Treasuries Jump on AI Investment Jitters as Meta Eyes $40 Billion Raise, SpaceX Telecom Push Draws Focus

1. US Treasuries Rally as AI Stocks Slump, Reclaiming Haven Status

Investors are piling into US Treasuries as AI-related stocks tumble. The move is reviving Treasuries’ role as a safe haven after they failed to offer much protection through much of this year’s equity-market slide.

Bloomberg reported that the inverse correlation between US Treasuries and AI-related stocks has strengthened to its highest level in about a year. The relationship has become more pronounced, with Treasury prices rising when AI shares fall.

The Treasury market posted its strongest advance in more than a year on Oct. 22. Yields on short-dated Treasuries dropped as much as 20 basis points during the session. Because yields move inversely to prices, that signaled a sharp rise in bond prices.

The Nasdaq 100 and the Philadelphia Semiconductor Index both recorded their biggest declines since June on the same day.

Turmoil in French financial markets and escalating tensions in the Middle East also fueled demand for haven assets. Brent crude rose above $113 a barrel after an attack in Saudi Arabia, but Treasuries kept climbing. That suggests concerns about financial-market stress and a slowing economy outweighed inflation worries tied to higher oil prices.

Charlie McElligott, a strategist at Nomura Holdings, said bonds are once again functioning as a hedge against equity risk. Markets are beginning to price in not only a reset in expectations for AI investment but also the possibility of slower US economic growth.

Investment in AI data centers, semiconductors and power infrastructure has been a key engine of US growth. Any slowdown in that spending could ripple across the broader economy.

Craig Veysey of Guinness Global Investors said the Treasury market has reached an important turning point. Recent data, including weaker consumer confidence, slower job growth and a sharp drop in pending home sales, point to a possible slowdown.

He said bonds could perform very well if investors start worrying more about recession risk than the AI boom.

Markets are also scaling back expectations for additional rate increases this year. If slower AI investment weighs on corporate capital spending and economic growth, the Federal Reserve may have less reason to tighten further.

Still, Treasury prices slipped modestly on Oct. 23 as technology stocks recovered part of their losses.

Longer term, views remain split on how AI will affect Treasury yields. If AI boosts productivity and lowers costs, it could help ease inflation and push rates lower. If it instead lifts growth and capital spending, stronger funding demand could drive yields higher.

2. Meta May Raise More Than $40 Billion as Competition for AI Funding Intensifies

Meta Platforms may pursue a capital raise of more than $40 billion within weeks to fund AI infrastructure investment.

Barron’s reported on Oct. 23 that Meta is trying to secure funding before other technology companies begin tapping capital markets in earnest.

Meta’s capital expenditures this year are projected to reach about $140 billion. Its long-term debt has climbed by $22 billion this year to $80 billion.

Meta holds an AA credit rating, but yields on its 30-year corporate bonds have moved above 7%. As debt financing becomes more expensive, the case for issuing new shares is strengthening.

In its earnings report on Oct. 21, Meta said it would introduce a new class of non-voting shares, known as Class C stock. The shares would be distributed to existing holders on a one-for-one basis, creating a structure that is effectively similar to a two-for-one stock split.

The move is viewed as a way to preserve Chief Executive Officer Mark Zuckerberg’s control even during a large capital raise. Zuckerberg currently owns about 14% of Meta’s economic interest while controlling roughly 60% of the voting power through super-voting shares.

Wall Street had initially expected any stock sale to come after January 2027, when the new shares are scheduled to be distributed. But Meta said in a filing that it may need to raise hundreds of billions of dollars over several years starting in the fall of 2026.

Anthropic’s planned initial public offering is also adding to the competition for funding. The company is expected to file a registration statement with the US Securities and Exchange Commission soon as it seeks a large IPO before Thanksgiving.

Mark Mahaney of Evercore said Meta could raise $50 billion to $100 billion over the next three to six months through stock and bond offerings.

