- The Nasdaq fell 2.5% on Thursday, with chip stocks and AI infrastructure names hit hardest on concerns about the scarcity of capital to fund the AI buildout.
- Broadcom CEO Hock Tan warned the prior Monday that a capital crunch could become AI's next bottleneck.
- CoreWeave bonds sold off, making it harder for the neocloud to raise new debt for its expansion plans.
- Meta Platforms posted strong earnings Wednesday, but free cash flow turned negative for the first time since its 2012 IPO, and its SEC filing said its long-term forecast requires raising hundreds of billions of dollars starting as early as fall 2026. Meta shares fell 7.5% Thursday.
- The Meta filing cited Alphabet and SpaceX, plus Anthropic and OpenAI, as competitors raising capital for the same AI growth, and said timing matters to secure funding before competitors saturate funding options.
- Huang said demand for capital is much greater than its availability but expressed confidence the funding gap for neoclouds would eventually be resolved.
- Treasury yields fell as the 10-year yield dipped below 5% for the first time since Sept. 23, helping high dividend and rate-sensitive stocks such as Kimberly-Clark and Home Depot outperform.
Quotes
“demand of the capital is much greater than the availability of the capital.”
“increasingly challenging environment for raising capital.”