Why Nvidia, Broadcom and other AI stocks are falling sharply

By Britney Nguyen

The AI trade is unwinding - with investors increasingly worried about debt raising by companies like Oracle and CoreWeave used to finance AI data-center buildouts

Broadcom's stock was down more than 5% on Wednesday.

Fears over debt financing for data-center buildouts have roiled the artificial-intelligence trade in recent weeks, with the selloff intensifying Wednesday on fresh concerns around Oracle.

Chip maker Broadcom's stock (AVGO) fell 4.5% on the day, extending its five-session slide to more than 21% - its worst performance over such a stretch since the five-day run that ended March 28, 2020, according to Dow Jones Market Data.

Shares of other chip players including Nvidia (NVDA), Advanced Micro Devices (AMD) and Micron Technology (MU) - the latter of which reported fiscal first-quarter earnings results after the bell - also traded lower on Wednesday. The PHLX Semiconductor Index SOX was down for a fifth consecutive day, having slid more than 10% across that period, according to Dow Jones Market Data.

"The increasing concerns about the ability of neoclouds Oracle and CoreWeave to be able to finance their data-center buildouts is weighing on the entire AI sector," D.A. Davidson analyst Gil Luria told MarketWatch in emailed comments.

Not being able to raise more debt would mean the companies can't continue spending on chips, he added.

Oracle's stock (ORCL) slid more than 5% on Wednesday after a report said that talks between the company and alternative-asset manager Blue Owl Capital (OWL) for a $10 billion data-center project have stalled. The companies were negotiating a 1 gigawatt data center to be built in Michigan for OpenAI, the Financial Times reported, citing unnamed people familiar with the matter.

An Oracle spokesperson previously told MarketWatch that the Financial Times report was "incorrect," and that the company is working with real-estate developer Related Digital. "Final negotiations for their equity deal are moving forward on schedule and according to plan," the spokesperson said.

See more: Oracle's stock falls on a fear one analyst says should be 'almost irrelevant'

Mizuho desk-based analyst Jordan Klein agreed that concerns over Oracle's funding were weighing on AI stocks. Plus, there's "no real volume," in the market at the end of the year, he said in emailed comments.

Meanwhile, CoreWeave's stock (CRWV) was down more than 7% on Wednesday after the AI cloud provider was criticized by short seller Jim Chanos, and following a report about data-center delays.

During an appearance on the Monetary Matters podcast that was published on Monday, Chanos, who predicted the fall of Enron, called neoclouds like CoreWeave a "commodity business," and said that as a host of Nvidia's chips, the company is "not benefitting from" the value that will be produced from running the chips. CoreWeave uses debt to buy Nvidia's graphics processing units that are placed in rented data centers. The company's customers then pay it to use the chips. Chanos added that the depreciation rate of AI chips is risky for CoreWeave's business.

The Wall Street Journal also reported on Monday about delays that CoreWeave is facing at a data-center cluster in Texas. Completion of the cluster, which will be used by OpenAI, is now months behind, according to the Journal, which cited unnamed people familiar with the matter.

Don't miss: Broadcom's worst three-day stock slide since 2020 marks a humbling of sorts

But not everyone on Wall Street is worried about the AI trade.

Futurum CEO Daniel Newman said he sees "little to no evidence of a slowdown in the AI buildout" - another concern that has been weighing on the stocks. And while investors' fears about debt financing are "the biggest market overhang right now," Newman said in emailed comments that he thinks those concerns, compared to the revenue opportunity for AI, are "heavily biased toward a breakdown in real AI demand" and that he doesn't see one taking place.

The selloff is "a speed bump as investors are digesting [capital expenditures], debt and risk to the buildout," he added. In his view, "the fundamentals are intact and AI demand remains insatiable."

Christine Ji contributed reporting.

-Britney Nguyen

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12-17-25 1713ET