AI Sell-Off Deepens as Hot Inflation Spooks Markets — SkimNews
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- Nasdaq fell 4.5% for the week—its worst weekly performance since June—while the S&P 500 dropped 2% and the Dow gained 0.7% as investors rotated from AI-exposed names into healthcare and consumer staples.
- September's CPI rose 3.7% year-over-year (above the 3.6% expected) and the September PPI jumped 6.3% annually—the biggest annual gain since December 2022—raising concerns the Federal Reserve would keep rates elevated longer.
- CoreWeave fell 25% last week with its total debt rising above $51 billion, while its corporate bond yields and credit default swaps spiked as investors grew uneasy about borrowing for AI infrastructure.
- Cybersecurity stocks led the tech decline—Palo Alto Networks lost more than 18% and CrowdStrike fell more than 17%—after reports that OpenAI is in early talks to acquire Trail of Bits.
- Meta Platforms rallied on the release of its Muse Wonder and Muse Wonder Full AI models, with Wells Fargo ranking them behind only Anthropic's Claude Opus 5.5; Microsoft closed at a record high Tuesday for the first time in nearly a year.
- Goldman Sachs reported a standout quarter with equities trading revenue surging 72% and investment banking fees rising 21%, though shares surrendered an early rally; Jim Cramer upgraded the stock to a buy-equivalent 1 rating with a $1,200 price target.
- Cramer's portfolio added to Kimberly-Clark (on the advancing Kenvue acquisition), bought more Bank of New York on strong earnings, trimmed Cardinal Health to lock in profits, and exited its remaining Honeywell Technologies position to replenish cash.
Why it matters: Investors rotating out of AI-exposed names drove steep losses—CoreWeave fell 25% on $51 billion in debt, Palo Alto Networks and CrowdStrike lost 18% and 17%, and the Nasdaq dropped 4.5%—while September's 3.7% CPI reinforced fears that persistent inflation could 'push up borrowing costs and complicate the massive AI infrastructure buildout,' a concern Broadcom's Hock Tan echoed.
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