AI rally wanes as Elice IPO plummets

Hello, I’m Leonie Kidd, in charge of today’s Morning Squawk.

Wall Street’s AI rescue rally has hit a wall in Asia and Europe, and the neo-cloud on the horizon has gone dark. Currently, they are focusing more on revenue, with attention focused on Netflix and SpaceX.

U.S. stock futures are giving up some of their overnight optimism following Monday’s rebound in AI stocks, as sharply negative trading in Asian markets suggests that concerns remain around tech stocks.

negative closing price core weaveand improved yield oracle Revealing deep-rooted trust concerns in AI trade.

Overseas Selling: South Korea’s Kospi led a sharp decline in Asia, moving closer to bear market territory. Meanwhile, across Europe, technology stocks pushed indexes into the red in morning trading.

Troubled IPO: Elice, a South Korean AI data center company, debuted as a small IPO on the domestic secondary market, but its stock price has plummeted, falling more than 30% in its trading debut.

Why it matters: Other data center companies have also canceled IPO plans, including Nvidia-backed Firmus, Blackstone-backed AirTrunk and SoftBank unit SB Energy. Analysis: John Lovelock, Gartner’s chief forecaster who wrote the report that spurred last week’s debacle, stood by his view, saying, “Everyone in the AI ​​race is running to be the last man standing. Nearly every market Gartner tracks in the AI ​​race is likely to collapse.” Toward a duopoly. ”

Shares of neo-cloud companies are falling in pre-market trading. Coreweave remains the eye of the typhoon, giving up on a bailout rally despite an upgrade from Goldman Sachs, which said the stock was “close to the top of the ecosystem quality rankings.” HSBC disagreed, saying late Monday that its share price could fall another 36% due to higher borrowing costs and slower revenue growth for AI models.

Thirty-nine years after Black Monday, Jim Cramer says the market can learn important lessons from Black Monday amid the AI ​​crash. He also said investors should pay attention to hedge fund liquidations and the role of hedge funds in the recent decline.

Crude Oil: $111: International oil benchmark Brent crude rose early Tuesday to its highest since May as attacks by Iran and its proxies intensify in the Middle East. The damage to energy infrastructure from the Ukraine-Russia deal does not help the situation either. Ukrainian President Volodymyr Zelenskiy is scheduled to meet with US envoys Steve Witkoff and Jared Kushner in Norway today, after President Donald Trump renewed his call for a new leader for the country.

Two huge leaders in today’s technology field, Netflix and space x Both are reported after the market closes.

Swimming upstream: Netflix is ​​expected to post 40% profit growth in the third quarter, according to LSEG. But with significant executive changes and significant layoffs, Netflix investors will likely keep an eye on the company’s engagement outlook.

Netflix’s stock price has fallen since its last five quarterly reports.

Tough action to follow: Elon Musk’s pledge to give SpaceX stock to every American child next year sets the stage for today’s earnings. This is the second time the group has reported profits as a public company, and while the stock is trading above its IPO price of $135, it is still far from its peak since its debut.

Watch CNBC’s live blog on SpaceX earnings. This blog will go live at 9am ET.

Nvidia is investing in Europe, committing nearly $10 billion to businesses, universities and research institutions across the region.

After announcing strategic cooperation with the government in Berlin, Mr. Jensen Huang toasted with Chancellor Friedrich Merz and announced new cooperation with Germany.

Why it matters: Huang’s European tour has invested in a number of startups, including Genesis AI, Agile Robots, and Reflex Aerospace, but Mistral AI remains a key partner. Analysis: Nvidia seeks to accelerate AI adoption outside the US, but Europe’s regulatory reputation could constrain development across the continent.

What is making Europe so angry?

Anger over the cost of living and pressures on public services has brought hundreds of thousands of protesters to the streets in several European countries, with complaints ranging from expensive housing to poor conditions at schools and universities.

The largest demonstrations occurred in France over the weekend, with more than 500,000 people marching. Although the majority of protests were peaceful, some committed looting, destroying stores, setting fire to city hall, and attacking police officers.

Separate protests were held in Italy, Spain, Portugal and Albania on Saturday and Sunday.

—CNBC’s Caleigh Keating, Kai Nicol-Schwarz, Lora Kolodny, Liz Napolitano, Sawdah Bhaimiya and Jenny Lee contributed to this report.

John Meloy edited this version.