Wall Street Calls AI Stock Selloff Another Scare as Retail Buyers Return
CoreWeave and Nebius each lost more than 25% over the week as financing worries hit technology shares, but some Wall Street analysts say the latest
CoreWeave and Nebius each lost more than 25% over the week as financing worries hit technology shares, but some Wall Street analysts say the latest rout has not broken the broader AI investment case. Retail investors, meanwhile, have been buying into chipmakers and AI infrastructure even as institutional traders turn more cautious.
The technology sector’s decline pushed the S&P 500 and Nasdaq into weekly losses. Investors have focused on the cost of borrowing for companies building data-center capacity and on concerns about complex financing arrangements.
Debt and cash flow in focus
CoreWeave, a cloud provider catering to AI workloads, and rival Nebius were among the hardest-hit stocks. Baird technology strategist Ted Mortonson said CoreWeave, Nebius and Oracle were likely among the weakest technology companies on free cash flow, pointing to higher capital costs and scrutiny of “circular finance.”
Oracle has become a focal point because it is expanding cloud capacity for AI customers while carrying a large backlog of contracted work. The company reported $664 billion in remaining performance obligations, but spent $28.5 billion on capital expenditures in its latest quarter and recorded negative free cash flow of $5.4 billion. It plans to raise about $40 billion through debt and equity during the fiscal year.
Oracle shares fell nearly 9% in a recent session as concerns about AI-related borrowing spread. The selloff has raised questions about whether providers can finance the infrastructure needed to meet demand without putting more pressure on their balance sheets.
Retail buying bucks institutional caution
Nvidia chief executive Jensen Huang voiced confidence in CoreWeave, which has received backing from the chipmaker. Nvidia owns roughly a 10% stake in the cloud provider.
Patrick Moorhead, founder and chief analyst at Moor Insights & Strategy, described the pullback as another bout of anxiety after earlier market fears involving DeepSeek, tariffs and predictions that AI demand would fade. He argued that the scale of gains in AI stocks has left investors looking for reasons to sell.
Retail investors have taken the opposite tack. Scott Rubner of Citadel Securities said individual investors were net buyers of $9.1 billion in U.S. equities on the firm’s platform last week, the strongest weekly buying in 15 weeks. Semiconductor stocks drew $2.6 billion in net inflows, while neocloud stocks attracted $700 million.
Rubner said retail demand was rising even as overall trading activity remained below average. Institutional investors, by contrast, have been growing more defensive. “Because the numbers are up so big on the AI trade, people are looking for a reason to sell as opposed to a reason to buy,” Moorhead said.
Source: finance.yahoo.com
