AI Stock Sell-Off Deepens as CoreWeave Shares Slide

Global technology stocks extended their losses on Thursday as investors reassessed the outlook for Artificial Intelligence investments amid rising borrowing costs, concerns about company valuations, slower revenue growth at leading AI developers and intensifying competition from China.

Nasdaq futures fell 1.1% shortly after 6:30 a.m. Eastern Time, signalling further pressure on technology shares after the index recorded its steepest decline since July on Wednesday. Companies involved in the AI infrastructure boom, including semiconductor manufacturers and data center operators, were among the hardest hit.

CoreWeave, a data center provider backed by Nvidia, dropped 6% in premarket trading after plunging 15.5% in the previous session. Oracle shares fell more than 2% before the market opened, following a nearly 9% decline on Wednesday. Intel, SpaceX and Nvidia were also expected to open sharply lower.

The latest sell-off highlights growing uncertainty over whether the enormous investments in AI infrastructure will generate enough revenue and profits to justify the industry’s high valuations.

Why Are AI Stocks Falling?

Several concerns are combining to weaken investor confidence in AI-related companies. Higher interest rates could increase financing costs, while questions about revenue growth, expensive valuations and competition from Chinese chipmakers are adding to market pressure.

Neil Wilson, a strategist at Saxo, said investors were reacting to concerns about AI infrastructure spending, elevated valuations, weaker-than-expected earnings growth at leading US AI developers, Chinese competition, inflation and interest rates.

Wilson also pointed to a slowdown in revenue growth at Anthropic and OpenAI as a factor contributing to investor anxiety.

AI infrastructure requires substantial investment in data centers, advanced processors, electricity and supporting equipment. Companies committing large sums to these projects face greater financial risks when borrowing costs rise or expected returns become less certain.

Investors are increasingly examining whether the expansion of AI services will translate into sustainable revenue growth and profitability. Any indication that spending is slowing or infrastructure costs are rising faster than expected can trigger sharp movements in technology stocks.

CoreWeave and Oracle Lead the Latest AI Stock Sell-Off

CoreWeave and Oracle were among the prominent companies affected by the latest downturn. CoreWeave’s premarket decline followed a steep loss on Wednesday, reflecting investor concerns about businesses closely tied to the expansion of AI computing infrastructure.

CoreWeave provides data center capacity and computing services used for demanding workloads, including AI development. Its growth prospects are connected to demand for computing power, but its capital-intensive business model also makes financing conditions and spending expectations important factors for investors.

Oracle has also attracted attention because of its role in cloud computing and AI infrastructure. Its sharp share-price decline demonstrated that concerns about the economics of AI investment are spreading beyond semiconductor manufacturers to companies providing the computing capacity needed to run AI applications.

Nvidia and Intel were also among the technology stocks facing pressure, highlighting the broad nature of the sell-off across the AI supply chain.

Anthropic Revenue Growth Raises Questions About AI Demand

Investor concerns have also focused on the revenue growth of leading AI developers. Multiple news outlets reported that Anthropic told investors during a presentation ahead of its expected initial public offering that its sales had grown 45% to $17 billion in the previous quarter.

The reported growth rate was slower than in the second quarter, when sales growth had more than doubled. Although Anthropic continued to report substantial sales expansion, the moderation in growth raised questions about whether the industry’s leading AI companies can maintain their previous pace.

OpenAI has also been part of the debate over AI demand and revenue growth. Because Anthropic and OpenAI remain privately held, public-market investors often look to other companies for evidence about the strength of demand for AI services.

Share-price movements can therefore be driven by developments across the broader AI ecosystem, even when investors do not have direct access to the financial performance of the largest private AI developers.

TSMC Warns of Demand Challenges Despite Strong Earnings

Fresh concerns emerged after Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest manufacturer of advanced chips, offered a cautious assessment of some market conditions during its earnings call on Thursday.

TSMC Chief Executive C.C. Wei told analysts that rising component prices and macroeconomic uncertainty were creating challenges for demand in certain market segments.

The comments weighed on investor sentiment despite the company’s strong earnings. TSMC shares ended 2% lower, contributing to a 3.5% decline in an index of Taiwanese technology stocks.

TSMC plays a central role in the global semiconductor supply chain, manufacturing advanced chips used in AI systems and other electronic products. Its outlook is closely watched because changes in chip demand can offer clues about spending across the wider technology industry.

