Will 80% of new cloud providers face a shakeout by 2030? CoreWeave stock plunges 15% as its bonds run into trouble, the dollar hits an 18-month high, the S&P 500 ends its longest stretch since 2020 without a single-day drop exceeding 1%, the Russell 2000 enters technical correction territory, and US chip stocks fall for a sixth straight session.
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CPI rekindles rate hike bets, dollar hits fresh 18-month high
US stocks suffered a selloff on Wednesday driven by both inflation expectations and credit risk. The S&P 500 fell 1.11%, ending a calm stretch of 53 consecutive trading days without a daily drop exceeding 1%, the longest streak since January 2020; the Nasdaq fell 1.88%, its biggest one-day drop in three months; the Dow fell only 0.09%, with blue chips relatively resilient. The Russell 2000 fell nearly 1.9% and was about 11% below its August high, formally entering correction territory and breaking below its 200-day moving average.
US September CPI rose to 3.7% year over year, while core CPI rose to 2.6%, both exceeding expectations. Gasoline prices surged 9.1% month over month, contributing more than half of the overall increase, while core goods, housing, and core services also heated up together, pushing inflation higher. After the CPI release, the probability of an October rate hike briefly soared from about 22% to more than 50%, and the probability of a December hike briefly surged above 95%. Expectations later eased somewhat, as the market had already come back to terms with a reality: October most likely still will not bring a hike, and the earliest move would be in December.
Chicago Fed President Goolsbee said bluntly that September CPI was "disappointing," that services inflation cannot simply be attributed to oil prices or tariffs, and that he is more worried about overheating demand. San Francisco Fed President Daly said further rate hikes may still be needed, but there is no need to rush action in October. TD Securities strategists also believed the report raised the odds of an October hike, but that the Fed is more likely to hold steady and wait until December to act, with the market itself already doing part of the tightening work for the Fed. The Fed's Beige Book showed energy costs are being passed along the supply chain, and businesses in five districts have already adjusted hiring because of AI. Goldman Sachs estimated that AI-related price pressures currently contribute about 45 basis points to core PCE, and will gradually fade after peaking at year-end. The bank believes the inflation pull from AI demand may already be near its peak, and that next year the pace of price increases for memory chips and computers will slow markedly, thereby easing both actual cost pressures and measurement effects in the price statistics for software and accessories.
The 10-year US Treasury yield climbed above 5.30% after CPI, then fell back to 5.19% as sharp declines in the Nasdaq and AI sector triggered safe-haven buying, ending the day down about 2 basis points; the 30-year yield touched 5.63% intraday. The dollar index rose and hit a fresh high since May 2025, breaking out of an 18-month trading range and reaching a nearly 18-month high.
Gold was first pressured by real yields, then supported by safe-haven buying. Spot gold briefly fell below $4,100 and was still down about 1.4% near the close, before rebounding in Asian trading to around $4,146 per ounce, essentially recovering its losses since CPI; silver fell more sharply, at one point dropping about 6.5%. Morgan Stanley is more bullish on gold, believing strong support has formed around $4,000 per ounce. The bank said that based on the relationship between gold and real yields from March to July, gold should theoretically be below $3,000, but central bank buying, ETF inflows, and concerns about fiscal sustainability are changing gold's sensitivity to interest rates; its target is for gold to reach $5,000 per ounce in the second quarter of 2027.
Middle East shipping attacks, Houthi threats, and mutual strikes on energy facilities by Russia and Ukraine jointly pushed crude oil prices higher. WTI crude rose about 1%, holding above $95 per barrel, while Brent briefly broke above $106 per barrel intraday. Standard Chartered's head of energy research, Emily Ashford, warned that restored shipping flows do not mean shipping security has been restored; as long as infrastructure and shipping remain under threat, the risk premium in the energy market will be difficult to dissipate. European diesel prices have more than doubled so far this year, and US retail diesel prices remain near record highs.
After "unblocking" Russian diesel, the Trump administration is trying again to cool oil prices from the supply side. The United States is considering easing restrictions on some tankers linked to the Russian, Iranian, and Venezuelan "shadow fleets," allowing them to transport "legitimate oil" to ease record tanker freight pressure. But Energy Aspects believes the effect will be limited, because many sanctioned tankers are old and their insurance remains constrained by EU and UK rules, making it impossible to quickly create effective capacity.
