Nvidia loses $365 billion in market value as CoreWeave bond yields surge, sparking AI financing fears

US chipmaker Nvidia shed approximately $365 billion in market value last week, with its shares falling 6.6% over the five sessions ending October 16 to close at $214.13. This decline reflects growing investor concern about the sustainability of the artificial intelligence infrastructure boom, shifting the narrative from pure demand strength to the financing capabilities of data center builders.

While demand for Nvidia's processors remains robust, the market worries whether companies constructing the data centers housing these chips can continue to finance their ambitions at affordable rates. CoreWeave, a cloud provider backed by Nvidia, has become a key indicator of this risk. Paul Chew, head of research at Phillip Securities, estimates that CoreWeave holds roughly $30 billion in net debt and another $36 billion in lease commitments. As yields on one of its bonds climbed above 15% from around 9.6%, the surge in borrowing costs triggered concerns about its solvency. Chew warned that a four-percentage-point increase in financing costs could add nearly $500 million to annual interest expenses.

The pressure is unevenly distributed, concentrated among heavily leveraged operators dependent on debt markets. In contrast, tech giants like Microsoft, Alphabet, and Meta possess stronger balance sheets capable of sustaining high capital expenditures. Nevertheless, broader industry sentiment was dampened, with the Philadelphia Semiconductor Index dropping 11.4% during the same period. The Financial Times reported that at least 47 major US data-center projects have been stalled or cancelled this year due to financing, power, and planning constraints.