Doug Anmuth of JPMorgan also said Meta’s capital raise could come sooner than expected. Moving early would help remove stock-market uncertainty around the company’s financing plans.

Berkshire Hathaway has been mentioned as a potential investor in a large stock sale.

Berkshire took part in Alphabet’s $85 billion capital raise in June, buying $10 billion of shares at a 6% discount to the market price. Those holdings are now valued at more than $30 billion.

Berkshire holds more than $350 billion in cash. Greg Abel, who succeeded Warren Buffett as CEO at the end of last year, is looking for opportunities to put that money to work.

Meta’s valuation is another factor that could support investor demand. The stock trades at less than 20 times estimated 2026 net profit, a relatively low level among the Magnificent Seven.

Barron’s said Meta could first raise $20 billion through existing Class A shares or convertible bonds, then secure another $20 billion after distributing Class C shares next year.

One financing option is an at-the-market offering, or ATM. Under that structure, a company sells new shares gradually over time depending on market conditions rather than issuing them all at once.

If Meta expands equity financing, it could keep funding AI investment while easing pressure to issue more corporate debt. Existing shareholders, however, would face dilution from new share issuance.

3. Cybersecurity Stocks Jump; Morgan Stanley Sees a Short-Term Buying Opportunity

Interest in US cybersecurity stocks is rising as investors bet that advances in AI will drive stronger demand for security.

Meta Marshall, an analyst at Morgan Stanley, wrote in an Oct. 22 report that while the investment backdrop for 2027 is challenging, the cybersecurity sector still offers a short-term buying opportunity.

Marshall reiterated an overweight rating on Palo Alto Networks and set a $410 price target, about 18% above the current share price.

He said Palo Alto is well positioned to respond to rapidly evolving threats and to consolidate the fragmented cybersecurity market.

One catalyst for the sector’s rise was a security alert from the National Security Agency and the Federal Bureau of Investigation.

The agencies warned on Oct. 21 about vulnerabilities in PHP, a programming language widely used in websites and online services. They urged companies running affected systems to install security updates immediately and said operators unable to patch quickly should temporarily suspend those systems.

Wall Street expects AI to be a long-term growth driver for the cybersecurity industry.

Paul Meeks, head of technology research at Freedom Capital Markets, told CNBC that CrowdStrike and Palo Alto Networks stand to benefit from advances in AI.

As AI becomes more deeply embedded in corporate workflows and information-technology systems, the amount of data and infrastructure requiring protection will increase. At the same time, cyberattacks that exploit AI could become more sophisticated, prompting companies to spend more on security.

Research advances by OpenAI and Anthropic in mathematics and cryptography are also drawing attention.

OpenAI released hundreds of mathematical proof materials earlier this month, and Anthropic published research findings in cryptography this summer.

If AI becomes better at solving complex mathematical problems and identifying weaknesses in existing encryption systems, it could bring sweeping changes to the internet security industry.

4. SpaceX Challenges Big Three US Carriers, Sending Telecom Stocks Lower

SpaceX is seeking telecom infrastructure as it pushes to become the fourth nationwide mobile carrier in the US.

Bloomberg reported on Oct. 22 that SpaceX is in talks with major tower operators including Crown Castle.

The US wireless market is currently dominated by T-Mobile, Verizon and AT&T.

After news emerged that SpaceX could become a new competitor, T-Mobile fell 4.3% in premarket trading on Oct. 23, while Verizon dropped 3.7% and AT&T lost 3.3%.

Crown Castle, by contrast, jumped about 7%. SpaceX, after dropping about 9% a day earlier, rebounded about 3% in premarket trading.

SpaceX is pursuing a plan to combine its existing Starlink satellite network with a terrestrial mobile network.

Starlink provides internet service through low-Earth-orbit satellites, but it faces limitations in maintaining stable service quality inside buildings and in dense urban areas with many obstacles.

