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Good morning and happy Friday.
On Thursday morning, the world partied like it was 2019. Peace and harmony nearly broke out as OpenAI’s ChatGPT, Anthropic’s Claude, Google’s Gemini, xAI’s Grok, and several other artificial intelligence platforms suffered outages around the same time. “For a brief moment, millions of people had to use their brains again,” technology journalist Paris Marx joked in a social media post.
While the cause was unclear and may not be uniform, Microsoft’s Azure cloud service also saw a spike in reported outages. Most AI services were restored and operating normally by the afternoon. But, for that fleeting moment, the title of world’s greatest authority on knowledge belonged not to a chatbot, but once again to your unemployed friend from college who edits 700 Wikipedia articles a day. Tomorrow, we can go back to worrying about the singularity.
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*Presented by Sprott. Stock data as of market close on September 3, 2026.
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*Please see important METL disclosures below.
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Photo via Clement Delangue/X
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It’s a match made in momentum trade heaven: AI’s biggest infrastructure provider is about to get its hands on AI’s biggest collection of open-source roadmaps.
On Thursday, Nvidia confirmed reports that it would acquire Hugging Face, a.k.a. “The GitHub of AI,” in a deal valued at a whopping $13 billion. It’s the latest (and perhaps greatest) expression of Nvidia’s strategy to promote an open-source AI ecosystem. “Open models strengthen safety and cybersecurity, accelerate innovation and diffusion, and enable sovereignty,” Nvidia CEO Jensen Huang said in an X post announcing the deal.
An Offer They Can’t Refuse
Nothing stays the same for long in the AI world. According to sources who spoke to the Financial Times for a story in January, Hugging Face last year rejected a $500 million investment offer from Nvidia, a cash infusion that would’ve come with a $7 billion valuation and amounted to more than the start-up had raised in its more than 10-year history. But the company told the FT it did not want to exist under the influence of a single “dominant” investor. By this summer, the deal tables had turned, and it was Hugging Face that approached Nvidia, Hugging Face CEO Clément Delangue said on CNBC’s Squawk Box on Thursday.
So what changed? First, the company employed open-source AI models to ward off a swarm of rogue (and proprietary) OpenAI agents that were trying to access the vast Hugging Face repository of open-source AI models, applications and datasets. Then, “we realized that Hugging Face and open source AI in general was at the turning point, and that it needed more, more resources, more scale, more visibility,” Delangue said. Nothing pushes an indie developer into the open arms of Big Tech like a cyberattack ripped straight out of Neuromancer.
For Nvidia, the deal marks another salvo in a simmering cold war with its biggest clients:
- By pushing cheaper open-source models, Nvidia can pull value away from expensive proprietary models like Anthropic’s and OpenAI’s and toward its own hardware, analysts told The Daily Upside. That may dent the resources that major models could use to develop their own in-house chips to replace Nvidia.
- And as its biggest customers increasingly develop their own in-house chip designs, open-source could help Nvidia diversify its customer base. “Open models let startups, businesses, universities and public institutions build on advanced capabilities without training every model from scratch,” Huang said Thursday.
  Carolina on My Mind: The Hugging Face acquisition wasn’t Nvidia’s only win this week. Huang also attended a summit at the Chapel Hill campus of the University of North Carolina, where AI industry leaders successfully lobbied representatives from G20 nations to back a light-touch AI regulatory framework dubbed The Carolina Principles. How’s that for a group hug?
Written by Brian Boyle
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Investors are once again learning the hard way that when a fund is semi-liquid, the operative part of the term is semi.
On Thursday, Blackstone continued to cap withdrawals from its $77.2 billion Blackstone Private Credit Fund (BCRED) as requests to pull money just keep rolling in. In the third quarter, investors requested withdrawals of 10% of the fund’s shares, according to a regulatory filing. That marks the second quarter in a row requests have hit that level. But investors won’t be getting their hands on as much as they’re asking for, which would amount to $4.3 billion in equity. Blackstone said it would limit withdrawals to 5% of the fund’s shares, which is typical for these types of semi-liquid funds.
