AI-linked stocks came under pressure, with CoreWeave falling to its lowest level since its IPO after its bond yields jumped as high as 15%, the Nasdaq Composite dropping 2.6% on Thursday, and Meta tumbling 7% despite a strong earnings report over its first quarter of negative free cash flow in its history, reflecting heavy AI infrastructure spending. Meanwhile, the 10-year Treasury yield fell 3.8% to 4.95%, and homebuilder stocks rose, with the State Street SPDR S&P Homebuilders ETF (XHB) up 3.8% and Pool Corporation, RH and Lennar gaining 14.4%, 9.5% and 9%. Investors now see a 93% chance the Fed holds rates steady at 375-400 basis points, though rates are still expected to rise over the next year. The author says he is not ready to call an AI bubble, since demand for AI compute remains strong, but argues that investors with AI gains may consider shifting some into homebuilder or home furnishing stocks, with the outlook depending on inflation and interest rates.
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Original headline: If the AI Bubble Bursts , These Stocks Will Be Winners
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CoreWeaveAI investmenthousingbondsinterest rates
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Related tickers and likely impact
NVDA
• NeutralNvidia
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Semiconductors |
| Market cap | $5.2T |
| Close on 10/22/2026 | 212.28 |
| Change that session | -4.36% |
QQQ
• NeutralInvesco QQQ Trust
Relevance: low
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/22/2026 | 704.59 |
| Change that session | -2.84% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- If the AI Bubble Bursts , These Stocks Will Be Winners
CoreWeave has fallen sharply in recent weeks to its lowest level since its IPO, after its bond yields jumped as high as 15%. The Nasdaq Composite dropped 2.6% on Thursday, and Meta Platforms fell 7% despite a strong earnings report, as investors reacted to its first negative free cash flow quarter in its history. Meanwhile, the 10-year Treasury yield fell 3.8% to 4.95%, below 5% for the first time in a month, which could reflect a rotation from stocks into bonds. Homebuilder stocks rallied: the State Street SPDR S&P Homebuilders ETF (XHB) rose 3.8%, while Pool Corporation, RH and Lennar gained 14.4%, 9.5% and 9%, as investors put a 93% chance on the Fed holding rates at 375-400 basis points. The article suggests investors with AI gains could consider shifting some into housing-related stocks, and that interest rates will determine the sector's outlook.
- Is CoreWeave Very Bad Week The Beginning Of The End Of The AI Bubble ? - OpEd
According to the article, CoreWeave's long-term debt interest rate exceeded 16 percent last week, while Oracle's debt yield peaked above 8.5 percent, nearing junk-bond territory (8.0 percent). The author notes that about 80 percent of OpenAI and Anthropic revenue comes from 1 percent of customers, mostly unprofitable AI startups, and that AI spending showed virtually zero growth in August and September as token prices fell faster than usage rose. The author describes DeepSeek's latest model as performing near or in some cases above OpenAI and Anthropic's frontier models at a small fraction of the price, costing less than 1/10th or even 1/20th for many tasks. The author argues this undermines the revenue assumptions needed to support trillions of dollars in AI infrastructure lease commitments.
- Is It Time to Sell CoreWeave Stock? Nvidia CEO Jensen Huang Doesn't Think So.
CoreWeave shares fell about 25% from Oct. 12 to Oct. 16 as yields on its debt spiked to 15%, a level the article classifies as distressed debt that signals market doubts about repayment. Nvidia, which held about 47 million shares as of the second quarter, roughly 10% of CoreWeave's total float, has a CEO, Jensen Huang, who says he is 'optimistic' and that CoreWeave's cost of capital is actually decreasing. The article notes CoreWeave is unprofitable but growing revenue rapidly, and that its bonds were initially issued at high yields, showing a gap between market and creditor views. The author is not racing to buy the debt but is not bearish, and believes the stock should be fine if CoreWeave delivers on the major deals it has signed.
- The AI Boom Just Sent a Warning Sign That Has Nothing to Do With Stock Prices
CoreWeave's share price has dropped more than 30% in about two weeks, and its bonds sold off sharply: notes issued earlier this year at a 9.675% yield now yield around 15%, meaning the market is pricing in much more risk. The author asks whether this signals a broader repricing over whether AI companies will earn enough return on their massive infrastructure spending, given CoreWeave's costly data centers and the long path to break-even. As an illustration, refinancing a hypothetical $1 billion loan at 15% instead of its original terms would add roughly $53 million in annual expenses, and the author compares the situation to the fiber-optic telecom build-out about 30 years ago. Credit spreads have widened about 50 basis points over the past month, an early warning rather than real systemic stress. Still, the author would not sell tech stocks or the S&P 500 over CoreWeave alone, and prefers companies financing AI expansion through cash flow rather than heavy debt.
- This AI Company Loaded with Debt Is Giving Everyone the Heebie Jeebies
CoreWeave, an AI company that borrows to buy Nvidia GPUs and rents them to Meta, OpenAI and Microsoft, has seen its $1.25 billion junk bond due 2032, issued in June at a 9.625% rate, push its yield above 15% within about four months, reaching distressed levels amid a broader AI bond selloff. Its five-year credit default swap hit a record 1,194.5 basis points last week, implying more than a 60% chance of default within five years, and the company is projected to be cash-flow negative until 2030. The author argues the near-term picture is less dire than the bond market suggests, since cash flow depends on GPU rental prices and demand, which remain strong. The bigger risk, the author says, would be a sharp fall in demand and GPU prices, drawing a parallel with the bandwidth price collapse of the dot-com era that could leave leveraged borrowers in serious trouble.
- The Bond Market Warning – and Three Stocks Worth Watching
The author argues that the disconnect between stocks and bonds could lead to a sharp Nasdaq pullback, and that volatility is now arriving. As of Friday afternoon, the Nasdaq Composite was down about 4.5% for the week while the Dow Jones Industrial Average was slightly up, and some CoreWeave Inc. (CRWV) bond yields approached 15%. The author says investors are demanding more compensation for lending to heavily indebted AI infrastructure companies, and that smaller companies with floating-rate debt may face pressure as rates rise. The three stocks on the author's watchlist are Freeport-McMoRan Inc. (FCX), AST SpaceMobile Inc. (ASTS) and Rocket Lab Corp. (RKLB), and the author expects volatility before the market recovers.
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