AI infrastructure shares fall as US rate hike expectations rise
Nebius fell 15.1% and CoreWeave lost 9.5%, while default-insurance costs for some AI companies reached record highs.
AI shares fall after US inflation report as borrowing concerns grow
CoreWeave, Nebius, Oracle and Dell Technologies lost about $80 billion in combined market value, while the 30-year US yield reached 5.63%.
Shares of major artificial intelligence companies fell on October 14 after a hot US inflation report, amid investor concerns about borrowing costs for businesses making substantial infrastructure investments. CoreWeave dropped 16%, Nebius declined 11%, Oracle lost 9% and Dell Technologies fell 11%.
The four companies’ combined market value shrank by about $80 billion. The Nasdaq was down 2% in afternoon trading. US interest rates rose after the inflation figures, with the 30-year yield reaching 5.63% before rates retreated sharply during the afternoon.
CoreWeave has issued bonds totaling $22 billion and loans totaling $26 billion, LSEG data showed. One of its bonds, issued in June at a yield of 9.625%, recently yielded 15%.
Kim Forrest, chief investment officer at Bokeh Capital Partners, said indications that the largest AI companies might not deliver anticipated earnings or revenue were making investors nervous about businesses such as CoreWeave. Ross Mayfield, investment strategy analyst at Baird, said long-term rates above 5% and approaching 6% presented difficulties for borrowers below the largest hyperscalers.
CoreWeave Chief Executive Officer Mike Intrator described the market’s behavior as irrational in an internal memo and expressed continued confidence in the company, according to a media report.