AI Infrastructure Shares Slide as Rate-Hike Bets Build
Higher borrowing-cost concerns hit AI-linked companies, while hot consumer-price data raised expectations for another Federal Reserve rate increase.
Key takeaways
- Nebius fell 15.1% and CoreWeave dropped 9.5% on Wednesday.
- Hot consumer-price data raised expectations for a second Fed rate hike this month.
Shares of companies tied to AI infrastructure fell sharply Wednesday as higher interest-rate expectations raised concerns about the cost of funding the sector’s expansion. Nebius dropped 15.1%, while CoreWeave lost 9.5%.
Data center operators IREN and Applied Digital fell 9.9% and 8.8%, respectively. Oracle slid 7.2%, while Dell and HPE declined 10.3% and 6.4%.
The prospect of a second Federal Reserve rate hike as soon as this month gained ground after hot consumer-price data. The 10-year Treasury yield rose 3.6 basis points, and the two-year yield climbed 7.2 basis points.
“Investors are questioning whether the AI buildout will generate the returns that were expected,” said Kim Forrest, chief investment officer at Bokeh Capital Partners. Barclays downgraded Dell and HPE to equal-weight from overweight, citing rising valuations and a lack of meaningful AI growth. Insurance costs against default for Oracle and CoreWeave reached records, according to S&P Global Market Intelligence data.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