The company’s cautious comments reinforced concerns that higher costs and economic uncertainty could affect some parts of the semiconductor market, even as demand for advanced AI computing remains an important source of investment.

Asian Technology Markets Suffer Sharp Losses

The global technology sell-off triggered significant losses across Asian markets on Thursday, with South Korea experiencing the steepest decline among the major indices mentioned in the report.

• South Korea’s Kospi: Fell 7.6%, with SK Hynix down 11% and Samsung Electronics losing 9.5%.
• Japan’s Nikkei: Declined 4.9%.
• Hong Kong’s Hang Seng: Fell 1%.
• Taiwan technology stocks: An index tracking the sector dropped 3.5%.

The sharp decline in South Korea triggered a circuit breaker, temporarily halting trading on the exchange. The move reflected the scale of the sell-off in a market where major semiconductor companies have a significant influence on index performance.

European technology stocks also came under pressure. An index tracking the sector fell 3% in early afternoon trading, while Dutch semiconductor equipment manufacturer ASML declined nearly 5%.

US Inflation and Higher Interest Rates Add to Market Pressure

The latest global retreat followed a sharp sell-off on Wall Street after stronger-than-expected US inflation figures intensified concerns about the Federal Reserve‘s interest-rate outlook.

Higher interest rates can increase the cost of financing large infrastructure projects and reduce the value investors place on future earnings. These pressures can be particularly significant for AI companies that require substantial upfront investment before their projects generate returns.

Many companies involved in AI infrastructure have taken on considerable debt to finance expansion. If borrowing costs remain elevated, these businesses could face higher financing expenses and greater pressure to demonstrate that their investments will deliver sufficient returns.

Mohit Kumar, chief European economist at Jefferies, warned that a slowdown in AI infrastructure investment could lead to a sharp reduction in US growth expectations.

Kumar highlighted the scale of spending on AI in the United States, noting that annual investment as a share of gross domestic product was greater than the proportion spent on building the country’s railways during the 19th century.

The comparison illustrates the scale of the current AI investment cycle and why investors are increasingly focused on whether spending can be sustained.

Chinese Semiconductor Advances Intensify Competition

Growing competition from China has added another challenge for US and South Korean technology companies. Chinese semiconductor manufacturer CXMT announced progress in advanced memory chips, raising questions about the competitive position and potential profitability of established industry players.

Memory chips are an important component of computing infrastructure, including systems used to train and operate AI models. Advances by Chinese manufacturers could affect competition, pricing and market share if they translate into commercially competitive products.

For investors, the possibility of stronger competition introduces uncertainty about future earnings. Companies that have benefited from strong demand for advanced computing components may face pressure if competitors improve their technology or offer products at lower prices.

The development also highlights the importance of tracking semiconductor innovation beyond the United States, Taiwan and South Korea as competition in the global AI supply chain intensifies.

Are AI Stocks in a Bubble?

The latest sell-off has renewed concerns that enthusiasm for AI could have pushed some technology valuations beyond levels justified by near-term earnings. However, the long-term outlook remains contested, with some market participants arguing that demand for AI infrastructure and services will continue to support corporate growth.

Kumar said Jefferies expected the upcoming earnings season to demonstrate that earnings and demand remained robust. At the same time, he indicated that the firm would consider reducing some exposure ahead of the US midterm elections, noting that a potential Democratic victory in Congress could be viewed negatively for the sector.

The comments reflect the competing forces shaping AI investment decisions: confidence in long-term demand on one side and concerns about valuations, financing costs and political uncertainty on the other.

What Investors Should Watch Next

The direction of AI stocks will depend on several factors, including corporate earnings, revenue growth, interest-rate expectations and developments in semiconductor competition.

Investors will be watching whether leading technology companies can demonstrate that their AI investments are generating sustainable returns. Updates from chipmakers, cloud computing providers and AI developers could provide further evidence about demand and spending trends.

Interest-rate developments will also remain important. If inflation stays elevated and borrowing costs remain high, companies with substantial financing needs could face continued pressure. Conversely, evidence of resilient earnings and strong demand could help restore confidence.

For now, the global technology sell-off reflects a reassessment of the risks surrounding the AI investment boom rather than a definitive conclusion about its long-term potential. The coming earnings reports and economic data will help determine whether the latest declines represent a temporary correction or a more prolonged period of volatility for AI-related stocks.