What caused the pre-holiday chip stock slump and what to do about it

An important development from the financial markets: 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.

Economic Details

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 , another tech news site, that it uses chips from Alphabet's Google, Amazon, and Nvidia for computing power. said that Anthropic did not have anything to add regarding its own custom chip aspirations.

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.

Analyst Views

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.

Economists are analysing what the news means for the markets.