CoreWeave Debt Crisis Sparks Global AI Selloff Before Nvidia CEO Huang Steadies Markets

A crisis of confidence in debt-financed AI infrastructure spread across global markets on October 15, with CoreWeave at the center of the storm. The cloud computing company's shares had already plunged 15.5% on October 14, and the slide extended into a third consecutive day, with the stock touching $65 in extended trading, down 53% from its 2026 peak. CoreWeave's five-year credit default swap spreads blew past 1,000 basis points, while its bonds' yield-to-worst reached 16.1%. The broader cost of insuring against US tech defaults hit record highs, and hedge funds dumped AI-linked stocks at the second-fastest pace in a year.

The selloff was fed by several converging pressures. Gartner warned that more than $3.5 trillion of AI infrastructure spending could face impairment by 2030, and separately said most neocloud companies would not survive independently. Anthropic's disclosure of likely slower third-quarter revenue growth deepened anxiety about whether the AI buildout can generate returns fast enough to service its debt. A hotter-than-expected September PPI print of 1.3%, the highest since March 2022, reinforced fears that the Federal Reserve would keep rates elevated, raising borrowing costs further. Franklin Templeton's Michael Browne told Reuters that rising borrowing costs were driving investors to offload AI company debt. CoreWeave's own chief revenue officer, Jonathan Jones, sold more than $2.9 million in company stock during the session, adding to the unease.

The damage was widespread. Nasdaq 100 futures fell more than 1%. Nvidia dropped 3%, AMD fell 5%, Intel declined 5.9%, and Marvell lost 5.5%. The Philadelphia Semiconductor Index posted its eighth consecutive daily loss, the longest such streak since October 2008. The selloff spread to Asia and Europe, with South Korean and Japanese markets sinking and European chip stocks including ASML and Infineon opening sharply lower. Even TSMC, which reported a 69% jump in third-quarter profit and guided fourth-quarter revenue to $52.3 billion to $54.3 billion, saw its shares fall as the results failed to calm fears about the broader AI trade. Saxo analysts noted investors increasingly splitting between profitable chipmakers like TSMC and debt-heavy infrastructure names like CoreWeave, Nebius, and Oracle.

Wall Street was divided on what comes next. Deutsche Bank maintained its Buy rating on CoreWeave with a $150 price target implying 128% upside, arguing that no company-specific fundamental justified the selloff and pointing to CoreWeave's partnerships with Nvidia, Dell, Meta, and OpenAI. Mizuho moved in the opposite direction, cutting its CoreWeave price target to $88 from $115. Wedbush's Dan Ives called the declines a clear buying opportunity, citing chip demand running 13-to-1 over available supply and his expectation for 800 to 1,000 new data centers in the coming years. Goldman Sachs CEO David Solomon and Broadcom CEO Hock Tan separately warned that financing, not demand, could become AI's central constraint, with Solomon estimating US data center expansion could cost more than $10 trillion through 2032.

Markets found partial relief late in the session after Nvidia CEO Jensen Huang publicly defended CoreWeave, saying the company's strength was improving every day, that its cost of capital was actually decreasing, and that Nvidia had no need to backstop it. Nvidia holds an approximately $2 billion stake in CoreWeave and helped rescue the company's downsized IPO. His comments helped arrest the broader selloff. The 10-year Treasury yield fell more than 28 basis points on the day as investors sought safety in bonds, and the US Treasury conducted a $6 billion debt buyback, bringing its October total to $19.33 billion. CoreWeave's October 2031 bonds bounced 3.3 cents to 82.8 cents on the dollar and the June 2030 bonds recovered 5.7 cents to 91.3 cents, though both remained well below face value. Markets closed off their lows: the S&P 500 rose 0.36%, the Dow gained 1.11%, and the Nasdaq edged up 0.08%, with an equal-weighted S&P 500 climbing 1.4% as money rotated into healthcare, where Eli Lilly gained 3.59% and UnitedHealth rose 2.81%.