The AI rally faces a major test of "who will pay the bill." The Nasdaq fell 4.48% for the week, its worst since June; the U.S. Treasury market posted its best weekly performance since February; memory-concept stocks plunged 16% for the week; and speculative growth stocks pulled back more than 12% across the board. CoreWeave plummeted 25% last week, and Goldman Sachs said hyperscaler stocks imply about 15% downside.
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Oil prices approach $110, and whether the U.S. Treasury rebound can be sustained becomes a key variable.
Last Friday, U.S. equities suffered a new round of technology stock selling, with concerns over returns on AI infrastructure investment, financing costs, and high valuations being released in a concentrated manner. The Dow fell 0.34%, the S&P 500 fell 1.09%, and the Nasdaq plunged 2.14%. The Nasdaq Composite posted a weekly plunge of 4.48%, its worst weekly performance since the "AI trading dark week" in June; the S&P fell nearly 2% for the week, and the weekly performance gap between the Dow and the Nasdaq exceeded 6 percentage points, an extreme not seen since 2002. The VIX index, which measures market fear, surged more than 21% intraday at one point, breaking above the 22 mark.
Previously, Brent crude once approached the $110 threshold, and WTI crude rose for seven consecutive days and stood above $101; but this morning, because Iran reiterated that "the plan to reopen the Strait of Hormuz within 7 days remains valid" and U.S.-Iran negotiations remain unresolved, and combined with the Trump administration's push for an agreement to bring Russian diesel into the market (Russian Deputy Prime Minister Novak said supply would reach the United States within 15 to 20 days after signing), oil prices plunged from highs, with Brent crude falling back to trade around $108.
Spot gold is temporarily consolidating above $4,170/oz, while spot silver is locked in a tug-of-war around $57/oz, nearly halved from its historical peak in January. The well-known precious metals institution Money Metals believes that silver's deep decline not only reflects the retreat of speculation, but also, due to its industrial attributes, has priced in ahead of time the erosion of global manufacturing expansion by high energy costs; however, data from the World Gold Council and Morgan Stanley show that central banks' gold allocation share has surpassed U.S. Treasuries for the first time in history. The strategic floor provided by sovereign buying and silver's six-year physical supply deficit mean that the underlying macro support for precious metals has not collapsed. In industrial metals, affected by uncertainty over Trump's tariff prospects and concerns about macro demand, the price spread between Comex and LME copper has continued to collapse, and Macquarie warned that price direction has been fully hijacked by policy variables.
The U.S. Treasury market, meanwhile, saw a dramatic return of safe-haven demand. The 10-year U.S. Treasury yield fell by about 17 basis points last week to around 5.08%, marking its best weekly performance since February, and this morning it further declined to 5.05%. Before the Federal Reserve entered its blackout period ahead of the October policy meeting, Fed Chair Warsh refused to give rate-hike guidance at the IMF annual meeting and said that "the world economy is broadly in line with expectations," directly causing traders' pricing of an October rate hike to plunge below 15%. Long-term bond yields retreated from more than two-decade highs. Goldman Sachs and Julius Baer pointed out that the market is showing a long-absent "stock-bond seesaw" effect. The cooling of AI capital expenditure is translating into expectations of weaker demand, triggering large-scale CTA short covering and reactivating the asset-hedging attributes of U.S. Treasuries.
The dollar index, pressured by the decline in long-end rates, fell below the 102 mark and hit a two-week low, helping the offshore renminbi briefly strengthen past the 6.69 mark to a four-year high. But undercurrents are stirring in the foreign exchange market. Political turmoil in Europe has capped the euro's rebound, the yen is fluctuating around 157.8, and Bank of Japan Governor Ueda's hints of intervention against rising long-end rates have left the risk of unwinding global carry trades hanging unresolved.
The computing power myth hits the "discount rate wall," and hedge funds conduct targeted deleveraging.
If what drove U.S. equities surging over the past three years was the "computing power growth myth," then the market is now ruthlessly switching its pricing logic to "free cash flow and interest coverage." Over the past week, U.S. equities did not see systemic selling, but rather "targeted deleveraging" dominated by crowding. UBS's trading desk directly characterized it as "deleveraging rather than de-risking," with price action strikingly similar to the previous blowup of the fund under "AI quantitative stock god" Aschenbrenner. Although hedge funds' net exposure plunged, gross exposure remains in the 90th percentile of the past five years. Capital has not fled the market; instead, with extreme hunger, it has carried out a cliff-like major rotation from the high-valuation AI chain to traditional defensive sectors.
