👀 This is a problem

SCOREBOARD

Tuesday close. S&P flat, as chips held up and banks sank. The Nasdaq still edged to a record. On the week: Nvidia +7.87%, S&P +2.36%, Nasdaq +4.86%. Prices via CNBC.

ON WATCH

Nscale, a British AI cloud company backed by Nvidia, has filed to list on the New York Stock Exchange at a reported $35 billion valuation. It's the next test of whether Wall Street still wants to own the AI boom's pipes and power.

The Financial Times found that nearly three-quarters of Nscale's sales last year came from ByteDance, TikTok's Chinese owner. That turned up only in a side document filed Friday, which didn't name ByteDance either.

ByteDance was renting top Nvidia chips in Norway that it couldn't buy in China. That's legal, but with Xi Jinping at the White House this week, it's not a customer you'd want in the headline.

Nscale also lost $1.02 billion in the first half of 2026 on $140.6 million of revenue, about $7 out for every $1 in. Its managers flagged "substantial doubt" about its ability to carry on.

It's not alone. SB Energy, a SoftBank data-centre builder Nvidia just backed, has pushed its $50 billion listing to October after buyers baulked at the price.

To be fair, Nscale has $103 billion of signed contracts, about $88 billion of it from Microsoft and Anthropic. It says its plans cover the cash gap, though Anthropic's deal still depends on financing.

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THE MACHINE

Meta's Muse agent, the one that sent Meta's shares up 11% on Monday, spent Tuesday hitting companies that don't do AI at all. JPMorgan and Wells Fargo each fell more than 3%, and the S&P 500's financials index closed at its lowest since July.

Insurer Allstate dropped 5.5% and Charles Schwab more than 6%. Let Meerkat translate.

Plenty of banks, insurers and phone companies do well because you can't be bothered to switch, and a bot that shops around for you threatens that. Goldman Sachs' trading desk warned that businesses built on recurring bills and "customer passivity" face "severe disruption".

The case against the panic is that Muse is having a messy first fortnight. Amazon blocked it over the weekend, and a researcher found a flaw in the Mac app that could let an attacker take over your account.

SOMEONE SMART SAID

Siegel ran trust and safety at Google from 2004 to 2019, the job of keeping the company's products from hurting people. He's now the first head of Common Sense Media's Youth AI Safety Institute, and he told Reuters the industry is repeating social media's mistakes, with even more harm possible for kids this time.

He listed the risks as suicide, psychosis and "cognitive offloading", kids letting a chatbot do their thinking. He wants independent crash tests for AI tools, the way cars get safety ratings, plus proper age checks at OpenAI and Anthropic.

"The idea that the industry will figure it out by itself without outside help is unrealistic," he said, which is quite a line from the man who ran the in-house version of that job for 15 years.

THE CHART

The S&P 500 closed Tuesday at 7,765, flat on the day, up 2.4% on the week and around five times its dot-com peak. That's while Fed officials spent the week saying they might have to raise rates again.

St. Louis Fed president Alberto Musalem told Reuters the new 3.75% to 4% range is still "on the accommodative side", in other words not tight enough to cool prices. Higher rates usually weigh on pricey tech stocks, yet the Nasdaq, packed with the AI names, is up 4.9% this week.

HEADS UP

ON THE HORIZON

MEERKAT ON YOUTUBE

Anthropic researchers are quitting... and now we know why! Meerkat goes through why researchers keep walking out of Anthropic, and what they've said on the way out. Watch on Meerkat Explains.

THE BURROW

Quick vote. Nscale wants a $35 billion listing, and its biggest customer last year was TikTok's owner. Would you buy in?

Trivia. TikTok's owner, ByteDance, was founded in which year? 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.

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TRIVIA ANSWER

2012. Zhang Yiming founded ByteDance in Beijing that year, and it launched Douyin, TikTok's Chinese twin, four years later.