AI infrastructure firms slump as US rate hike bets rise

IREN

14/10/2026 17:09

Oct 14 (Reuters) - Shares of debt-heavy AI firms tumbled on Wednesday as prospects of higher interest rates intensified concerns over the financing of the industry's massive buildout.
Companies whose shares had rallied earlier this year on AI optimism were some of the worst performers on the main benchmarks.
Here are the details:
Shares of neocloud firms Nebius NBIS.O and CoreWeave CRWV.O dropped 15.1% and 9.5%, respectively
CoreWeave stock set to wipe out about a quarter of its value this month, Nebius set to erase almost 20% 
Data center operators Applied Digital APLD.O and IREN IREN.O down 8.8% and 9.9%, respectively
Shares of debt-laden AI hyperscaler Oracle ORCL.N were down 7.2% and most of its dollar bonds had also declined
"Investors are questioning whether the AI buildout will generate the returns that were expected," said Kim Forrest, chief investment officer at Bokeh Capital Partners
AI server makers Dell DELL.N and HPE HPE.N dropped 10.3% and 6.4%, respectively, as Barclays downgraded the ratings on the stocks to "equal-weight" from "overweight"
"Valuations have run, commodity costs have helped revenues, and we don't see a meaningful AI inflection yet," Barclays said
Higher rates mean elevated costs for firms borrowing to build data centers and buy AI chips 
The prospect of a second Federal Reserve rate hike as soon as this month rose following hot consumer price data 
10-year Treasury yields US10YT=RR climbed 3.6 bps, two-year yields US2YT=RR jumped 7.2 bps 
The cost of insuring debt against defaults for some AI companies, including Oracle and CoreWeave, surged to record highs, as per S&P Global Market Intelligence data

 (Reporting by Shashwat Chauhan and Darshan Kumar in Bengaluru; Editing by Shinjini Ganguli)
 ((Shashwat.Chauhan@thomsonreuters.com;))