Tech stocks tumble as CoreWeave bond yields hit 15% and analysts warn AI debt boom has reached a 'Darwin moment'

CoreWeave's bonds, issued in June at a yield of 9.675%, have tumbled to yields of 15% — levels that signal distressed debt — as investors dumped securities in the Nvidia-backed data centre company on fears that returns from the AI infrastructure boom will not materialise fast enough to service its borrowings. The turmoil spread across AI infrastructure and semiconductor stocks globally, with CoreWeave shares falling more than 15% before recovering some ground after Nvidia chief Jensen Huang said the company's 'financial strength is improving every day'. With roughly $50 billion in debt on its books, CoreWeave is racing to scale up computing capacity. Analysts now regard the sell-off as an inflection point for the entire sector.

CoreWeave is 'absolutely the canary in the coal mine,' according to Max Frumes of credit analytics firm 9fin, who says AI-linked debt will get 'more expensive' with 'a lot more scrutiny.'

Nebius, Applied Digital, IREN, Dell and Hewlett Packard Enterprise were all caught in the downdraft, as climbing Treasury yields made debt-funded data-centre buildout look increasingly precarious.

Fund manager James Harries warns we are 'nearing the end of market exuberance,' calling the AI capex cycle 'probably the greatest the world has ever seen' — with vast misallocation of capital likely.