AI Credit Squeeze Separates Cash-Rich From Debt-Heavy Players

Wednesday’s selloff separated AI stocks based on their financing methods, with heavily indebted companies like CoreWeave and Nebius suffering the largest declines. Oracle stands out among hyperscalers with significantly more debt than peers, relying on customer prepayments while holding a credit rating just one notch above junk status. CoreWeave’s bonds yielding over 15% now outweigh its $104 billion backlog, as the company needs lenders to continue funding existing sales. If expensive debt shifts AI demand toward cash-rich hyperscalers, those firms benefit, though substantial financial resources still do not guarantee that spending will generate adequate returns.