AI selloff deepens as Nasdaq drops 6.4% and lenders turn wary of AI debt

What happened

A selloff in artificial intelligence related shares dominated equity trading, with the Nasdaq down 6.4%. Hedge funds reduced technology exposure at a near-record pace, and banks and investors were reported to be growing more cautious on debt tied to AI infrastructure after the market drop.

Among the so-called neoclouds, CoreWeave and Nebius have each lost about half their value over the past month, with CoreWeave facing a "doom cycle" narrative as credit risk concerns overshadow its growth. Several Wall Street brokerages argued the selloff has gone too far and played down the risk of regulation from Democrats.

Why it matters

Large technology and AI names carry heavy weight in US equity indices, so a repricing in that group tends to move the broad benchmarks rather than one sector alone. When positioning is crowded and funds reduce exposure quickly, moves can extend beyond what individual company news implies.

Concerns about the debt financing AI data centres link equity stress to credit markets, where funding costs and lender appetite matter for companies building capacity. Shifts of this kind often change demand for defensive assets such as the dollar and gold, while crypto has at times traded in sympathy with high-risk technology exposure.

What to watch

Earnings reports from CoreWeave and Nebius are due this week, and further commentary from banks and brokerages on AI-related credit and on regulatory risk.