AI stocks may no longer be the sure bet they once were as credit risks grow, according to Dario Perkins of TS Lombard, who says debt is now the marginal source of funding rather than cash flow. He expects AI companies to issue around $700 billion in new bonds in 2027, with $400 billion from hyperscalers, which he notes exceeds the total issuance of all euro-area governments combined. CoreWeave plunged 25% last week on fears it is taking on too much debt, while Nvidia CEO Jensen Huang said capital for AI is scarce and holding back growth. Credit costs may rise, with CME FedWatch showing a 75% chance of another Fed rate hike in December. Still, Meta reported 26% revenue growth in the September quarter and Magnificent Seven earnings are expected to rise 33%, leaving open whether AI companies can justify their growing debt.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on cnbc.com ↗
Keywords
Open a keyword to see other news on the same topic.
Related tickers and likely impact
QQQ
▼ Likely negativeInvesco QQQ Trust
Relevance: medium
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/21/2026 | 725.21 |
| Change that session | +1.06% |
META
▼ Likely negativeMeta Platforms
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Communication Services |
| Industry | Interactive Media & Services |
| Market cap | $1.9T |
| Close on 10/21/2026 | 698.43 |
| Change that session | +0.60% |
NVDA
▼ Likely negativeNvidia
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Semiconductors |
| Market cap | $5.2T |
| Close on 10/21/2026 | 221.87 |
| Change that session | +2.49% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- Top Midday Stories: Meta Credit Risk Gauge Hits Record High Amid AI Spending Plans; Tesla Q3 Revenue Misses Consensus
- Meta stock sinks 6% as AI spend pushes free cash flow negative
Meta shares fell roughly 6% Thursday after third-quarter results showed negative free cash flow of $2.12 billion, and the company now expects full-year capex of $135 billion to $145 billion. The spread on its five-year credit default swaps hit an all-time high, signaling growing investor credit concerns as Meta leans further into AI spending. Revenue rose 26% from a year earlier to $64.60 billion, above the $63.37 billion analysts expected, while EPS of $3.83 is unclear to compare with the $5.75 Wall Street was looking for. Meta also plans to create a nonvoting Class C stock to preserve its founder-led structure and help finance growth.
- 'People are now recognizing Nvidia's compute has a great deal of residual value,' CEO Jensen Huang tells Deirdre Bosa
Nvidia CEO Jensen Huang told Deirdre Bosa that Wall Street is increasingly recognizing the residual value of Nvidia's compute, which could be used to backstop the debt for building data centers. He said the company's systems are widely used, deliver strong performance and are software programmable, so they stay productive for a long time. In August, Nvidia signed memoranda of understanding with six financial institutions, including Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR, to assemble a $500 billion funding pool for data center infrastructure. Nvidia points to its 6-year-old Ampere chips still drawing customer demand, and Huang said what used to be a four-year life cycle is now probably eight years or more, which could support loans secured against the chips.
- AI debt concerns drive default insurance costs to record highs
- AI debt concerns drive default insurance costs to record highs
- ‘How many canaries have we killed in the coal mine?’ — Wall Street debates if the latest AI bubble warnings are another head fake or the real thing
Since ChatGPT's launch in late 2022, Wall Street has repeatedly seen warning signs of an AI bubble, from Nvidia's market cap crossing the $2 trillion, $3 trillion, $4 trillion and $5 trillion milestones to hyperscalers' borrowing and capex and the DeepSeek shock, yet earnings kept rising and stocks kept hitting records. The current worry is whether trillions of dollars in AI spending will pay off, which has hit debt-laden firms like CoreWeave, sending its stock lower and its credit default swaps higher. Dan Greenhaus of Solus Alternative Asset Management argued that CoreWeave is not a canary signaling an imminent AI bust, noting the market has repeatedly shrugged off similar warnings. With the Iran war and oil prices pushing bond yields to their highest in more than 20 years and the Fed hiking again, AI firms that rely on bond issuance face closer scrutiny.
Related markets
Latest news
- Investors are punishing Big Tech's biggest spenders. Meta is the latest casualty.
