Debt concerns continue to weigh on AI stocks

U.S. stocks have been volatile lately as investors have moved away from artificial intelligence stocks, especially those related to AI infrastructure. oracle, broadcom and coreweave.

The concern is that these companies are taking on large amounts of debt to finance multibillion-dollar deals.

Oracle, for example, said Wednesday it needs to increase its capital spending by an additional $15 billion this fiscal year and increase its data center leases. The company is relying on debt to cover all of that.

Shares fell 2.7% on Monday, while shares of Coreweave, the company’s peer in the AI ​​data center trade, fell about 8%. Broadcom also withdrew from the market due to concerns about shrinking profit margins, resulting in a decline of about 5.6%.

However, the overall market was not negatively affected as investors continued to rotate into sectors such as consumer staples and industrials. of S&P500 down 0.16%, Dow Jones Industrial Average It was only 0.09%. Nasdaq CompositeCompanies that make up more tech companies fell 0.59%.

Broader market performance suggests that concerns are largely contained within the AI ​​infrastructure space.

“We definitely need an ROI (return on investment) to continue to fund this AI investment,” Matt Wiziler, head of late-stage growth at Wellington Management, told CNBC’s “Money Movers” on Monday. “From what we’ve seen so far, the ROI is good.”

The bullish side of the story, Wisiller said, is that “every AI company on the planet is saying, if you give us more computing, we can make more money.”

According to this argument, client-ready availability means that the companies providing the computing (Oracle and CoreWeave) simply need to ensure that their financials are sound.

—CNBC’s Ari Levy contributed to this report.

US stocks fell slightly on Monday. All major indexes fell as AI stocks continued to weigh on the market. regions of europe Stocks 600 It rose by 0.74%. The continent’s defense stocks fell after Ukraine offered to abandon its NATO membership.

Tesla is testing driverless robotaxis in Austin, Texas. CEO Elon Musk wrote in a post on his social network X over the weekend that “testing is underway without passengers in the vehicle.” shares of tesla It rose 3.6% on Monday to close at its highest point this year.

The US collects $200 billion in tariffs. The country’s Customs and Border Protection agency said Monday that the tally includes only new tariffs imposed during President Donald Trump’s second term, including a “reciprocal” tax and a “fentanyl” tax.

The peace agreement between Ukraine and Russia is almost complete. That’s according to U.S. officials who have met with Ukrainian President Volodymyr Zelenskiy since Sunday. Officials say Ukraine has indicated its intention to abandon NATO membership, but Russia is open to Ukraine joining the EU.

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