AI Capital Expenditure Narrative is Cracking

Dow Jones10-15 23:29

1529 GMT - The artificial-intelligence investment boom increasingly looks like it will struggle to generate sufficient returns, Panmure Liberum strategist Joachim Klement says. "We are seeing some blocks being pulled out of the Jenga Tower that is the AI capex boom," Klement says. "Higher debt costs makes it extremely difficult for neoclouds and hyperscalers to finance further data centers now that their free cash flows have evaporated." For instance, cloud-computing company CoreWeave saw its cost of borrowing soar over the past two sessions as shares in chip makers and data center companies are falling sharply across the globe. The Philadelphia Semiconductor Index pares losses to fall 1.7% Thursday, though the index remains on track to extend its losing run to seven days--its longest losing streak since May 2025.

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