Cash Crunch
For years, private credit was primarily available only to institutional investors. But as retail investors grew hungry for investments outside of traditional stocks and bonds, alternative asset managers, seeing a massive new pool of potential investors, were eager to oblige. Wealthy individuals could get exposure to private credit without completely locking up their money via semi-liquid funds.
Now, we may be seeing the end of the retail liquidity illusion, in part because of concern that AI disruption could hurt many of the software companies that private credit funds lend to. Tack on the fact that private credit valuations are often opaque and you can see why investors are nervous and eager to get their money back. In the second quarter, BCRED fulfilled roughly half of its redemption requests, leaving a backlog of $2.3 billion in unfulfilled requests, many of which were resubmitted in the third quarter, per the filing.
Blackstone isn’t alone:
- Bloomberg reported that Cliffwater told shareholders Thursday that it’s limiting withdrawals from its Cliffwater Corporate Lending Fund to 5% after investors asked to withdraw 16% of the fund’s shares.
- Other firms like Apollo and Ares have also had to cap redemptions amid the private credit reckoning.
Worth It? There’s more bad news for mom-and-pop investors: The underlying assets in some private credit funds may be worth even less than they initially thought. A new analysis from Reuters of 44 business development companies found that portfolio values moved further below cost in the first six months of the year. Their combined investments had a $92.88 billion fair value at the end of June compared with a $95.19 billion reported cost. (That’s a wider spread than the $95.82 billion fair value and $96.54 billion cost at the end of last year.)
Written by Mallika Mitra
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Photo via Superhuman AI
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America has the fewest cattle in three (human) generations. The resulting higher beef prices would be a blessing for the meat industry, were it not for the fact that operating expenses have swarmed balance sheets like horn flies to a herd.
The latest to report on the phenomenon was Tyson Foods, which trimmed its outlook like a tenderloin on Thursday. Shares fell 7.3%, while rivals Smithfield Foods and JBS tumbled 1.6% and 3%, respectively.
Unfortunate Misteaks
This story starts with the US cattle herd, which is at a 75-year low, according to the latest US Department of Agriculture data. The 28.5 million beef cows as of July 1 marked the lowest headcount since tracking began in 1971 and represented a 1% year-over-year decline. For consumers, the herd shortfall has pushed beef prices up 70% since 2020. But ranchers have little incentive to rebuild because high prices are the one thing helping them protect the other thing vanishing before their eyes: margins.
As America’s largest meatpacker, Tyson is in the crosshairs of the crisis. The company has said the operating margin of its beef segment was negative 4.3% in the first nine months of the year. Downsizing hasn’t closed the gap yet, and earnings remain under pressure:
- Tyson expects its beef segment to lose $625 million to $775 million in 2026, more than its previous estimate of $500 million to $650 million. Overall, the company slashed its annual income forecast to $1.85 billion to $2.05 billion, from the previous $2.1 billion to $2.3 billion.
- The Trump administration has attempted to lower beef prices, most recently agreeing to allow 300,000 metric tons of duty-free beef imports for 90 days from September 1, on the condition that it is sold at “25% below the market price.” But, as CNN reported, this only represents about 2% of domestic beef consumption.
Herd the News? Earlier this week, the US Department of Agriculture announced a series of federal initiatives it hopes will support herd growth and end a cyclical contraction that began in 2019. Among them is a mechanism allowing ranchers to insure the value of cattle retained for breeding for two years.
Written by Sean Craig
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- Brushing Up: Amid a fight to win cash-strapped consumers, toothpaste maker Haleon negotiated better placement on shelves at Walmart and Target for its Sensodyne brand.
- Nerd’s Nightmare: As computing power costs continue to rise, Microsoft’s Xbox plans to impose a monthly cap on the amount of time subscribers can spend playing games on the cloud.
- Form-Fitting Dysfunction: Shares of Lululemon plunged as much as 18% in after-hours trading after a disappointing earnings call; sales fell 4%, while overall sales of leggings fell 20%.
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Disclaimer
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