AI Cloud Stocks Crater as CoreWeave Plunges Nearly 16% on Debt Fears. Its CEO Says the Market Is "Irrational"

A selloff in AI cloud stocks deepened on Wednesday, and this time debt was at the center of it. CoreWeave (CRWV) fell 15.8% to $65.51, a day after a chart showing its rising borrowing costs spread widely on X. The selling quickly hit the rest of the group: Nebius, Oracle, DigitalOcean and the bitcoin miners that have reinvented themselves as AI data-center operators all dropped between 9% and 14%. CoreWeave's chief executive pushed back, telling staff in an internal memo that the market is acting "irrationally," according to Bloomberg.

The damage

Prices are from about 3:35 to 3:40 PM ET on October 14, not closing figures.

CoreWeave: a chart that spooked investors

CoreWeave rents out large clusters of Nvidia GPUs to AI companies and has financed much of its rapid growth with debt, borrowing against its chips and customer contracts. That model works as long as money is cheap and demand stays strong. The chart that circulated on X on Tuesday showed the company's borrowing costs climbing, and with the 10-year Treasury yield near 5.3%, its highest since 2002, investors seized on it as a sign that the economics of debt-funded AI data centers are getting tighter.

CoreWeave's CEO disagreed. In an internal memo reported by Bloomberg, he said the market is acting "irrationally." The company has not changed its guidance or announced any change to its financing.

Oracle keeps sliding

Oracle fell another 8.9% to $130.40, extending a slide that began last week. On October 8 the stock fell 5.5% after OpenAI, one of Oracle's biggest cloud customers, disclosed softer-than-expected revenue and the Wall Street Journal reported that Oracle is preparing to tap debt markets to fund AI chip purchases. Oracle's long-term debt has nearly doubled over two years to more than $160 billion, and its quarterly capital spending reached $28.5 billion, up from $2.3 billion two years earlier. It is reportedly in talks with Apollo and Goldman Sachs on a structure in which investors would fund a separate company to buy the chips, which Oracle would then lease.

Miners-turned-AI hosts hit hardest

IREN, TeraWulf and Cipher Digital all fell more than 10%, and Hut 8 dropped 9.5%. These former bitcoin miners have pivoted to hosting AI computing, signing long-term leases with AI and cloud companies and raising large amounts of debt and convertible notes to build data centers. That makes them especially sensitive to rising borrowing costs. Cipher was already under pressure after announcing an $850 million convertible note sale on Tuesday.

Why now

Wednesday's drop caps a week of warnings about how the AI build-out is being paid for. On Tuesday, the CEOs of Goldman Sachs, JPMorgan and Wells Fargo all flagged the risk of a debt-fueled AI boom facing a painful reset, Broadcom's CEO compared AI investing to a casino, and Microsoft unveiled its own chip that could reduce reliance on Nvidia GPUs. With inflation running at 3.7% and long-term rates at multi-decade highs, investors are repricing the companies that depend most on borrowed money to grow.

What to watch

• Credit markets. Bond and loan pricing for CoreWeave, Oracle and the AI-hosting miners will show whether financing is truly getting harder or the selloff ran ahead of the data.
• Any CoreWeave response. Public comments on financing costs or new funding deals could steady the stock, or confirm the worries.
• Hyperscaler earnings. Microsoft, Alphabet, Amazon and Meta report later this month. Their capex plans drive demand for everyone in this table.
• Treasury yields. Further rate increases would keep pressure on the most heavily indebted names.