Treasuries Surge on AI Angst as Meta Fundraising, SpaceX Telecom Push Draw Focus: Park Shin-young’s Pre-Market Brief

1. Treasuries surge as AI stocks slide, reviving their haven role

Investors are piling into US Treasuries as AI-related shares tumble, restoring the bond market’s role as a haven after it offered limited protection during much of this year’s equity selloff.

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: when AI shares fall, Treasury prices rise.

The Treasury market posted its strongest rally in more than a year on October 22. Yields on short-dated government debt fell as much as 20 basis points during the session. Because bond yields move inversely to prices, that meant Treasury prices jumped.

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

Turmoil in French financial markets and rising tensions in the Middle East also fueled demand for haven assets. Brent crude climbed above $113 a barrel after an attack in Saudi Arabia, but Treasuries kept advancing. Concern over market stress and slowing growth appeared to outweigh inflation worries linked 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 also beginning to price in slower US growth as expectations for AI investment are recalibrated.

Investment in AI data centers, semiconductors and power infrastructure has been a major engine of US economic growth. If the pace of AI spending slows, the broader economy could feel the impact.

Craig Bethune 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 the possibility of an economic slowdown.

He said bonds could deliver strong returns if investors begin to worry more about recession risk than the AI boom.

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

Still, Treasury prices edged lower on October 23 as technology shares recouped part of their losses.

Over the longer term, views remain split on how AI will affect Treasury yields. If AI lifts productivity and cuts costs, it could help ease inflation and push rates lower. If it drives stronger growth and capital spending, rising funding demand could instead put upward pressure on rates.

2. Meta may raise more than $40 billion as competition for AI funding intensifies

Meta Platforms Inc. may launch a capital raise of more than $40 billion within weeks to fund AI infrastructure investment, Barron’s reported.

The company is trying to secure financing before other technology firms begin raising funds in earnest, Barron’s said on October 23.

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

Meta carries an AA credit rating, but yields on its 30-year corporate bonds have climbed above 7%. That has made debt financing more expensive and strengthened the case for issuing stock.

The company said in its October 21 earnings release that it plans to introduce a new class of non-voting shares, known as Class C stock. The shares would be distributed to existing investors on a one-for-one basis, creating a structure similar to a two-for-one stock split.

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

Wall Street had initially expected a capital raise after January 2027, when the new shares are 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 push toward an initial public offering is also intensifying competition for capital. The company is expected to file a registration statement with the US Securities and Exchange Commission soon as it pursues a large IPO before Thanksgiving.

Mark Mahaney, an analyst at Evercore, said Meta could raise $50 billion to $100 billion over the next three to six months through stock and bond issuance.

Doug Anmuth, an analyst at JPMorgan, also said Meta’s capital raise could come sooner than expected. Completing the process early could remove uncertainty hanging over the stock.

Berkshire Hathaway Inc. is being mentioned as a potential investor in a large offering.

Berkshire took part in Alphabet Inc.’s $85 billion capital raise in June, buying $10 billion of stock at a 6% discount to the market price. The value of those holdings is now estimated 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 seeking opportunities to put that money to work.

Meta’s valuation is also supportive. Its forward price-to-earnings ratio based on estimated 2026 net income is below 20 times, relatively low among the Magnificent Seven.

Barron’s outlined a scenario in which Meta first raises $20 billion through existing Class A shares or convertible bonds, then secures another $20 billion after the Class C distribution next year.

One possible tool is an at-the-market, or ATM, offering. Under that structure, a company sells newly issued shares gradually over time rather than all at once, depending on market conditions.

A larger stock sale would let Meta continue funding AI investment while reducing its reliance on bond issuance. Existing shareholders, however, would have to absorb dilution from the new shares.

3. Cybersecurity shares jump as Morgan Stanley sees a short-term buying opportunity

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

Meta Marshall, an analyst at Morgan Stanley, wrote in an October 22 report that the 2027 investment backdrop is challenging, but the cybersecurity sector still offers short-term buying opportunities.