The semiconductor and AI hardware infrastructure sectors became the storm's hardest-hit areas. **The Philadelphia Semiconductor Index suffered a rare eight-day losing streak,** with more than $2 trillion in market value wiped out, marking the longest losing streak since the 2008 financial crisis; **memory concept stocks plunged 16% for the week, and speculative growth stocks broadly corrected by more than 12%.** BofA strategist Michael Hartnett emphasized that although its Bull & Bear indicator fell below the threshold and ended its "sell signal," technology stock positioning crowding remains at a five-year high. For the market to stabilize, the decisive factor rests entirely on whether semiconductor prices and credit costs can stabilize.
The alarm bells in the credit market have even drowned out the stock market itself. Goldman Sachs strategist Louis Miller presented a "terrifying chart" warning: **credit spreads for hyperscale cloud service providers have widened to the widest level of the year, credit default swaps have hit record highs, while the equity side has not fully priced in this premium, implying about 15% downside for related concept stocks.** Goldman Sachs data show that hyperscalers' capital expenditure growth will peak at 116% in Q3 2026 and then decline quarter by quarter; by 2028, the massive depreciation and amortization of data centers will even turn their contribution to S&P EPS negative. More seriously, junk-rated AI data center bonds are fraught with danger. Several emerging cloud service providers have postponed IPOs, and Wall Street has begun to shift from asking "is computing demand there" to asking "who will pay for the massive physical infrastructure and high financing costs of up to $10 trillion."
In stark contrast to the bloodbath in AI, traditional value stocks and inflation-resistant assets have regained strong investor favor. The consumer staples sector bucked the trend and surged more than 5%, oil majors and low-volatility value names successively set new all-time highs; small caps and the equal-weighted S&P index clearly outperformed the broad market. At the same time, Wall Street banks have quietly launched a defensive battle against AI Agents. JPMorgan, BofA, and Citi have collectively restricted third-party AI agents from directly operating bank accounts, strictly preventing trillions of dollars in low-cost deposits from being automatically transferred out. The impact of AI on the traditional business models of the financial system is now backfiring on the technology concept itself.
Specific project moves and stock price fluctuations.
CoreWeave plunged 11.91% in a single day (down nearly 25% for the week): As a computing cloud "unicorn" heavily backed by Nvidia, its five-year credit default swap spread soared above 1,100 basis points, implying a default probability of over 60%, and some unsecured bonds fell into distressed territory. Its logic of expanding production through high leverage and borrowing was voted down by the market. Although Jensen Huang spoke out in support, saying its cost of capital is falling, institutions such as Baird pointed out that its free cash flow is almost at the bottom.
Emerging AI infrastructure concept stocks suffered indiscriminate selling. Nebius fell 12.18% in a single day (down more than 25% for the week), highly indebted expansionary cloud vendor Oracle fell 4.64%, and data center network supplier Lumentum fell 5.22%.
**Memory chips plunged:** SanDisk fell 6.85%, SK Hynix fell 6.58%, Micron Technology fell 5.63%, and AMD fell 5.95%. Industry concerns that potential new capacity in 2029 will turn into a "red ocean," combined with high rates suppressing the pace of computing power procurement, caused earlier profit-taking positions to rush for the exits. Although South Korea's finance minister voiced support that the chip boom will continue through 2027, it still failed to stop the exodus.
**Semiconductor equipment fell across the board:** lithography giant ASML edged down 0.96%; foundry leader TSMC, despite a 68.7% surge in third-quarter net profit, closed down 1.80% due to initial 2nm gross margin drag (down 2.28% for the week); semiconductor ETFs plunged 11.4% cumulatively for the week.
**Apple bucked the trend and rose 0.43%:** After pre-orders for its first foldable phone, the iPhone Duo, opened on Friday, it sold out within minutes, and the shipping period was instantly pushed back to December. Strong hardware consumption resilience drove Apple shares to a record high against the market trend.
**Meta Platforms plunged 3.72%:** Expectations that free cash flow will turn negative (the market expects -$9.14 billion in Q3) and massive borrowing to build infrastructure ignited concerns about capital expenditure. Related giants: Microsoft fell 1.93% (regulatory filings disclosed that it plans to more than double its data center expansion); Google-A fell 2.32%, Amazon fell 1.87%, and Nvidia fell 1.43%.
Tesla closed down 2.13%: Although the new-generation Roadster sports car stunningly demonstrated a "flying" stunt that grabbed the market's attention and the stock rose as much as 5% premarket, JPMorgan and HSBC said the move was merely a display of engineering prowess, with mass production and delivery postponed to 2028 and no material profit contribution in the short term, after which the stock turned lower.
