AI gear stocks slide up to 24% as CoreWeave debt fears rattle the buildout trade

The week was brutal for the pickaxes-and-shovels side of AI. GE Vernova, Vertiv and Bloom Energy each lost between 10% and 24% as investors rethought how long the AI buildout can run, according to The Motley Fool. None of them sells AI models. They sell the turbines, cooling systems and fuel cells that keep data centers humming.

Two punches landed at once. Hotter-than-expected US inflation data pushed borrowing costs up, a problem for an industry built on enormous construction projects. More than half of GE Vernova's drop came in a single session, a day that paired inflation jitters with a slide in CoreWeave's share price.

CoreWeave is now the credit story's canary. The AI cloud provider carries an estimated $35-50 billion in debt, its bonds were trading at yields of 15-16.5% by mid-October, and its credit default swap spreads signal a tough credit outlook. If a high-profile AI cloud is paying mid-teens yields, smaller players may find funding even harder to land.

The damage spread well past those three names. The broader AI power and infrastructure group has fallen sharply since early October, with a median decline of 23% and some companies down as much as 24%. About $1 trillion in data center debt maturities still needs to be rolled over — a far more expensive job with rates this high.

The underlying businesses, meanwhile, are still posting big numbers. GE Vernova said third-quarter orders jumped 96% year over year to $29 billion, with backlog climbing to $197 billion. Vertiv reported quarterly sales of $4.3 billion, up 61%, and raised its full-year guidance. Bloom Energy notched sales growth of 138% and revised its full-year outlook.

Politics is piling on. The upcoming US midterm elections have clouded permitting for new projects, and some states could pause new data center development, with Texas among those in focus. Sector-wide fears now center on project delays and cancellations, driven by higher refinancing costs and political risk. Next up: more inflation data, CoreWeave's bond yields and credit spreads, and the midterm results.