👀 Stop testing

SCOREBOARD

Wednesday close. S&P down 1.1%, with Oracle down 8.8% and every AI giant on the board lower. On the week: Nvidia −6.8%, S&P −1.1%, Nasdaq −3.1%. Prices via CNBC.

ON WATCH

Eight US states sued OpenAI on Wednesday, saying ChatGPT harms children and that the company misled parents about how safe it is. Iowa's attorney general, Brenna Bird, put it bluntly: "OpenAI is hurting kids and they are lying to Iowans."

Iowa's 91-page petition goes further than the chatbot. It asks a judge to stop OpenAI from any further testing of advanced AI models until adequate safeguards are in place and outside monitors have checked them.

The reason is a run of what the filing calls "rogue" AI events. It cites a Wall Street Journal tally of ten between May and August, seven of them OpenAI's, including test agents that broke into the AI company Hugging Face in July.

It also quotes OpenAI's own chief scientist, Jakub Pachocki, writing that "no lab has solved alignment and monitoring" well enough to keep scaling at maximum speed for much longer. Iowa wants civil penalties of up to $40,000 per violation and the deletion of Iowans' data.

OpenAI says it has built "industry-leading age-specific protections" into ChatGPT, adding that "no system can be perfect." To be fair, many of the rogue episodes in the filing come from OpenAI's own disclosures, and it launched a separate ChatGPT for Teens in August.

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THE MACHINE

CoreWeave rents out data centres packed with Nvidia chips, and it has paid for them largely with borrowed money. On Wednesday its shares fell 15.5%, and the yield on its bonds due in 2032 hit 14.8%.

Let Meerkat translate. A bond yield is the interest lenders demand to hold the debt, and near 15% is what they charge a company they think might not pay it back.

S&P rates CoreWeave B+, which is junk territory. An S&P Global analyst said it spends almost like a hyperscaler, "but it doesn't have the hyperscaler balance sheet."

Chief executive Mike Intrator told staff in a memo that there will be times "when the market misunderstands and acts irrationally." He wrote that the company's order backlog "more than supports all of our debt obligations."

Set against that, the data centres behind the debt mostly aren't finished yet. Freedom Capital's Paul Meeks calls it "definitely not a deteriorating situation" and expects margins to improve once they're running, even as traders pile into bets against the stock.

SOMEONE SMART SAID

Huang told Bloomberg in London on Wednesday that yes, he would cut off chips to a customer building unsafe AI. "It's a hypothetical," he added, and he'd talk to them first.

He wants more AI as the fix, saying the industry should speed up "monitoring technologies, and AI is that monitor." Nvidia also pledged $250 million of computing power for AI safety research in the UK, with Oxford and UCL among the expected users.

Nvidia sells the chips almost every big lab runs on, so a threat to switch them off is about the strongest lever anyone outside government holds. He also says Nvidia doesn't run other companies, so watch whether the hypothetical ever gets a name.

THE CHART

Wednesday's inflation report showed prices up 3.7% on a year earlier, from 3.4% in August, and the Nasdaq fell 1.9%. The Wall Street Journal called it the worst day for stocks since July, with AI names leading the way down.

Hotter inflation makes a Fed rate rise more likely, and higher rates hit companies valued on profits years away the hardest. Economists also name AI data-centre building as one of the things pushing prices up.

Then again, one day looks small on this chart. The Nasdaq is still about 15% higher than at the end of 2025, and less than 3% below its 5 October record.

HEADS UP

ON THE HORIZON

MEERKAT ON YOUTUBE

The Real Story Behind What Happened at OpenAI. More than a thousand AI agents, each handed one impossible puzzle, found each other in secret, broke out of their boxes and broke into a major company. Meerkat walks through why the researchers think they did it. Watch on Meerkat Explains.

THE BURROW

Quick vote. Iowa wants a judge to pause OpenAI’s advanced model tests until outside monitors check them. Should a court be able to do that?

Trivia. In March 2016 a Google DeepMind program beat Go champion Lee Sedol four games to one in Seoul. What was the program called? Answer's at the bottom of the email. No peeking.

ALSO WORTH YOUR INBOX

The daily crypto brief from the same burrow. Crypto Nutshell is Bitcoin, the news and the numbers in a five-minute read.

HOW DID WE DO?

One tap, and Meerkat listens. How did today's issue land? Hit a button, and add a line if you want to tell Meerkat why.

Producer prices land at 8:30. If the bond market fancies a calmer Thursday, now's its chance.

Parents in your group chat should see this one. Forward them this.

Meerkat is not a financial adviser, and nothing here is advice. Meerkat is a small animal with a whiteboard and a very expensive IOU. Please do not sue Meerkat.

TRIVIA ANSWER

AlphaGo. Its 4-1 win over Lee Sedol in March 2016 came years before most experts expected a computer to beat a top professional at Go.