Chip stocks fall for sixth straight session, NeoCloud industry may accelerate reshuffling
Last night, the sharpest selling pressure in US stocks came from AI infrastructure. The Philadelphia Semiconductor Index plunged 4.3%, closing lower for a sixth consecutive trading day, the longest losing streak since May 2025. Over the past six trading days, it has fallen about 12% cumulatively, with the risk of market value destruction estimated at more than $1 trillion. Arm, Applied Materials, Intel, AMD, Micron, and other chip stocks with high valuations and stronger cyclical attributes bore the brunt.
CoreWeave became the center of the storm. Its unsecured bonds maturing in 2032 fell below 80 cents on the dollar, with yields exceeding 15%; its 9.75% bonds maturing in 2031 yielded close to 16%, and its CDS widened by more than 135 basis points in a single day. The market has begun to worry about debt repayment risk. After seeing this yield, Musk commented, "Scary."
A report from research firm Gartner further amplified the panic. Gartner expects AI providers to spend nearly $1 trillion on AI infrastructure in 2026, with an additional $6 trillion from 2027 to 2030. But before 2030, enterprise and consumer AI revenue will not be enough to support profitable returns on all planned capital expenditures. Calculated at a 12% return on invested capital, AI data center owners would need to generate cumulative revenue of $8.5 trillion, but related revenue forecasts do not exceed $3.6 trillion. Gartner also expects that by 2030, more than 80% of new cloud service providers will cease independent operations, and by 2032 more than $4 trillion in asset value may be exposed to write-down risk.
Bloomberg macro strategist Tatiana Darie warned that dimming financing prospects leave the highly interconnected AI market facing credit transmission risk, and concerns about circular financing could suddenly become reality. Michael Ball pointed out that after the leadership momentum of semiconductors and AI weakened, higher yields and rate volatility are becoming negative forces for stocks, while weak market breadth exposes rising correlation across risk assets.
AI credit pressure also weighed on enterprise hardware. Barclays downgraded Dell, Hewlett Packard Enterprise, and NetApp from "Overweight" to "In Line with the Market." Analyst Tim Long noted that enterprise hardware stocks have risen about 140% on average this year, with a 2027 estimated P/E of about 21 times, above the five-year average, while enterprise AI spending has yet to show a clear inflection point.
Specific project actions and stock price moves:
CoreWeave fell 15.46%: bonds and stocks were hit together. CEO Mike Intrator said in an internal memo that the order backlog is sufficient to support debt repayment, but market pricing has already pushed its credit risk into distressed territory. D.A. Davidson analyst Gil Luria warned that its financing cost is higher than its return on investment, and there is a risk that equity value could go to zero.
AI infrastructure and server stocks fell in tandem: Dell dropped more than 11%, Oracle about 8.8%, Nebius about 10%, IREN more than 12%, and optical communications company Lumentum about 9%.
Dell Technologies fell 11.27%: Barclays downgraded Dell to "In Line with the Market," cutting its target price from $603 to $574, citing the sharp expansion in enterprise hardware valuations while enterprise AI spending has yet to show a clear inflection point. The bank still expects Dell's AI server revenue to rise to $75 billion this fiscal year, about triple last year's level, and possibly reach $100 billion in fiscal 2028, but the room for upside surprises may narrow. Hewlett Packard Enterprise was downgraded, and NetApp was downgraded; Micron fell 4.08%, Western Digital dropped more than 4%, Seagate Technology fell more than 4%, and SanDisk dropped 5.33%.
Oracle fell 8.83%: Oracle asked US regulators to quickly approve the natural gas pipeline needed to supply power to a large data center project in New Mexico. If approval is delayed, operations for Project Jupiter could be affected. Its bonds maturing in 2033 are also at low levels, and the market is worried that construction, energy, and financing risks for large AI data center projects are being exposed in a concentrated way.
Nvidia fell 3.16%: Jensen Huang said Nvidia is willing to stop supplying customers if they develop unsafe AI software, but would communicate before doing so; he also said the shortage of AI infrastructure will persist for several years, and that "supply and demand will eventually balance, but not today." The company also pledged to provide $250 million worth of computing resources over the next five years for UK AI safety research. Semiconductors fell broadly: AMD dropped 5.73%, Intel 4.56%, Broadcom 3.10%, TSMC 3.40%, and Micron 4.08%.Bank of America fell 4.76%, at one point dropping nearly 9% intraday, hit by a double blow from earnings and fines: the company's third-quarter revenue was $29.96 billion, below expectations; GAAP EPS was $0.91, and excluding a $1.2 billion regulatory fine, EPS was about $1.08, still below expectations. Fixed-income trading revenue fell 17% year over year, while equities trading rose 10% year over year but still missed expectations; the CET1 capital adequacy ratio was 10.9%, below market expectations. CEO Brian Moynihan said the company understands the seriousness of the compliance issues and will continue to complete regulatory remediation. Related bank stocks: Morgan Stanley closed down 2.70% despite beating profit expectations, Goldman Sachs fell 1.48%, and the S&P Banks Index touched a more than four-month low intraday; BlackRock rose 0.72% against the trend, driven by strong EPS and assets under management.
