Nasdaq leads stock declines as dollar approaches weekly loss
European shares rose despite U.S. technology-sector weakness, while G7 government bonds were poised for their best week since late May.
CoreWeave shares fall more than 9% as debt concerns weigh on AI firms
The cloud-computing company's weekly stock loss approached 23%, while its bond yield briefly exceeded 16% amid concerns over its $50 billion debt load.
CoreWeave shares dropped more than 9% on October 16 as investors worried about the Nvidia-backed cloud company's $50 billion debt burden. The decline brought its weekly loss to nearly 23%, putting the stock on course for its worst week in over 11 months if those levels hold.
The selling followed inflation figures that increased expectations of interest-rate hikes, raising concerns about borrowing costs for heavily indebted AI infrastructure and data center companies. Todd Schoenberger, chief investment officer at CrossCheck Management, said investors questioned whether revenue would be sufficient to generate profits and service debt.
Other companies also fell. Nebius Group shares dropped 9% and were headed for their biggest weekly decline in two months. Applied Digital lost 7.2%, while IREN declined 8%.
Debt markets also showed strain. The yield on CoreWeave's dollar bond maturing in October 2031 briefly exceeded 16%. The bond was headed for a fifth consecutive weekly price decline, losing about 3 cents on the dollar. S&P Global Market Intelligence data showed the cost of protection against CoreWeave's debt rose above 1,000 basis points to a record.
Some investors continued buying. Funds run by Cathie Wood's ARK Invest purchased more than 381,000 CoreWeave shares over the last two sessions. Retail investors made net purchases of $66 million during the week, the second-highest weekly amount recorded, according to Vanda data.