AI Debt Concerns Weigh on Nvidia, CoreWeave Shares Rebound
Nvidia shares fell roughly 1% as investors sold chip and AI-related stocks amid concerns about debt-heavy balance sheets and hotter-than-expected inflation…
Concerns about the cost of financing AI infrastructure pulled chip stocks lower on Wall Street. NVDA shares fell roughly 1% on Thursday, paring earlier losses as investors also reacted to hotter-than-expected inflation data and shifted toward defensive assets.
The sell-off reflects a wider worry: companies carrying heavy debt could face more pressure if interest rates stay elevated. That concern has reached Nvidia-backed CoreWeave, whose borrowing costs and balance sheet have become a focus for investors.
Nvidia CEO Jensen Huang expressed optimism about CoreWeave after its shares had plunged 15% on Wednesday. The stock erased a 7% drop on Thursday and closed up more than 5%, according to Yahoo Finance.
Debt fears weigh on AI-related shares
Nvidia and peer Advanced Micro Devices both fell roughly 1%, after trimming steeper losses earlier in the session. The overall technology sector also narrowed its decline as investors rotated into defensive stocks and bought Treasurys, pushing long-dated yields substantially lower.
Other chipmakers moved unevenly. Sandisk pared losses to close just below the flatline, while Micron turned positive during the session. SK Hynix fell 1%. Both memory companies had faced pressure earlier in the week over concerns about Chinese competition.
TSMC shares also pared losses, though they still dropped less than 1%. Positive earnings and record profit from the chip contractor were not enough to lift the stock, Yahoo Finance reported.
The market pressure came as investors weighed financing costs against inflation. Hotter-than-expected price data raised fresh questions about how rising prices could influence the Federal Reserve’s next move, while debt-heavy companies faced scrutiny over their ability to fund expansion.
CoreWeave links Nvidia to financing concerns
CoreWeave matters to Nvidia because the companies have financial and commercial ties. Yahoo Finance reported that Nvidia announced an expanded relationship with CoreWeave in January, including a $2 billion investment in CoreWeave stock. CoreWeave committed to using Nvidia technology to build more than 5 gigawatts of AI factories by 2030.
Nvidia holds 47.2 million CoreWeave shares, or around 10% of the company, according to the report. CoreWeave also buys Nvidia GPUs and rents computing capacity to other businesses, including hyperscalers such as Meta.
That relationship leaves Nvidia exposed to investor concerns about the economics of AI infrastructure, even as demand for computing capacity supports chip sales. A sharp deterioration in financing conditions for a major customer could put attention on the durability of spending plans across the sector. The sources do not say that CoreWeave has failed to meet its commitments.
CoreWeave’s bond yields rose amid fears of an AI slowdown and worries about its balance sheet. The pressure spread beyond the company: Yahoo Finance reported declines in several other AI cloud and infrastructure stocks, including an 11% drop for Nebius and a further 9% fall for Oracle.
A Gartner report added to those concerns, forecasting that by 2030 “cost pressure and a lack of a differentiating business model will force over 80% of neocloud providers to cease independent operations.” CoreWeave is a neocloud provider.
For investors, the episode shows how financing risks at AI infrastructure firms can weigh on chip stocks even when the underlying demand story remains tied to data-center expansion. Nvidia’s Thursday decline eased as the session progressed, while CoreWeave closed up more than 5% after Huang’s public show of confidence.
Source: finance.yahoo.com
