Red hot CPI report fuels AI rout

US inflation data sent major AI stocks tumbling on Wednesday, sparking investor worries about the sector's financial risks. CoreWeave, an AI data center operator, dropped 16 percent, while Nebius, an AI infrastructure provider, fell 11 percent. Cloud computing giant Oracle decreased 9 percent, and Dell Technologies, an AI server seller, declined 11 percent.

These declines wiped out approximately $80 billion in market value. Barclays downgraded Dell and two other enterprise hardware stocks, noting a quadrupling of Dell's shares this year. Concern over rising borrowing costs also affected other big decliners. CoreWeave, which issued $22 billion in bonds and $26 billion in loans, saw its June bond yield surge to 15 percent.

Analysts suggest that the largest AI companies may not be delivering the anticipated earnings or revenue, causing unease about the sector. Despite strong economics and investments, investors remain cautious, wary of the potential impact of high rates on borrowing and building costs, particularly for less-profitable firms.