AI boom stumbles over white swan events

ASML Holding

15/10/2026 15:29

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Jennifer Johnson
LONDON, Oct 15 (Reuters Breakingviews) - It’s tough to believe that any investor was blindsided by this week’s AI selloff. The factors that precipitated the panic – including surging US consumer price inflation – have been on the cards for months. Indebted neocloud companies like CoreWeave CRWV.O, which rents chips to artificial intelligence developers such as OpenAI, have been duly marked down, but were also known risks. Investors may now, however, be more alert to signs of stress.
The rout has taken some of the shine off previously untouchable stocks – with chipmakers like $5.3 trillion Nvidia NVDA.O and TSMC 2330.TW falling 8% and 4% respectively over the last week. Even suppliers to the semiconductor industry, like lithography equipment group ASML ASML.AS, have been implicated. The $629 billion Dutch firm’s shares were down nearly 6% on Thursday, despite reporting strong orders and committing to a capacity increase the prior day.
So far, the moves look mostly to be a response to concerns over neocloud operators. That has been exacerbated by high inflation, which may force the Federal Reserve to jack up rates, in turn driving up funding costs for already indebted companies. CoreWeave is busy hunting for new sources of "unlimited" capital, such as insurers. But in the meantime, investors have marked down its bonds to less than 85% of face value, a sign of financial distress. In an internal memo seen by Reuters yesterday, CoreWeave CEO Mike Intrator told employees that the company’s deal backlog covers its debt obligations, and that markets can sometimes "misunderstand and act irrationally."
Yet falls beyond the neoclouds are still modest, implying investors are not yet pricing in more serious concerns, such as a broader slowdown in demand for AI. While TSMC expressed some uncertainty over the macroeconomic outlook in its most recent results, it also posted a record net profit for a sixth straight quarter. Both the Taiwanese chipmaker and ASML remain up more than 40% in the year to date. That suggests AI stocks could fall a lot further if doubts grow over consumer demand for the technology. 
The current jitters could also exacerbate concerns over how the AI boom will continue to fund itself. Groups like CoreWeave and rival Nebius NBIS.O, which rent GPUs to hyperscalers and frontier AI labs, are expected to account for about one-fifth of compute capacity by 2030. If they struggle to access markets, then chipmakers or labs like OpenAI will need to find other sources of capital, or buy more GPUs themselves. Institutional investors that have been stung by losses on neoclouds' debt or equity – CoreWeave has some $50 billion of borrowings – may be less willing to step up, or demand higher returns. At the start of this week, Broadcom CEO Hock Tan stated that capital and funding – rather than semiconductor or power shortages – could be the major constraint on AI’s expansion. The market is only just beginning to price those risks.
     
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CONTEXT NEWS
US chipmakers, hyperscalers and cloud computing groups are poised for a second consecutive day of sharp selloffs on October 15 following an uptick in consumer price inflation.
Heavily-indebted data centre operator CoreWeave fell more than 6% in premarket trading, following a 15% drop on October 14. Meanwhile shares in Oracle, the cloud computing giant, were down 2% after falling nearly 9% the previous day.
The rout is a global phenomenon, with South Korea's KOSPI index – whose cohort of major chipmakers have made it one of the top beneficiaries of AI euphoria – plunged almost 8% during trading on October 15.

(Editing by Neil Unmack; Production by Maya Nandhini)
((For previous columns by the author, Reuters customers can click on JOHNSON/Jennifer.Johnson@thomsonreuters.com))