**SpaceX closed down 1.74%:** Even though the probability of a "Tesla-SpaceX merger expectation" triggered by a Barclays report rose above 50% in prediction markets.**Moderna plunges more than 12% intraday, closes down 7.82%:** The U.S. FDA formally declined to accept for review the marketing application for its seasonal influenza vaccine mRNA-1010 due to the lack of a rigorous controlled study design in the Phase III clinical trial, triggering a reassessment of the monetization capability of its mRNA technology pipeline. The biotech ETF fell more than 2.5% intraday, while traditional pharmaceutical giants Eli Lilly and Merck & Co. attracted defensive flows and bucked the trend to close higher.
**Traditional giants and defensive sectors strengthen:** Chevron, ExxonMobil and Coca-Cola rose more than 2% and hit new highs. Geopolitical conflict lifted oil price expectations, which, combined with low valuation attributes, made traditional energy and consumer staples hedge fund safe havens, with PepsiCo and Walmart rising in tandem.
Next, attention should be paid to
October 19 (Monday)
9:20: Hong Kong stock market closed, Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect suspended, Dongxing Securities and Xinda Securities delisted.
German Chancellor Merz meets Jensen Huang: Focus on whether German industrial AI, data centers and sovereign computing cooperation translate into actual investment and orders.
15:00 SCIO "Invigorating Commerce through Science and Technology" press conference: Focus on technology applications and commercial policy, which may catalyze AI applications, retail digitalization and the consumer sector.
Financial Street Forum opens, running until the 22nd: Focus on policy remarks from Pan Gongsheng, Wu Qing, Zhu Hexin and others, especially monetary policy, capital market reform and growth-stabilization measures.
World Bank Global AI and Digital Summit and Shanghai Bund Summit held until the 22nd; RISC-V China Summit runs until the 20th: Focus respectively on AI financing and governance, global capital allocation, open-source chips and domestic substitution.
October 20 (Tuesday)
NVIDIA GTC Berlin conference opens, running until the 22nd: Focus on AI chip architecture, inference, robotics and European customer orders to judge whether technological breakthroughs can translate into revenue.
APEC Finance Ministers' Meeting held in Hong Kong, running until the 21st; 12:15 ECB Chief Economist Lane speaks: Focus on fiscal cooperation and digital infrastructure financing information released from the meeting chaired by Lan Fo'an, as well as European monetary policy signals.
U.S. earnings: GE Aerospace, RTX, 3M, General Motors pre-market; Netflix, SpaceX after-market.
October 21 (Wednesday)
08:00 South Korea October first 20 days import and export data: Focus on semiconductor exports to judge whether HBM, DDR5 and AI storage demand remain strong.
Jensen Huang GTC keynote: European sovereign AI, inference demand, new architecture and scale of cooperation are the focus; the market needs clear orders, not just long-term vision.
World Intelligent Connected Vehicles Conference held; China-Europe Investment, Trade and Technology Cooperation Fair held until the 23rd: Focus on autonomous driving, vehicle-road-cloud standards and cross-border industrial cooperation.
Bessent and Druckenmiller attend the JPMorgan-Robinhood investor conference: The meeting is closed to the media; if public information emerges, focus on fiscal financing, interest rates and market risk judgments.
U.S. earnings: IBM, AT&T pre-market; Meta, Tesla, Lam Research, Texas Instruments after-market.
October 22 (Thursday)
04:30 Meta earnings call; 05:30 Tesla Q&A livestream: For Meta, focus on whether AI spending can be covered by advertising growth; market expectations are revenue of $63.29 billion, capital expenditure of $40.97 billion and negative free cash flow of $9.14 billion; for Tesla, focus on how more than 486,000 deliveries and 13.7GWh energy storage deployments translate into profit.
Bank of Korea rate decision: Expected to pause after consecutive hikes; if tightening continues, the won may gain support, but chip stocks and companies with large financing needs would come under pressure.
U.S. 20-year Treasury auction: Focus on the strength of demand and whether the final yield is higher than expected, testing whether this round of U.S. Treasury rebound can continue and transmit to gold and tech stocks.
Earnings: Nokia, Spotify, American Airlines, Procter & Gamble; after-market focus on Bloom Energy, Western Digital, Newmont Mining.
October 23 (Friday)
07:30 Japan September CPI: Expected 2.1% year-on-year, previous 1.9%; if higher than expected, it will strengthen bets on a Bank of Japan rate hike, affecting the yen and global carry trades.
European Society for Medical Oncology ESMO Congress opens, running until the 27th; Moderna and Merck & Co. release detailed Phase III data on individualized mRNA cancer vaccine combined with Keytruda.
Shanghai Global Developer Pioneer Conference and Embodied Intelligence Skills Competition held until the 25th, with more than 200 teams competing for the "Model Worker" title.