CoreWeave Leads Fresh Selloff in AI Stocks as Nasdaq Drops 1.9%
Key Takeaways
- •CoreWeave shares fell more than 11% and its unsecured bonds yield about 15%, after a Bloomberg report disclosed that its founders sold $3.3 billion of stock since the IPO, including $2.4 billion this year.
- •The selloff extended into cybersecurity and software, with CrowdStrike down 7.8% and Palo Alto Networks down 7.6% despite no clear catalyst, in trades the report described as crowded.
- •Other notable decliners included DigitalOcean down 12.2%, Nebius down 11.1%, IREN down 10% to $27 from $50 on September 23, and Super Micro down 7.8% following Barclays' downgrades of HPE and Dell over memory-inflated hardware revenue.
- •Large technology names also declined, with AMD down 4.8%, Micron down 4.7%, Meta down 3.4% ahead of next week's earnings, Broadcom down 3.5%, Microsoft down 2.5%, and Tesla down 2.7% after a pre-market gain faded.
- •The report suggested markets may be underestimating the chance of a rate hike at month-end given hot inflation data, leaving Meta's earnings next week and the decision as two closely watched checkpoints.
Technology stocks came under renewed pressure, led once again by CoreWeave, as skepticism toward the neocloud space — the cohort of AI-focused cloud providers that lease out GPU capacity — spread to cybersecurity names and other previous AI winners.
CoreWeave sat at the center of the selloff, with its unsecured bonds yielding about 15%, a level that reflects the substantial compensation investors are demanding to hold the company's debt. Sentiment soured further late yesterday after a Bloomberg report highlighted that the company's founders have sold $3.3 billion of stock since last year's IPO, including $2.4 billion this year. Shares of CRWV fell more than 11% on the day, nearly wiping out the previous session's strong bounce.
Other notable decliners included:
- Nebius (NBIS): down 11.1%, sold alongside CoreWeave despite funding itself mostly with equity and convertible notes.
- CrowdStrike (CRWD): down 7.8%. The report noted no clear catalyst for the cybersecurity drop but described it as a crowded trade.
- Super Micro (SMCI): down 7.8%, still digesting Barclays' downgrades of HPE and Dell over memory-inflated hardware revenue.
- Palo Alto Networks (PANW): down 7.6% at $341.98, with the same caveat as CrowdStrike.
- Datadog (DDOG): down 8.1% at $248.98.
- DigitalOcean (DOCN): down 12.2%, falling fast.
- IREN (IREN): down 10.0%, now at $27 from $50 on Sept 23.
- Palantir (PLTR): down about 7.6% after opening higher, another momentum name that is flagging.
Among the larger names, the picture was little better:
- AMD: down 4.8%.
- Micron (MU): down 4.7%.
- Alphabet (GOOG): down 2.0%.
- Meta (META): down 3.4% ahead of next week's earnings report.
- Tesla (TSLA): down 2.7% after rising as much as 5% in the pre-market; per the report, because the demo was seen as a toy rather than a business.
- Broadcom (AVGO): down 3.5%.
- Microsoft (MSFT): down 2.5%.
Overall, the Nasdaq Composite was down 1.9% and received little help from oil, which traded near the highs of the day and up 2.7%. The report suggested the market may be underestimating the chance of a rate hike at the end of the month, noting that the data keeps coming in hot and that this week's inflation numbers were problematic. Rate expectations tend to bear hardest on long-duration growth stocks, whose valuations depend on earnings projected years into the future, making the month-end decision one of the more closely watched items on the technology calendar. Between Meta's earnings next week and that rate decision, the market faces two scheduled checkpoints in short order.
