RUM Group stock jumps on $13.7 billion Anthropic deal: will the gains hold?

RUM Group stock is in a strong upward trend today, even as other top technology companies slip. It jumped by over 20%, reaching a high of $8.73, its highest level since September 4 this year, after reports that it reached a giant deal with Anthropic. 

RUM Group surges on Anthropic AI deal

RUM Group, formerly known as Rumble, is soaring today after reports that it had reached a $13.7 billion computing deal with Anthropic. This deal, if confirmed, will make it one of the biggest neocloud companies in the world. 

Anthropic has made some notable deals in the past few months. It has a $1.2 billion-a-month deal with SpaceX, a $35 billion partnership with Lambda, and a $50 billion one with Lambda., 

The company also reached a $45 billion deal with Nscale and another one with CoreWeave, the biggest neocloud firm in the world. 

The deal will come at a time when RUM Group is positioning itself as a major player in the data center industry. It recently announced that it increased its ownership of Northern Data to 98% and plans to increase its position to 100%. 

RUM Group, which counts Tether as its biggest shareholder, rebranded its business to give a clear vision of its business. It now owns Rumble, its YouTube competitor that is popular among conservatives. It also owns Quake AI, its AI data center business, which has over 22,000 H100 and H200 chips and is working to boost its capacity. 

Data center business to offset its media business slowdown

Quake AI will now become a bigger part of its business than Rumble. The most recent results showed that RUM Group made $40.4 million in revenue, up by 58% from the same period last year. Northern Data contributed $10 million to this revenue.

The management predicted that its third-quarter revenue will be between $83 million and $93 million. Also, it believes that Quake has the capacity to make $3 billion in annual revenue. 

There are signs that Rumble’s business is slowing as the platform has struggled to compete with other popular companies like YouTube and Instagram. SimilarWeb data shows that traffic to Rumble dropped by 2.3% last month to 33.2 million. In contrast, YouTube’s traffic rose slightly to 30.3 billion. 

Therefore, there is a likelihood that its annual revenue will be better than the $239 million that analysts expect. 

RUM Group stock price technical analysis

RUM Group stock chart | Source: TradingView

The daily chart shows that the RUM Group stock has been in a strong sell-off in the past few months. It fell from a high of $10.59 in August to a low of $6.90 on Friday. It formed a hammer candle, which explains why it has rebounded. 

The stock has now rebounded above the 50-day moving average amid the ongoing Anthropic rumors. Therefore, there is a likelihood that the stock will continue rising as investors cheer the news.

However, as we have seen with other neocloud stocks, these gains will be shortlived, which may push it below $7. One reason for this sell-off is that the AI data center industry is highly expensive, meaning that the management will likely need to raise additional capital.