AI debt 'full-blown crisis of confidence' hits Wall Street as Nasdaq suffers its worst week since June

The Nasdaq dropped 573 points on Friday — its worst weekly finish since June — after a collapse in CoreWeave's bonds sparked a broad sell-off across AI and chip stocks. CoreWeave, the Nvidia-backed neocloud carrying roughly $50 billion in debt, lost 25% over the week as its bond yields surged to distressed levels above 15%. Analyst Nic Puckrin said the economics of the AI buildout are breaking down, describing the situation as a 'full-blown crisis of confidence,' while Anthropic's IPO valuation was revised down from $2 trillion to $1.5 trillion.

CoreWeave bonds priced at a 9.675% yield in June have climbed to 15%, prompting credit analyst Max Frumes to describe the company as 'the canary in the coal mine.'

New Gartner research projects AI providers will commit $7 trillion to infrastructure through 2030 yet take in only $3.6 trillion in revenue, and forecasts that 80% of neoclouds will fail within a decade.

Chipmakers AMD, Micron, Intel and Broadcom each fell between 4.5% and 6%, while fund manager James Harries cautioned that markets may be approaching 'the end of market exuberance.'