Mike Intrater, founder and CEO of CoreWeave, poses for a photo during the initial public offering at Nasdaq headquarters in New York on March 28, 2025.
Michael M. Santiago | Getty Images
Neocloud entered the tank. Credit default swaps have skyrocketed. meta Cash flow turned negative. and SK Hynix The Solidig division has canceled plans for an initial public offering.
It’s been an eventful week for AI infrastructure deals.
Following Thursday’s plunge, the Nasdaq fell further on Friday, ending the week down 0.7%. Among the hyperscalers, the one with the worst performance was alphabetfell 6% ahead of the internet giant’s third-quarter earnings report next week. Microsoft and Amazon were also included in the study, each with a decline of less than 1%.
While tech markets have so far avoided a dramatic overall decline, there are signs of strain in the build-up of artificial intelligence.
neo cloud coreweave, Nevius and Airen Both have fallen sharply this week, with October losses of well over 30% in each. Group leader Coreweave has seen its CDS spreads widen above 11%, typically seen as a distress level, as investors have to pay for protection against defaults.
Meanwhile, the company’s 2031 and 2032 unsecured bonds have yields above 15%.
“What investors are doing is throwing the baby out with the whole bathwater and saying any neo-crowd will devalue anyone,” Dave Mazza, CEO of Round Hill Investments, said Thursday on CNBC’s Squawk on the Street.
Concerns are not limited to the US market. South Korean cloud provider Eris Group’s shares fell 30% in its market debut on Tuesday, while Australia’s NextDC plunged 39.5% on Wednesday after the data center operator cut its annual revenue forecast.
Optimism about AI has been a major market driver in recent years, as the constant demand for new models and services has driven the world’s largest technology companies to spend on infrastructure at historic rates. But skeptics are increasingly concerned that the returns on AI investments won’t justify the capital investment.
Analysts at research and advisory firm Gartner predict that 80% of neo-cloud companies will go out of business or be absorbed by 2030.
Nvidia CEO Jensen Huang, perhaps the leading AI evangelist, remains bullish. “The demand for neocloud is extraordinary,” Huang said at a corporate conference in Berlin this week.
“The demand for capital far exceeds the availability of capital,” Huang told CNBC’s Arjun Karpal. “That will be resolved.”
IPO withdrawal
Wall Street isn’t convinced. Thursday, Korean memory giant SK HynixThe company, one of the biggest winners of the AI boom, announced it was withdrawing its US-based Solidigm unit’s IPO, citing market volatility. SK Hynix has acquired Solidigm, which manufactures NAND and SSD storage for data centers. intel In 2021.
SK Hynix said in a release, “The IPO was expected to reduce the investment burden and expand the ability to return profits to shareholders, but in consideration of market conditions and stock price trends, we have suspended the review.”
Despite the turmoil, all of the tech mega-cap stocks have maintained their investment-grade ratings, even as they finance expansion through debt and other means. Even with this group of companies, there is some turmoil in the market.
Mark Zuckerberg, CEO of Metaplatforms, speaks at the MetaConnect event on Wednesday, September 23, 2026 in Menlo Park, California, USA.
Min Connors | Bloomberg | Getty Images
Meta’s stock price fell 7% on Thursday after the company raised its full-year capex floor from $130 billion to $135 billion while reporting negative free cash flow of more than $2 billion in the third quarter. Meta also said it plans to spend about $825 billion on various leases and contracts over the next few years, of which more than $450 billion are non-cancelable take-or-pay contracts.
Meta’s 5-year CDS spread reached an all-time high of over 124 basis points. CDS on Nvidia and oracle This week, the spreads hit new records by hitting 126 basis points and 343 basis points, respectively. Oracle’s stock has lost more than a third of its value this year, and the company now faces the risk of a credit rating downgrade.
John Williams, head of the derivatives practice at law firm Milbank LLP, said investors are looking at ways other than buying CDS to hedge the risks associated with AI trading.
“With so many investments being made, whether bullish or bearish, it’s very appropriate to look for risk management tools,” Williams said. “It’s crazy that people aren’t looking for the right risk management tools.”
“Everything is tied together,” Brian Statland, portfolio manager at Equity Armor Investments, told CNBC’s “SquawkBox Asia” last week about the impact AI will have on the overall market.
“If you drop a bowling ball in one part of the pool, won’t the waves hit the rest of the Nasdaq downstream?” he said. “I don’t know. I have some concerns about that.”
— CNBC’s Katie Tarasov contributed to this report
Attention: Concerns over rising CDS spreads in data center construction
