AI Trade Under Pressure as the Chip Index Falls Seven Sessions Straight

what happened

Investors are growing noticeably more skeptical of the huge spending on data centers for artificial intelligence. According to Barron's, the PHLX Semiconductor index has dropped for seven straight trading days since October 6, shedding roughly 12%. CoreWeave's stock fell 24% over the same stretch, and its bonds due 2032 trade near 82 cents on the dollar, with a yield to maturity of 14.4%, versus 9.6% when they were sold in June.

Confusion over OpenAI's revenue added to the unease. Its annualized pace in September was cited as either $70 billion or $50 billion, depending on whether gross or net receipts were counted. Anthropic presented quarterly figures at a private investor event, yet that did little to calm nerves. OpenAI has postponed its IPO, and Australian AI cloud firm Firmus delayed its own listing after investors rejected a proposed $30 billion valuation, up from $11 billion in August.

Demand for computing power still looks strong. Data from Silicon Data and Ornn shows GPU rental prices rising all year, and five of the largest companies could spend up to $750 billion on capital expenditure this year.

why it matters

The key question for markets is whether the industry can carry its debt load. Higher long-term interest rates weigh on cloud projects that rely heavily on borrowing, and CoreWeave's expensive credit suggests some lenders are becoming more selective. Shares of chipmakers and cloud providers remain sensitive to any news about AI demand and funding.

market impact

Semiconductors and AI infrastructure: rising doubts about debt and valuations weigh on the sector.

tags

instruments