Meta shares fell more than 7% on Thursday, wiping out about $125 billion in market value and erasing the stock's gain for the year. It was on track for its third straight drop of 5% or more the day after earnings, a first since its 2012 IPO. Revenue rose 26% to $64.6 billion, but Meta raised its full-year expense outlook, narrowed capital spending to $135–145 billion, and unveiled nonvoting shares it can sell to raise money. Analyst Gil Luria of D.A. Davidson said Zuckerberg will need to raise both debt and equity, while the cost of insuring Meta's debt climbed to its highest in months. Luria also said Meta is gaining share from Google and its ad sales are growing strongly; the stock has traded roughly between $500 and $800 since mid-2024, and a weekly close above $800 would signal a breakout while a close below $500 would open the door to a deeper slide.
- Oil Climbs Above $111 as AI Stocks Slide, Dragging the S&P 500 and Global Markets With Them
Brent crude rose 2.6% to $111.66 a barrel, its highest in five months, as AI-linked stocks slid and pulled the Nasdaq down 1.5% and the S&P 500 down 0.8% by mid-morning in New York. Asian markets also fell sharply, with South Korea's Kospi down 3.52%, Japan's Nikkei 225 down 2.65% and Hong Kong's Hang Seng down 3.03%, while China's CSI 300 entered a bear market. Nvidia fell 2.3% and Meta dropped 5.8% after its profit missed forecasts. The 10-year Treasury yield rose to 5.03% from 3.97% before the Iran war, ahead of the Fed's Oct. 28 decision. Citadel founder Ken Griffin said investors are 'almost certainly' in an AI bubble, though he did not tell them to sell.
- Oil Climbs Above $111 as AI Stocks Slide, Dragging the S&P 500 and Global Markets With Them
Brent crude rose 2.6% to $111.66 a barrel, its highest in five months, as AI-linked stocks slid and pulled the Nasdaq down 1.5% and the S&P 500 down 0.8% by mid-morning in New York. Asian markets also fell sharply, with South Korea's Kospi down 3.52%, Japan's Nikkei 225 down 2.65% and Hong Kong's Hang Seng down 3.03%, while China's CSI 300 entered a bear market. Nvidia fell 2.3% and Meta dropped 5.8% after its profit missed forecasts. The 10-year Treasury yield rose to 5.03% from 3.97% before the Iran war, ahead of the Fed's Oct. 28 decision. Citadel founder Ken Griffin said investors are 'almost certainly' in an AI bubble, though he did not tell them to sell.
- We're dipping back into the AI trade with our first data center buy in weeks
Jim Cramer's Charitable Trust is buying 10 shares of GE Vernova (GEV) at about 818 USD, lifting its weighting to about 2.15% from 1.9%, its first data center-related purchase since a Micron buy five weeks ago. The trust is buying into a Thursday sell-off driven by investor concern over how to fund the data center buildout, as cash flows are used up and debt financing grows less attractive, rather than weaker AI demand. GE Vernova was the third-worst S&P 500 performer that day and trades about 12% below its Aug. 24 level, when the trust downgraded it to a 2 amid caution on AI stocks; it has now been upgraded to a 1 to play for a bounce.
- Could Intel be the next trillion-dollar company?
Maverick Capital reportedly expects Intel to become a trillion-dollar company again, citing growing demand for CPUs used in AI inference. One speaker argues the story is compelling, pointing to huge chip demand, Intel's domestic chip production and strong government support, and notes the stock, though pulled back, sits right on its 200-day trend line. The others say they sold Intel long ago or never owned it, preferring holdings such as Nvidia, Broadcom and AMD. They describe a five- to seven-year wait that carried a large opportunity cost.
- Underdog taps zerohash to bring crypto deposits to prediction markets
Prediction market operator Underdog has partnered with zerohash to add cryptocurrency and stablecoin deposits, expected to launch later this year. Eligible users will be able to fund accounts through the app with near-instant transfers around the clock, without managing wallet addresses or choosing blockchain networks. Underdog has not yet said which cryptocurrencies or stablecoins will be supported. The company, founded in 2020, has more than 11 million registered accounts and is being acquired by IG Group for up to $1.3 billion, with closing expected in late 2026 or early 2027. Over the 30 days ending Oct. 21, its trading volume reached $1.4 billion, up 133%, still far behind Kalshi's $81.5 billion and Polymarket's combined $17.2 billion.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.