CoreWeave Rout Signals Credit Stress Spreading to Broader Stock Market

Wall Street strategists warn that a selloff in AI cloud-computing providers is spilling into the wider tech trade and could drag the U.S. stock market down to its June lows. CoreWeave Inc. shares have fallen 41% since Oct. 6, when major U.S. equity indexes hit a fresh record, after its bonds plunged to distressed levels this month. Other neoclouds — firms supplying computing power for AI models — also posted double-digit declines: Iren Ltd. is down 40% and Nebius Group NV has dropped 36%. Investors are concerned about the debt borrowed for the AI build-out and how much more companies will take on after reporting earnings. Measures of credit risk for the biggest AI-spending technology companies hit new highs last week. "It's now transitioning from being a micro event to a macro event," said Brian Reynolds, chief market strategist at Reynolds Strategy LLC, who expects selling that could push the S&P 500 back to its early-June lows — a 4.7% drop from Friday's close. The Philadelphia Semiconductor Index has fallen 15% in October.