The U.S. stock market has been rattled by a sudden downturn in AI-related stocks, triggered by unexpected infrastructure delays. A heavy rainstorm in Texas caused a 60-day construction setback at CoreWeave’s massive data center in Denton, delaying the installation of roughly 260 megawatts of computing power. The disruption prevented timely delivery of clusters leased to OpenAI, sparking panic selling across the sector.
CoreWeave’s Collapse
Shares of CoreWeave (CRWV-US) have become the poster child for volatility. The company’s market capitalization shrank by $33 billion in six weeks, a decline of more than 60%. Despite quarterly revenue doubling to nearly $1.4 billion, CoreWeave still posted a net loss of $110 million and an operating margin of just 4%—insufficient to cover high interest expenses.
Analysts argue the company’s model, which relies on leasing AI chips housed in data centers, is vulnerable to construction delays and debt pressure. Investor confidence was further shaken by contradictory statements from management. While executives initially claimed delays were "controllable," later disclosures admitted risks to delivery schedules, raising concerns about transparency and operational stability.
Ripple Effect Across AI Stocks
The fallout extended beyond CoreWeave. Heavyweights Broadcom (AVGO-US) and Oracle (ORCL-US) saw their shares tumble more than 17% over three trading days, erasing over $300 billion in market value. The declines highlight broader investor unease about overvalued AI companies and the risk of delayed capital expenditures across the supply chain.
Market watchers note that enthusiasm for AI infrastructure had already been priced into valuations. With delivery setbacks now surfacing, liquidity sensitivity is amplifying corrections, shifting sentiment from exuberance to caution.
Fundamentals Under Scrutiny
The sell-off underscores a broader pivot in investor focus. Rather than chasing growth narratives, markets are increasingly scrutinizing fundamentals and profitability. CoreWeave’s fragile balance sheet, coupled with its reliance on debt financing, has become a cautionary tale for the sector.
Observers warn that if AI hardware infrastructure cannot be deployed as quickly as expected, the capital cycle and profit model of the industry could face significant challenges. This shift has already spilled into overall tech sentiment, with volatility spreading across U.S. technology stocks.
Outlook
For investors, the message is clear: the AI boom is not immune to real-world risks. Infrastructure delays, debt burdens, and transparency issues can quickly erode confidence. While long-term demand for AI computing remains strong, the recent sell-off suggests valuations may need to reset before the next leg of growth.