AI infrastructure stocks fall as US rate hike bets rise

Shares of debt-heavy AI firms tumbled Wednesday as rising expectations of US interest rate hikes intensified concerns about financing the industry's massive buildout, with neocloud companies among the worst performers. Nebius and CoreWeave shares fell 15.1% and 9.5%, respectively, while data center operators Applied Digital and IREN dropped 8.8% and 9.9%. Oracle declined 7.2%, and AI server makers Dell and HPE fell 10.3% and 6.4% after Barclays downgraded their ratings. Higher rates raise borrowing costs for firms financing data centers and AI chips, with a possible Fed rate hike looming after hot inflation data. Treasury yields climbed, and credit default insurance costs for some AI companies hit record highs.