Investor doubts over data centre buildout hit AI stocks, bonds — SkimNews
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- CoreWeave shares dropped 15% on the Nasdaq Wednesday before rebounding nearly 6% Thursday after Nvidia CEO Jensen Huang publicly signaled his support for the neocloud, leaving the stock down 15% for the week.
- CoreWeave bond yields climbed above 15%, a level investors consider severely distressed, and the cost of its credit default swaps also soared to distressed territory, signaling growing fear of default.
- Cerebras Systems, Nebius Group, and Iren Ltd. each saw shares slump 13-14% since the start of the week, reflecting a sector-wide retreat from debt-financed AI infrastructure providers.
- Investors fleeing AI exposure pushed the benchmark 10-year U.S. Treasury yield down more than 10 basis points Thursday, even though fresh consumer and wholesale inflation data pointed to rising prices.
- Gartner analyst Will Sommer warned in a September note that "multitrillion-dollar writedowns of AI infrastructure assets are more likely than not by 2032" if capital spending holds, and estimated more than 80% of neocloud providers will cease independent operations by 2030.
- Bell Canada is investing $1.7 billion in its initial Saskatchewan data centre buildout and planning a 1.2-gigawatt expansion, with both CoreWeave and Cerebras signed as long-term, noncancellable anchor tenants — yet BCE shares rose 2% Thursday as investors rotated to its stable telecom earnings.
Why it matters: Bell Canada's $1.7 billion Saskatchewan buildout and its planned 1.2-gigawatt expansion depend on CoreWeave and Cerebras as anchor tenants, both of whom now have bonds and CDS trading at distressed levels. Even with noncancellable contracts and upfront payments, a tenant default would interrupt Bell's cash flow and delay its return on investment.
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