To address that, the company is considering options to lease or acquire about 80,000 mobile base-station sites across the US.

Securing low-band spectrum is another key task. Low-band frequencies are well suited to covering wide areas and penetrating buildings, making them essential for building a nationwide mobile network.

Asked during an Oct. 22 earnings call whether Crown Castle was negotiating with SpaceX, Chief Executive Officer Chris Hillebrandt said the company is talking with all parties. He did not directly confirm the talks, but he also did not deny the possibility.

Citigroup said SpaceX’s entry into the mobile market would be negative for incumbent carriers but positive for tower operators.

Established telecom companies could face pressure on market share and pricing if a new rival enters the field. Tower operators, meanwhile, could generate new revenue by leasing base-station sites to SpaceX.

Citigroup said the related lease agreements could be worth billions of dollars.

The bank named Crown Castle, SBA Communications, American Tower and EchoStar as buy-rated stocks that stand to benefit.

SpaceX is projected to need about three to five years to build a nationwide mobile network. Reaching close to a 20% market share could take as long as a decade.

Because incumbent carriers already have nationwide networks and large subscriber bases, SpaceX is unlikely to take market share quickly.

5. SpaceX Price Target Raised to $250 From $75 on AI Computing Growth

Wall Street’s view of SpaceX (SPCX) is shifting as the company’s AI computing business expands rapidly.

CNBC reported that PhillipCapital upgraded SpaceX to buy from sell on Oct. 23.

The firm also raised its price target to $250 from $75. That implies about 73% upside from the Oct. 22 close of $144.75.

PhillipCapital said the biggest reason for the rating change was improving performance in the AI computing business.

In third-quarter results released on Oct. 20, SpaceX posted revenue of $14.58 billion and adjusted earnings per share of 45 cents. Both figures topped market expectations, and the company recorded its first quarterly profit since listing in June.

Glenn Thum, an analyst at PhillipCapital, gave a positive assessment of growth in the AI computing and satellite communications businesses, as well as improving profitability.

SpaceX runs a business that leases computing resources to AI companies. Instead of building their own data centers, those companies use SpaceX’s GPUs and servers and pay usage fees.

The company calls the business Super Intelligence, or SI.

Its contract with AI coding company Cursor has generated $608 million in revenue since mid-August.

The satellite communications business is also growing. Revenue from corporate and government customers rose 91% from a year earlier as Starlink service for aircraft expanded and the US government increased Starshield contracts.

In AI computing, supply shortages are helping profitability.

Demand for computing from AI companies is rising quickly, but the supply of data centers equipped with GPUs, power infrastructure and cooling systems is not keeping up.

PhillipCapital said SpaceX is raising rental rates for computing resources when it renews existing contracts.

The company’s ability to recoup investment in new computing equipment within a year was also seen as a positive. High utilization rates and customers willing to pay higher rental fees are shortening the payback period.

SpaceX’s guidance was also strong.

The company said first-quarter 2027 revenue would be more than double this year’s third-quarter level. Based on third-quarter revenue of $14.58 billion, first-quarter 2027 revenue could exceed $29.16 billion.

PhillipCapital said, however, that such growth may be difficult to sustain throughout next year.

The biggest constraints are power and cooling facilities. Even if demand for GPUs and servers rises, the company cannot expand computing supply unless it builds out power and cooling infrastructure in time.

The average price target among 43 analysts covering SpaceX tracked by CNBC is $249.24. That is about 72% above the Oct. 22 close.

Of those analysts, 33 rate the stock buy or strong buy.

Wall Street is also changing the way it values SpaceX. In the past, rocket launches and Starlink satellite internet were the main growth drivers. Now the AI computing business is emerging as the key factor in determining the company’s value.

As debate intensifies over the profitability of AI investment, SpaceX has delivered actual revenue growth and a return to profit in AI computing, helping drive a positive response from investors.

Park Shin-young, New York correspondent, Hankyung.com, nyusos@hankyung.com