US Stocks Fall on Hot Inflation and AI Spending Fears

The Nasdaq fell 1.88% and the S&P 500 1.11% as technology shares led declines. Semiconductors dropped 3.6%, while AI-linked megacaps including Meta, Microsoft, Tesla and Amazon all weakened. The move was not just a generic rates trade. It was also a reassessment of whether the enormous debt and capital spending now flowing into AI infrastructure can be justified by returns.

That concern sharpened after CoreWeave slid 17%. The AI cloud provider, which rents computing power to customers including Microsoft and OpenAI, has more than $40 billion of debt tied largely to data-center expansion. Investors are increasingly questioning whether the cash the business generates can cover its interest burden. Its 2032 bonds are now trading around 78 cents on the dollar, and credit-default swap protection has climbed above 11% a year, a stark sign that the market is assigning real default risk. In other words, the AI investment cycle is starting to look less like a straight-line growth story and more like a balance-sheet test.

Anthropic’s third-quarter numbers did little to ease that anxiety. Revenue reportedly rose to $16.8 billion from $11.5 billion in the second quarter, a 46% quarterly increase, but analysts noted the pace is slowing from earlier periods. That matters for the broader AI trade because markets have been pricing infrastructure spending as if demand growth will remain steep enough to absorb massive outlays from cloud providers, chipmakers and model developers. If revenue growth decelerates even while capex stays elevated, margins and funding costs become harder to reconcile.

The selloff spread quickly beyond the US. Asia took the brunt on Thursday, with Korea’s KOSPI dropping 8%, Japan’s Nikkei falling 5% and Taiwan’s TAIEX off 3.5%. Futures pointed to more losses in Europe and the US. Meanwhile, the inflation surprise and risk-off mood drove investors into bonds, lifting demand for safe assets and weakening the dollar from its intraday peak. The greenback’s index fell about 1%, while euro-dollar moved up 0.5% to 1.12.

The market backdrop leaves the Federal Reserve with less room to pivot and investors with fewer reasons to pay up for long-duration assets. A December rate hike is now being more firmly priced, and that keeps pressure on valuation-sensitive sectors, especially those most dependent on future cash flows. Health care, consumer staples and energy held up better than technology, underscoring the rotation into defensive earnings as the cost of capital rises.