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Explainer-Why Are Credit Default Swaps Unnerving AI Investors?
- Nvidia-Backed CoreWeave's shares recovered on Thursday following a sharp decline, as market participants grappled with concerns over the company's substantial debt burden supporting artificial intelligence infrastructure expansion.
- CoreWeave carries approximately $50 billion in debt, making it emblematic of industry concerns that the data-center boom is credit-fueled, with Gartner warning that about 80% of neoclouds could shut down by 2030 if impairment accelerates.
- Deutsche Bank maintained a buy rating with a $150 price target, while analyst Brad Zelnick said the artificial intelligence infrastructure backdrop remains "quite supportive" despite recent selloffs.
- Nvidia CEO Jensen Huang, holding about a 10% stake, downplayed financial concerns, telling reporters "CoreWeave's financial strength is improving every day" and dismissing any need for additional Nvidia support.
- The selloff rippled through broader AI markets, with the Philadelphia Semiconductor Index erasing over $1.6 trillion in value over six sessions, while options traders ramped up bearish bets hedging against deteriorating credit sentiment.
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(New York = Yonhap News) Correspondent Kim Yeon-sook = Companies that have rapidly emerged as key infrastructure investors in the artificial intelligence (AI) craze have encountered a reef of steep interest rate increases and profitability concerns...
·Seoul, Korea (the Republic of)
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Market confidence is wavering as AI data center companies face difficulties in raising funds due to profitability issues relative to massive investment costs. As financial uncertainty grows—such as the sharp drop in Coreweave's bond prices and Fundus's withdrawal of its IPO—concerns about a bubble are spreading across the entire AI industry, and anxiety regarding the semiconductor supply chain is also escalating.
Coverage Details
Total News Sources108
Leaning Left9Leaning Right17Center21Last UpdatedBias Distribution45% Center
Bias Distribution
- 45% of the sources are Center
45% Center
L 19%
C 45%
R 36%
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