US tech stocks slide as AI debt fears grip Wall Street
The Nasdaq fell more than 2% on Oct. 16-17 as investors fled heavily indebted AI infrastructure firms, with bond yields on cloud operator CoreWeave climbing to around 15%.
Wall Street's AI trade cracked into the end of the week, with the Nasdaq Composite falling 2.1%, the S&P 500 down 1.09% and the Dow slipping 0.34% as investors reassessed the data-centre boom. The VIX 'fear index' jumped 21% to 19.99. The focus of the sell-off was mounting debt among AI infrastructure firms: bond yields on cloud operator CoreWeave climbed to roughly 15% during the week, a sign that even larger players such as Alphabet and Meta Platforms are feeling pressure on cash flows as borrowing costs stay high. One loss-making cloud company now carries about US$50 billion in debt. Safe havens rallied: the US dollar index fell 0.27% to 101.779, gold edged up 0.2% to US$4,165 an ounce, while the 10-year Treasury yield held near 5.085%. Asian markets rebounded on Oct. 17, with Japan's Nikkei 225 closing up 1.39% at 65,324.29 and South Korea's Kospi gaining 2.05% to 5,668.05, but analysts said debt-heavy AI names had 'exposed the market's fault line' and that questions over whether today's capital spending will become tomorrow's profits are now driving global flows.
