Friday in observance of the Fourth of July — so, understandably, Thursday’s trading volume was light, which made stocks vulnerable to big swings. Here’s what happened. Tech media outlet The Information put out a story Thursday, reporting that Anthropic is in talks with Samsung to manufacture a custom artificial intelligence chip. Anthropic’s prowess as a maker of leading AI models is already setting the company up for one of the biggest initial public offerings of all-time. While it is not far-fetched that Anthropic, like other AI-forward companies Alphabet and Amazon, would want its own custom chips, the report from The Information was short on details on what a potential Anthropic chip would be — GPU or CPU — or how it would be used. Anthropic told TechCrunch , another tech news site, that it uses chips from Alphabet’s Google, Amazon, and Nvidia for computing power. TechCrunch said that Anthropic did not have anything to add regarding its own custom chip aspirations. It didn’t matter. Every hedge fund manager had to take action because who knew what an Anthropic chip would be. Then, every fellow traveler who does know what they own has to bail from Micron , Seagate , Western Digital , Sandisk , and Advanced Micro Devices (AMD), as well as Club names Nvidia and Intel . These stocks have weak holders to begin with who don’t know how things are working out. They don’t know how sold out everyone is. They don’t know how much it would cost. They don’t realize that if Samsung is going into a new chip for Anthropic, it would require billions of dollars in semiconductor capital equipment, which, if any were actually available, would be a monumental underwriting. Anthropic would have to do an equity offering right now to get in that queue, which is pretty backed up, to say the least. Despite the love for Anthropic, the company has no compunctions claiming it will make anything and dominate everything. I don’t know who makes these claims, if they are made at all, but I know that Anthropic’s word is law, and The Information story plays right into Anthropic’s handiwork. The problem is that we have seen this horror movie before. Back in January, with CrowdStrike in the high $110s, down from $138, we learned that this great cybersecurity company’s “goose was cooked” because it was believed that Anthropic would disrupt the industry. (Those prices on CrowdStrike shares account for the 4-for-1 stock split that happened on Thursday.) I immediately had George Kurtz, CEO of CrowdStrike, come and talk about the possibility of a new entrant with a superior product coming in. George dismissed it out of hand. Why? Because even if Anthropic wanted to play that role, being both the provider of a hackable service and the blocking of cyberterrorists, the insurance companies, the determinants of who gets coverage, would never allow it. You can’t do both, George said. It’s just not going to happen. At the time, it didn’t matter. CrowdStrike kept being filleted. An unstoppable force of negativity, something that lasted until Anthropic launched Project Glasswing , which showed the desperate nature of a level of cybersecurity only CrowdStrike and Palo Alto Networks had. By then, CrowdStrike had fallen to the $90s, as panic had repeatedly ensued. But it was beginning to dawn on people that Anthropic’s new Mythos model was a real threat to cybersecurity — perhaps the best thing going for it. From there, CrowdStrike rallied to the $190s, a $100 gain from the bottom. So, fast forward to now. That’s why I want to revisit the gameplan we put into place last winter when we decided it was too much and cyber stocks didn’t deserve the punishment. Now, I am picking Intel because it has CPUs, it is building foundries (that’s semiconductor-speak for manufacturing facilities), and it is creating a packaging business that will give Cadence a run for its money. It will not be hurt by Anthropic. I don’t know if anything will be hurt by Anthropic; I am just picking Intel because it has the most upside. Believe me, I would rather pick Nvidia, but there is not a day when someone tries to rain on Nvidia’s parade, and I am sick of the deluge. Anyway, there you have it. The repeat of the cyber run. It was vicious. It lasted several months. You needed plenty of dry powder to make it work for you, which we had then and we have now. (Jim Cramer’s Charitable Trust is long GOOGL, AMZN, INTC, NVDA, CRWD, PANW. See here for a full list of the stocks.) 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What caused the pre-holiday chip stock slump and what to do about it
