AI cloud computing service providers continued their decline on Friday, with Nebius Group NV (NASDAQ: NBIS) and CoreWeave Inc (NASDAQ: CRWV) each falling more than 7%, while Oracle Corp (NYSE: ORCL) dropped over 4%.
On the news front, a steady stream of negative signals has emerged in the AI investment space. Amazon continues to maintain high levels of AI capital expenditure, sparking market concerns. Intel, meanwhile, issued guidance below market expectations, projecting fourth-quarter revenue of $15 billion to $16 billion and adjusted earnings per share of 25 cents, both significantly below forecasts. Its shares plummeted sharply after the earnings release, at one point dropping more than 30% intraday, wiping out over $137 billion in market capitalization.
Concerns over the cost of the AI boom have further intensified. At the same time, major technology companies are undergoing a broader shift in how they finance their spending. Massive data center investments have turned once lightly indebted companies into major borrowers. Both Alphabet and Meta recorded net cash outflows in the September quarter. Microsoft is the only one in this group that has not been burning cash, but it also launched a $25 billion bond issuance on Thursday.
While tech giants can still sustain this level of spending, investors have grown increasingly cautious about smaller AI cloud companies that have taken on heavy debt to fulfill large backlogs of orders.
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