[New York = E-Daily Seong Joowon Correspondent] Perspectives on the artificial intelligence (AI) investment boom on Wall Street are shifting. The key question has shifted from how large a market AI will create to when and how much of the massive investment capital can be recouped. As companies that had financed the construction of AI data centers through debt faced heavy selling pressure, the tech-heavy Nasdaq index posted its worst week since June.

On the 16th (local time), the Nasdaq Composite Index closed at 26,140.03, down 2.15%, on the New York Stock Exchange. The S&P 500 index closed at 7,659.44, down 1.09%, while the Dow Jones Industrial Average ended the day at 52,002.41, down 0.34%.
The Nasdaq plunged about 4.5% this week. In contrast, the Dow rose 0.7% on a weekly basis.
Semiconductor stocks were at the center of the sell-off. The Philadelphia Semiconductor Index fell for the eighth consecutive trading day, setting its longest losing streak since 2008. The VanEck Semiconductor ETF (SMH), a semiconductor exchange-traded fund (ETF), fell 10% this week, marking its largest weekly decline since April of last year.
The company that drew the most market attention was CoreWeave, an AI cloud service provider. CoreWeave, in which NVIDIA has invested, saw its stock price plunge about 12% on the day and fall 25% this week alone. With the company’s total debt exceeding $51 billion (approximately 68.1615 trillion won), yields on some of its corporate bonds have surpassed 15%. This signals that investors are concerned about high borrowing costs and the company’s future ability to repay its debt.
The problem isn’t that expectations for the AI business have vanished. Demand for data centers and semiconductors remains strong, but the costs of building them are simply enormous. According to Bloomberg Intelligence, annual capital expenditures by major tech companies are projected to approach $1 trillion. Investors have begun to question whether this capital will translate into sufficient returns.
Fawad Rajakzada, an analyst at StoneX and Forex.com, told Bloomberg, “This week’s stock price movements show that the market narrative is beginning to shift,” adding, “The question now is not how big an opportunity AI can be, but how profitable the massive investments required to realize that opportunity will be.”
The high-interest-rate environment is fueling these concerns. High interest rates reduce the present value of future profits while simultaneously increasing the cost of financing data center construction. Analysts note that emerging AI infrastructure companies, which rely on issuing high-yield corporate bonds, are particularly vulnerable compared to large tech firms with high credit ratings.
The sharp rise in international oil prices also acted as a negative factor. On that day, Brent crude closed at $109.86 per barrel, up 3.72%, approaching the $110 mark. This was the result of a combination of disruptions to crude oil shipments from the Middle East and supply concerns regarding Russian petroleum products. Concerns about prolonged inflation have also grown as U.S. consumer and producer price inflation rates came in higher than expected this week.
Rob Haworth, chief investment strategist at U.S. Bank Wealth Management, told Reuters, “High oil prices, in particular, tend to put pressure on the price-to-earnings ratio (P/E ratio) of stocks,” explaining that investors are adopting a cautious stance rather than taking risks ahead of the weekend.
Market jitters were also reflected in volatility indicators. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX)—known as Wall Street’s “fear gauge”—surged to its highest level since last June, surpassing 22 during the trading session.
However, some point out that it is premature to conclude that the debt issues facing AI companies will soon escalate into a crisis for the entire financial system. Michael Rosen, Chief Investment Officer (CIO) at Angeles Investment, told CNBC, “While we need to continue monitoring the expansion of debt, it is nowhere near the level where it would become a systemic problem.”
Cathie Wood, CEO of Ark Investment, views this downturn as a buying opportunity. She assessed that concerns over CoreWeave’s high borrowing costs are a phenomenon that can occur in early-stage growth companies. Ark Investment purchased additional shares of CoreWeave and AI semiconductor company Cerebras Systems while stock prices were falling this week.
Market attention is expected to shift to corporate earnings reports, which will begin in earnest next week. As companies such as Tesla and Meta Platforms release their earnings, investors are likely to seek confirmation that increased AI investments are actually translating into higher revenue and profits. Even if expectations for AI growth remain strong, the market may take a much harsher view of companies that fail to demonstrate their ability to recoup their investment costs.