What’s News in Markets: CoreWeave Selloff, Apple Milestone, Borrowing Boom

The bull market turned four years old this week, but the party got crashed by hotter-than-expected inflation data that rattled the entire AI trade. By Wednesday, the S&P 500 and Nasdaq had suffered their worst single-day drop since July, with the Nasdaq falling about 4.5% for the week and the S&P 500 losing just under 2%. Only the Dow bucked the trend, eking out a 0.7% gain. Investors fleeing stocks found refuge in bonds, pushing the benchmark 10-year Treasury yield to its biggest weekly decline since February. The week's biggest laggard was CoreWeave, whose shares plunged more than 25% as debt fears swept through the riskiest corners of the AI boom.

CoreWeave's Debt Storm

CoreWeave, the former crypto mining company that now rents out powerful computer chips to AI developers, became the week's weather vane for a risk that investors are suddenly paying attention to: the mountain of debt supporting AI infrastructure. Building those data centers is expensive, and CoreWeave has racked up at least $35 billion in debt to finance its growth. One analysis projected the company would burn through roughly $80 billion of cash over the next three and a half years. When inflation came in hot on Wednesday, it added to bets that the Federal Reserve could raise interest rates again this month, making that debt much more expensive to carry.