AI Stocks Fall as Rising Rates Squeeze Debt-Heavy Firms

Shares of heavily indebted artificial intelligence companies fell on Wednesday amid growing concerns over rising interest rates and the cost of financing industry expansion. Cloud providers Nebius and CoreWeave dropped 15.1% and 9.5%, respectively, with both facing significant monthly losses. Data center operators Applied Digital and IREN declined 8.8% and 9.9%, while Oracle fell 7.2% and its dollar bonds also weakened. Server makers Dell and HPE dropped 10.3% and 6.4% after Barclays downgraded both stocks to "equal weight" from "overweight." The declines mark a reversal for AI-related firms that had rallied earlier this year on sector optimism. The selloff reflects investor anxiety about higher borrowing costs squeezing companies that rely heavily on debt to fund capital-intensive AI infrastructure projects.