ASML closed down 3.94%: strong earnings failed to reverse the decline in chip stocks. The company's third-quarter net sales were EUR 11.7 billion, gross margin was 57.5%, net profit was EUR 5 billion, and earnings per share were EUR 12.95; it expects fourth-quarter net sales of EUR 14.2 billion to EUR 15.2 billion, and full-year sales of EUR 44 billion to EUR 45 billion. Management is studying raising 2028 capacity growth to more than 30% and said customers are also showing interest in equipment orders for 2029 to 2030.
Among the Magnificent Seven tech giants, only Apple closed higher, up 0.50%, and closed above a $5 trillion market capitalization for the first time, becoming the second listed company after Nvidia to reach that milestone. Bloomberg reported that Apple plans to launch the first batch of Apple Intelligence features in mainland China in December through iOS 27.3, cooperating with Alibaba on a compliance mechanism and working with Baidu on localization.
Berkshire Hathaway rose 1.18%, achieving a 10-day winning streak: as risk assets in tech and AI were sold off, Berkshire, as a representative of stable cash flow, low leverage, and countercyclical assets, attracted capital. The company also plans to invest an additional $330 million in Bending Spoons through a private placement, and the latter's stock price surged 41.2% against the trend.
SpaceX fell 2.80%, Tesla fell 2.15%: SpaceX's AI business released Grok Voice 3.0, saying it can respond within 1 second and autonomously resolve about 70% of Starlink customer service calls, with API pricing maintained at $0.08 per minute. In addition, Barclays said a merger between Tesla and SpaceX could be announced before December 6, but a shareholder vote is the main obstacle.
Rocket Lab closed down about 7.9% and fell nearly another 10% after hours: the company said a manufacturing problem was found in the dome of the first-stage propellant tank of the Neutron rocket, requiring remanufacturing and inspection of related components. CEO Peter Beck said it would not use "maybe it can succeed" as the standard, and expects to evaluate the launch date after completing overall assembly of the first-stage rocket in the first quarter of 2027.
Next, key items to watch:
October 15 (Thursday)
14:00 TSMC third-quarter earnings call: the market is focused on gross margin, advanced process demand, CoWoS capacity, AI customer orders, and 2027 capital expenditure guidance.
20:30 U.S. initial jobless claims for the week ending October 10: if initial claims remain low, it would indicate the labor market is still tight and make it difficult for the Fed to pivot dovish quickly; if they rise significantly, the economic slowdown trade could heat up.
G20 finance ministers and central bank governors meeting: the market is focused on discussions around global debt, inflation, exchange rates, and financial stability. If the meeting emphasizes fiscal risks and high interest rate pressure, it could continue to affect long-end bond yields.
Nvidia China Developer Day is held in Suzhou and runs through October 16: the market is focused on Nvidia's statements on its China ecosystem, developer tools, AI applications, and computing power solutions. If there are new partnerships or product updates, it could affect discussions around AI applications and domestic computing power substitution.
Tesla's next-generation Roadster event is held: the market is focused on the new car's performance, mass-production timing, and whether it incorporates SpaceX-related technology. If the launch exceeds expectations, Tesla and the high-end EV supply chain could receive a sentiment boost; if it is delayed again, the market may be disappointed.
October 16 (Friday)
Fed Chair Warsh attends the IMF annual meeting and holds a fireside chat with IMF Managing Director Georgieva: this is the week's finale. Warsh will speak after U.S. CPI, PPI, and retail sales, and the market will focus on whether he supports a December rate hike. If he is hawkish, the dollar and Treasury yields may rise, pressuring U.S. stocks; if he emphasizes that the bond market has already tightened financial conditions, growth stocks may rebound.
iPhone Duo pre-orders open: the market is focused on demand for Apple's new product and acceptance of its pricing. If pre-orders are strong, it would benefit Apple's supply chain, consumer electronics, storage, and optics; if they fall short of expectations, concerns about Apple demand would intensify.