AI sector loses its luster as investors retreat

Investors are retreating from the AI sector this week, with credit stress at CoreWeave, spending concerns, and hot inflation data erasing over $1 trillion from 20 major AI and semiconductor stocks. CoreWeave's bond yields and credit default swap spreads signal distress, prompting a rotation out of AI names like Nvidia, AMD, and Dell. Nvidia's Jensen Huang also reiterated safety warnings, urging collaboration with Chinese firms on monitoring the "potentially dangerous" technology. Despite the sell-off, TSMC posted a record sixth straight quarter of profit, with fourth-quarter revenue expected 58% higher year-over-year. Meanwhile, U.S. producer prices rose 6.3% annually, the fastest since December 2022, ahead of the Fed's Oct. 27-28 policy meeting.