AI stock selloff spreads to bonds as debt-funded data centre bets face scrutiny

Investor concerns over debt-financed AI infrastructure have triggered sharp declines in AI stocks and distressed bond yields, with CoreWeave shares dropping 15% this week before a partial rebound. The selloff reflects unease about companies' ability to repay massive borrowings for data centre construction. CoreWeave, an anchor tenant in Bell Canada's planned Saskatchewan data centre, saw its bond yields exceed 15% and credit default swap costs soar to distressed levels. Other neocloud providers including Cerebras Systems, Nebius Group, and Iren Ltd. each fell roughly 13-14% this week. Gartner analyst Will Sommer warned that multitrillion-dollar writedowns of AI infrastructure are likely by 2032, predicting over 80% of neocloud providers will cease independent operations by 2030. Bell is investing $1.7-billion in the initial data centre build-out near Regina, with plans to quadruple capacity to 1.2 gigawatts. Scotiabank analyst Maher Yaghi noted Bell's infrastructure-only model limits direct exposure to technology risks but does not eliminate tenant-credit risk, though both tenants have signed long-term, noncancellable agreements with prepayments. Bell shares rose 2% Thursday as investors sought safer assets.