A week after hitting record highs, the Nasdaq sank to near a one-month low on Thursday, and the AI stock selloff is starting to look less like a dip and more like a reckoning. The tech-heavy index is down more than 4% from those records, according to Reuters reporting.
Early in the session, the Nasdaq was off roughly 1%. The S&P 500 had slipped about 0.4%, and the Dow was slightly higher. (Those are mid-morning figures, so they will move by the closing bell.)
Why the AI stock selloff is hitting now
It’s a pile-up of bad news arriving all at once. Wednesday brought the biggest one-day fall for the S&P 500 and Nasdaq since July. Hotter-than-expected consumer inflation data had pushed up bets on more Federal Reserve rate hikes.
Then Thursday piled on, with fresh data showing that US producer prices rose in September by the most in 4-1/2 years.
That matters because AI is expensive. Higher rates make borrowing pricier for the companies building the data centers. They also shrink the value, in today’s dollars, of the future profits those bets rely on. Rising borrowing costs are already weighing on the broader stock market, too.
The AI chip rout and the debt problem
The pain was spread across the sector. Nvidia fell about 3.3%, Micron dropped 5% and AMD slid 6.4%, according to Reuters via Business Recorder. CoreWeave lost another 8.5% on top of Wednesday’s drop of roughly 15%.
If losses hold, the chips index would shed about $2 trillion. That would come during a slide of more than 14% over seven sessions, its longest losing streak since May 2025.
Here’s the part that should make investors sit up: debt.
CoreWeave and Oracle bonds also fell, pushing their yields to record highs. CNN notes that CoreWeave is down 66% from its post-IPO peak and carries tens of billions of dollars of debt.
Saxo’s chief investment strategist, Charu Chanana, put it bluntly: “The repricing of CoreWeave’s debt suggests that investors are becoming less willing to finance AI infrastructure growth at any cost.”
Why this tech selloff reaches your retirement account
Here’s the thing: you don’t have to own a single AI stock to feel this. AI stocks are now a huge slice of the major index funds sitting in 401(k)s and brokerage accounts. When they wobble, plenty of people feel it, whether they follow the news or not.
Jefferies economist Mohit Kumar warned that a slowdown in the AI buildout “would imply a sharp slowdown in US growth expectations.” CNN adds that US AI spending as a share of the economy now exceeds that of the 1800s railway boom. That’s a heck of a comparison, and railways, as history buffs know, had their own bumpy moments.
Other bad news fed the AI stock slide
Sentiment also took a hit from TSMC’s cautious note on 2027, which cited macroeconomic uncertainties. Reports that Anthropic’s third-quarter revenue grew 45% from the previous quarter failed to lift anyone’s mood. That shows how skittish the market has become. Elsewhere, FMC plunged more than 38% after sharply cutting its outlook.
Not everything fell. Healthcare and consumer staples each gained more than 2%, which kept the Dow in positive territory. Investors, it seems, wanted something boring.
What comes next for the AI stock selloff
Earnings season is in full swing. Wall Street expects S&P 500 profits to grow 30.6%, per LSEG data cited by Reuters. Still, worries over rates and AI spending threaten to drown out those big numbers. Global bond markets are adding pressure, as surging yields could soon reach mortgage rates.
Watch two things: whether CoreWeave and Oracle debt yields keep climbing, and whether the chips index stretches its losing streak.
The AI party isn’t necessarily over. But the bill is starting to arrive, and the question now is who’s picking up the check.
