Tech stock sell-off reopens debate on who will foot the AI bill

On Wall Street, the question is no longer how much artificial intelligence will grow, but who will foot the bill. After years of market domination, tech companies have stopped being a safe bet, and the time has come to pick carefully, identifying which ones are going to fall prey to their own pharaonic investment plans and which ones are not. The recent market correction goes beyond simple profit collection following the AI-driven rally. The question that is being asked is how much longer can the industry hold up, considering it requires multimillion-dollar investments and increasingly expensive financing. There are few companies that illustrate the change as well as CoreWeave. The U.S. cloud computing firm that specializes in AI and is participated by Nvidia has become a symbol for all the doubts that are beginning to emerge in the sector. Besides shedding 36% in share value in the last month, the return demanded by investors has soared to 16%, a level typical of companies whose solvency has started to come into question. With $50 billion in debt and plans to keep resorting to the market to fund its expansion, the company exemplifies one of the big issues of the new tech fever: whether future revenue will be enough to justify the massive investment required in the AI boom. The hesitation around CoreWeave has extended to the industry. While semiconductor makers have accumulated losses of 19% in the last 12 trading days and are well on their way to their worst performance since 2008, other AI-infrastructure firms are stepping on the brakes. The Australian company Firmus and the British Nscale have postponed their plans for an IPO due to deteriorating investor sentiment. Those who have decided to carry on will have no easy ride. South Korea’s Elice, specializing in data center infrastructure, lost 32% when it went public this week. Although two days later it managed to recover its opening price, the volatility of its public debut served as a clear warning: the market is no longer willing to fund just any AI-related project without first seeing some evidence of profitability.CoreWeave and the ‘neoclouds’ After months of following the hyperscalers — cloud titans like Amazon, Microsoft and Alphabet who astounded observers quarter after quarter with their profits and investment ability — attention is now focusing on the so-called neoclouds. These new actors, whose business it is to buy processors, install them in data centers and sell the capacity to the market, have much more fragile financial structures. CoreWeave illustrates, better than anyone else, that dependency on financing. At the close of the second quarter it had orders worth $104 billion and revenue of $2.6 billion, but also net losses of $626 million compared with $290 million the previous year. A large chunk of this was due to the $640 million in interest payment on its debt. This sums up the sector’s problem: will AI-infrastructure companies make enough to offset the kind of investment required for their expansion? Tech corrections are nothing new. In recent years, every bump on the road has triggered warnings about a potential bubble. To date, however, investors have shown unshakeable faith in AI. After DeepSeek emerged in January 2025 and Trump announced tariffs a few months later, the semiconductor index lost as much as 34.8%. The current drop of 27% from June highs is smaller. The difference is not in the magnitude of the fall, but in the context in which they are taking place. Unlike earlier situations, current adjustments are taking place as central banks maintain restrictive monetary policy in a bid to contain inflation, with debt yields at 20-year highs, and growing expectations about debt issuance. How to finance so much demandThe debate is no longer about the potential of the new technology or the demand for chips, which few people question, but the ability to finance the next round of growth. The corrections of recent weeks coincide with a new round of company results that, far from suggesting a deceleration, confirm a strong demand for AI. The Taiwanese chip maker TSMC outperformed market forecasts and improved its own outlook, whereas ASML, leader in chip production equipment, saw record sales of €11.7 billion and said expected demand for the coming two years is more than available capacity.Enrico Chinello, head of next-gen technology analysis at Julius Baer, believes that the financing tension observed in the last few days affect mostly a reduced group of neoclouds that are highly leveraged, rather than being a sign of a broader deterioration of the industry as a whole. “We see a few potential financing risks is specific areas of the ecosystem, but they are specific to certain cases and do not underscore weakness in demand or in the industry fundamentals, which remain solid,” he claims. The market fully expects AI to keep marching on; the question now is how much it will cost to keep it going.Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition