Chip stocks post longest losing streak since 2008 as investors question returns on AI spending
Chipmakers fell for an eighth straight session and the Nasdaq 100 had its worst week since April 2025 as AI financing worries mounted. Nvidia’s Jensen Huang said “all of this is going to pass,” while the FT reported Anthropic is offering Blackstone a yield above 10% on chip debt.
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US chipmakers fell for an eighth straight session on Friday, October 16, their longest losing streak since 2008, as investors questioned whether the artificial-intelligence infrastructure build-out has outrun companies’ ability to earn a return on it. A fresh burst of selling in technology shares drove the Nasdaq 100 down 2.5% to its worst week since the April 2025 tariff turmoil, Bloomberg reported.
The market move
The Philadelphia Stock Exchange Semiconductor Index has now fallen for eight consecutive days, and Nvidia shares have dropped in seven of the past eight sessions. The S&P 500 lost 1.1%. CoreWeave, the AI cloud-computing provider whose bonds recently hit levels that typically signal distress, sank 12% on the day and lost about a quarter of its value over the week.
While angst about funding AI has been building for months, CoreWeave has drawn outsized attention as an early entrant that has relied heavily on high-yield debt markets to finance its build-out. With bond yields elevated and inflation still high, the cost of that financing is rising fast. The 10-year Treasury yield rose to 5.09%, and West Texas Intermediate crude climbed 3.8% to $101.71 a barrel.
“This week’s price action suggests the market debate is beginning to shift,” said Fawad Razaqzada at StoneX Trading and Forex.com. “The question is no longer simply how large the AI opportunity can become, but how profitable the enormous investment required to realize it will ultimately be.” Higher interest rates, he said, reduce the present value of future cash flows while increasing the cost of financing the next phase of AI growth.
Huang: “All of this is going to pass”
Nvidia Chief Executive Jensen Huang took a sanguine view of the rout. “All of this is going to pass, and the reason for that is very simple,” he told Bloomberg’s Emily Chang at an event in Berlin. “It’s going to be transformative. It’s going to impact in a very positive way every single industry and every single country. There’s no question it will continue, and we’re at the beginning of that.” Describing recent headlines as “choppy news,” he urged investors to “stay focused on first principles.”
Cathie Wood of ARK Investment Management said CoreWeave’s high borrowing costs are common for young companies raising money when rates are elevated, and that ARK added both CoreWeave and Cerebras Systems during the week’s declines.
The cost of AI debt
The rising price of AI financing was also visible at Anthropic. The Financial Times reported that Anthropic is offering Blackstone a yield of more than 10% to finance its latest chip deal, with Blackstone funds investing $9 billion in debt backed by Anthropic’s five-year lease payments on the chips, citing people familiar with the matter. Reuters, which carried the report, said it could not immediately verify it.
Sources: Bloomberg (via Swissinfo), Bloomberg (via The Straits Times), Reuters, citing the Financial Times (via U.S. News). Photo: Reuters (via The Straits Times).
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