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A hotter-than-expected inflation reading sent US stocks to their worst day in about three months, with chip stocks leading the fall. CoreWeave's bonds also dropped sharply, which makes borrowing for AI data centers costlier. That pressure could reach the server and chip sales of Super Micro and Nvidia.
Source: Reuters ↗
A hotter-than-expected inflation reading raised bets that the Federal Reserve will lift rates. Chip and AI stocks led the market to its worst day in about three months. The further pressure runs through borrowed money. CoreWeave, which rents out AI computing power, saw its 2032 bonds trade below 80 cents on the dollar on October 14, after closing at a record yield of 14.5% the day before. Buyers like CoreWeave pay for servers and chips partly with debt, and costlier debt could slow those purchases. Super Micro Computer sells AI servers and had $11.1 billion of revenue in the quarter to June 30. Nvidia supplies the chips inside them. Nvidia is also an investor in CoreWeave, which plans $35–39 billion of 2026 capital spending, mostly on Nvidia chips.
Stock prices already show some of this worry. Super Micro fell 8.4% on October 14 and about 20% over five trading days. Nvidia fell 3.2% that day and 6.8% over five trading days. Much of the five-day drop came before the CoreWeave bond news and the inflation report. The chip index had already fallen for six straight days, losing 11.6%, and Nvidia's 3.2% drop on October 14 was smaller than the index's 4.3%.
AI buyers may keep borrowing easily despite one bad bond. The sign would be CoreWeave's bonds climbing back toward full value, and junk bond yields over Treasuries staying close to the 3.16% seen on October 13, over the next few weeks. Strong data center orders in the next quarterly reports from Nvidia and Super Micro would also show the link failing.
The bond stress was concentrated on debt-heavy names such as CoreWeave, Oracle, Nebius and IREN, and junk bond spreads were only 3.16% on October 13. Nvidia's revenue more than doubled and Super Micro's rose 93% in their latest quarters, so one borrower's bond slump may barely touch orders. The steep drop in Super Micro's stock may already go beyond any real loss of sales.
A hotter-than-expected inflation reading raised bets on Federal Reserve rate hikes. Chip and AI stocks led the S&P 500 and Nasdaq to their worst day in about three months.
CoreWeave's 2032 bonds traded below 80 cents on the dollar on October 14. The day before, they had closed at a record yield of 14.5%. That makes borrowing to build AI data centers more expensive.
Data center builders that rely on debt may slow purchases of AI servers from Super Micro and chips from Nvidia. Nvidia is an investor in CoreWeave, which plans $35-39 billion of 2026 capital spending, mostly on Nvidia chips. That is large but small next to Nvidia's $303 billion of revenue over the last four quarters.
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