Morning Bid: Market picks CoreWeave as AI rout deepens
The AI selloff persisted into Asian trading hours on Wednesday, also affecting bond markets. South Korea's KOSPI index fell more than 15% in the week, with data centers under intense scrutiny. CoreWeave, an AI-focused data center operator that is currently in debt totaling nearly $50 billion, was particularly hard hit. Shares of the loss-making company dropped 15% on Wednesday and another 6% after markets closed, erasing a fifth of its value.
CoreWeave's debt yields surged to over 15% after the market hours, causing ripples in credit markets. CEO Mike Intrator acknowledged that market participants may sometimes act irrationally. The company's woes led investors into safer Treasury and sovereign bonds. US ten-year government bonds rallied and extended gains throughout Asia.
Fed funds futures surged as short-sellers moved out of the market. Despite the market turmoil, the revenue from chipmakers remains substantial and is expected to keep growing. TSMC, the world's largest AI chip manufacturer, is likely to report another record quarter of earnings later on Thursday. ASML, the leading maker of tools used to manufacture AI chips, reported that customers are already planning orders for 2029 and 2030, easing fears of a waning AI investment boom.
The following economic data will be released on Thursday and could further influence market sentiment: US retail sales, PPI, British monthly GDP.
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