Marshall reiterated an overweight rating on Palo Alto Networks and set a price target of $410. That is 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 gains was a security warning from the National Security Agency and the Federal Bureau of Investigation.

The agencies warned on October 21 about vulnerabilities in PHP, a programming language widely used in websites and online services. They urged companies running related systems to install security updates immediately and said operators that cannot patch quickly should temporarily suspend those systems.

On Wall Street, AI is increasingly viewed as a long-term growth driver for the cybersecurity industry.

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

As AI is embedded more deeply into corporate workflows and information-technology systems, the amount of data and infrastructure that must be protected will increase. At the same time, cyberattacks that misuse AI could become more sophisticated, likely pushing corporate security spending higher.

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

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

If AI becomes better at solving complex math problems and identifying weaknesses in existing encryption systems, the internet security industry could face a new wave of change.

4. SpaceX challenges the big US carriers, sending telecom shares lower

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

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

The US wireless market is currently dominated by three companies: T-Mobile US Inc., Verizon Communications Inc. and AT&T Inc.

On news that SpaceX could emerge as a new competitor, T-Mobile fell 4.3% in premarket trading on October 23, while Verizon dropped 3.7% and AT&T lost 3.3%.

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

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

Starlink uses low-Earth-orbit satellites to provide internet service, but it has limitations in delivering stable connectivity inside buildings and in dense urban areas with many obstacles.

To address that, SpaceX is reviewing plans to lease or acquire about 80,000 mobile base-station sites across the US.

Securing low-band spectrum is another key task. Those frequencies are useful for covering wide geographic areas and reaching inside buildings, making them essential for a nationwide mobile network.

Asked during an earnings call on October 22 whether Crown Castle was in talks with SpaceX, Chief Executive Officer Chris Hillabrand said the company is speaking with all parties. He did not directly confirm negotiations, but he also did not rule them out.

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

Existing carriers could face pressure on market share and pricing as a new rival enters the market. Tower operators, by contrast, could gain a new revenue stream 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 Corp., American Tower Corp. and EchoStar Corp. as buy-rated stocks expected 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 lifted to $250 from $75 on AI computing growth

Wall Street’s view of SpaceX Corp. is shifting as the company’s AI computing business grows rapidly.

Phillip Capital upgraded SpaceX to buy from sell on October 23, CNBC reported.

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

The biggest reason for the upgrade was improving results in the AI computing business.

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

Glenn Thum, an analyst at Phillip Capital, said he viewed growth in the AI computing business and satellite communications unit, along with improving profitability, positively.

SpaceX operates 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.

A contract with AI coding service company Cursor has been especially important. Since mid-August, it has generated $608 million in revenue.

The satellite communications business is also expanding. Revenue from enterprise and government customers rose 91% from a year earlier as Starlink service for aircraft and US government Starshield contracts grew.

In the AI computing business, supply shortages are helping margins improve.

Demand for computing power from AI companies is rising rapidly, but supply of data centers equipped with GPUs, power connections and cooling systems is struggling to keep pace.

Phillip Capital said SpaceX is raising lease rates for computing resources when it renews existing contracts.

A further positive is the company’s ability to recover investment in new computing facilities within a year. High utilization rates and customers willing to pay higher rental fees are shortening the payback period.

The company’s guidance is also strong.

SpaceX said first-quarter 2027 revenue is expected to more than double from the level posted in the third quarter of this year. Based on third-quarter revenue, that would put first-quarter revenue next year above $29.16 billion.

Phillip Capital said, however, that such growth is unlikely to be sustained throughout next year.

The biggest constraints are power and cooling facilities. Even if demand for GPUs and servers rises, supply cannot expand unless power delivery and cooling infrastructure are built out in time.

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

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

On Wall Street, the basis for valuing SpaceX is also changing. Rocket launches and Starlink satellite internet were once seen as its main growth drivers. Now the AI computing business is emerging as the key variable in the company’s valuation.

As debate intensifies over returns on AI investment, investors are responding positively to the fact that SpaceX has shown real revenue growth and a turn to profitability in AI computing.

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