CoreWeave and Nebius drop over 25% as AI financing concerns mount

CoreWeave CRWV and Nebius NBIS each ended the week down more than 25%, leading a broader technology sector sell-off that pushed the S&P 500 and Nasdaq Composite into negative territory. The decline reflects growing investor scrutiny over the financial arrangements supporting artificial intelligence expansion, with specific concerns focused on the ability of infrastructure providers to generate free cash flow.

Baird technology strategist Ted Mortonson told Yahoo Finance that CoreWeave, Nebius, and Oracle ORCL are likely among the weakest companies in the tech sector regarding free cash flow. He noted that rising capital costs amid inflation worries are intensifying the examination of how these firms finance their operations.

Despite the pressure on infrastructure stocks, semiconductor manufacturers offered a contrasting view of underlying demand. ASML ASML and Taiwan Semiconductor Manufacturing Co. TSM provided commentary suggesting that demand for AI chips and related infrastructure remains robust. This resilience in chip demand persists even as investors become more cautious about how companies convert spending into profits. UBS strategists described the recent volatility as a recalibration of expectations rather than a fundamental break in the AI investment story, according to Yahoo Finance.

Ulrike Hoffmann-Burchardi, who serves as UBS's chief investment officer for the Americas and global head of equities, urged investors to prioritize firms where AI expenditure is driving sustainable earnings increases and broader adoption among businesses and consumers, according to Yahoo Finance. Her guidance suggests a shift toward businesses demonstrating tangible results from their technology investments rather than those solely expanding capacity.

Zacks Investment Research data provides specific valuation metrics for major AI-related stocks. NVIDIA NVDA's fiscal Q2 2027 data center revenue reached $89 billion, up 117% year over year, supporting its position as a primary beneficiary of hyperscaler investments. The stock carries a Zacks Rank #1 (Strong Buy) and trades at a forward P/E of 23.03X, with shares up 13.4% as of Oct. 16, 2026. Investors can access NVIDIA through the VanEck Semiconductor ETF SMH.

Microsoft MSFT shares trade at a forward P/E of 26.92X, with an earnings-growth outlook described as relatively strong compared with other hyperscalers. The Technology Select Sector SPDR Fund XLK offers basket exposure to Microsoft. Apple AAPL appears to be a decent play from an earnings-growth perspective, trading at a forward P/E of 41.03X, which the source characterizes as neither particularly cheap nor excessively expensive. Global X PureCap MSCI Information Technology ETF GXPT includes Apple holdings.

Other major players show mixed signals. Meta META's earnings growth outlook for FY27 is moderate, though recent growth has been lackluster, with shares trading at a forward P/E of 22.41X. Amazon AMZN's outlook looks mixed, while its valuation appears cheap at a forward P/E of 19.21X. Alphabet GOOGL's FY27 outlook is downbeat, but its stock is considered cheap at a forward P/E of 16.58X.

Tesla TSLA presents a different risk profile, with a decent FY27 earnings-growth perspective offset by a high valuation at a forward P/E of 209.73X. The stock is down 19% as of Oct. 16, 2026. This premium valuation could face pressure if earnings growth fails to justify the cost.