Last week’s technology selloff brought a question from the bond market into sharper focus: how much will it cost to keep financing the AI boom?
The warning came from bonds
CoreWeave, which provides computing capacity to AI customers, saw some of its bond yields reach around 15% last week. Investors were demanding roughly 10% above US Treasury yields: a substantial premium for taking the company’s credit risk.
Its existing fixed-rate interest payments have not changed. But its next round of borrowing could be much more expensive. For a company buying chips and leasing data centres to expand rapidly, strong demand needs to be matched by affordable financing.
This is important for shareholders too. Higher interest costs leave less cash for growth, while issuing new shares to fund expansion can dilute existing investors.
Why this matters beyond CoreWeave
CoreWeave is already junk-rated, but financing concerns also reach larger technology companies held across retail portfolios.
Oracle is worth watching because its AI expansion requires substantial investment and its shares sit in the S&P 500. A fall in Oracle therefore weighs on the index in proportion to its weight, affecting investors in funds tracking it even if they do not own Oracle directly. The bigger risk is that similar concerns spread to other large technology holdings.
Oracle remains investment grade, although Moody’s has a negative outlook and S&P rates it just one notch above junk. A downgrade is not inevitable, but investors need to examine how growing customer orders translate into cash after infrastructure spending and interest payments.
For shareholders, the distinction is increasingly between companies that can comfortably finance expansion and those whose growth depends on continued access to fresh capital.
Your chip stock is connected
For shareholders, the risk is that higher borrowing costs force AI companies to cut spending, leaving their suppliers with fewer orders.
CoreWeave buys Nvidia-powered equipment and rents facilities from companies including Applied Digital and Core Scientific. Delayed expansion could therefore affect chip purchases, rental income and construction activity.
These companies have different contracts and financial protections. They will not necessarily suffer equally. But owning a chipmaker, a cloud provider and a data-centre developer can still leave a portfolio dependent on the same spending cycle.
What earnings need to show
The Nasdaq 100 fell 5.5% last week. Earnings now need to reassure investors that AI spending is supporting profitable growth.
Watch cash flow after capital expenditure, changes to investment budgets and management’s financing plans. Larger spending announcements alone may no longer be enough to lift shares.
We remain constructive on profitable technology leaders, but selective. Strong balance sheets provide flexibility; they do not remove valuation risk.
The investment takeaway
Stay selective on AI. Prioritise sustainable cash generation, manageable debt repayments and a credible route from investment to returns. Check valuations too: financial strength does not make every share price attractive.
For existing holdings, ask three questions:
- Can the business fund its plans without repeated fundraising?
- Would slower AI construction materially weaken its earnings?
- How much of my portfolio depends on the same customers and spending budgets?
While a bond-market warning is a reason to investigate, it is not an automatic instruction to sell. Strong earnings and accessible funding could stabilise sentiment. The bigger concern would be weaker cash flow arriving just as refinancing becomes harder.
Big Show, Weak Numbers? Tesla Has to Deliver
The spectacular presentation of the new Tesla Roadster 2 with SpaceX thrusters has made major headlines. However, ahead of Tesla’s quarterly results on Wednesday after the market close, the event could also serve as a distraction. Other factors will matter more.
What Investors Should Watch at Tesla
- Vehicle deliveries and revenue
- Margins amid inflation and price competition
- Progress in autonomous driving and robotics
- Consumer sentiment as an indicator of consumer demand
- Free cash flow after the billions invested in AI data centers
Analysts expect revenue of around $27.8 billion. Earnings per share are expected to fall to around $0.44 to $0.45. The key question is how much cash Tesla actually generates after its heavy investment spending.
Technical Recovery at Risk
Tesla shares fell 7.3% last week to $355 and moved back below the 20-week moving average at around $366. It is still trading around 20% above its July low. Prior to this, the stock had formed an ABC correction after reaching a record high of $496 in December 2025.
For the chart to improve sustainably, Tesla must overcome several resistance levels. First, the stock needs to reclaim the 20-week moving average, followed by the 50-week moving average at $396. Above that, an important resistance zone awaits around $410.
In the short-term, the risk of another decline toward the July low has increased. Buyers need further confirmation before a medium-term change in direction can be discussed.
SpaceX will also release its results on Tuesday after the US market close.
Tesla, weekly chart. Source: etoro
Credit Markets Are Getting Nervous
The US High Yield OAS shows the additional interest premium investors demand for US corporate bonds with low credit quality compared with US government bonds. A narrow spread signals limited concern about risk, while a wider spread points to growing worries about defaults, financing and the economy.
The spread currently stands at around 3.2 percentage points, up from approximately 2.6 percentage points at the end of August. This level is not yet alarming from a long-term perspective. However, the sharp increase shows that credit markets are becoming more cautious.
Rising spreads make financing more expensive for companies with high capital needs. This particularly affects the expansion of data centers, chip production and other areas of AI infrastructure. Higher financing costs can weigh on investment, margins and expected earnings. The credit market is therefore becoming an important stress test for the AI story. Strong revenue growth is not enough if that growth becomes too expensive or difficult to finance.
A significant widening of the spread would signal lower risk appetite and higher default risks. A level of 4% or more would be a much stronger warning signal, although it would not automatically mark a crisis threshold. Investors should therefore assess the spread together with bond yields, credit default swaps, banks and corporate guidance.
A further increase could weigh particularly on highly valued technology stocks. Companies with high debt, weak cash flow or major investment needs would be especially vulnerable. Stabilization in the spread, on the other hand, would provide short-term reassurance for equity markets.
For long-term investors, the key question is whether the widening spread remains a normal repricing or develops into broader credit stress.
Bitcoin is shedding excesses, but the recovery remains unconfirmed
Bitcoin is holding near $81,500 in a market showing increasingly mixed signals. Large holders have accumulated nearly 86,000 BTC since mid-September, while selling pressure from long-term holders is easing. However, ETFs have recorded around $760 million in outflows since October 7, and stablecoin supply has declined slightly. Accumulation is taking place, but we are still not seeing enough fresh capital entering the market.
In derivatives, nearly $950 million in liquidations on October 15 helped reduce excess leverage. Funding rates remain contained, and there are no signs of widespread capitulation. However, risk remains concentrated below $80,000, where approximately $1.6 billion in long positions could be vulnerable to liquidation.
The macro backdrop is not helping either. With US inflation at 3.7%, the 10-year Treasury yield around 5.1%, and the Fed maintaining a restrictive stance, financial conditions continue to weigh on risk assets. Ethereum and altcoins remain particularly vulnerable.What matters next? For bitcoin, the $80,000–$80,400 area is an important support zone. A sustained break below could bring $78,000 into focus. On the upside, reclaiming $84,200–$85,000 alongside renewed ETF inflows would strengthen the recovery case, although $88,000 could attract fresh selling pressure. For ethereum, the $2,500–$2,560 area remains a key resistance zone.
The next ETF flow figures and the Fed meeting on October 28 will be important events to monitor.
Bitcoin’s positioning looks healthier following the recent reduction in leverage, but a sustainable recovery is not yet confirmed. Stronger spot demand, renewed institutional inflows and improving liquidity conditions would provide more convincing evidence of a shift in momentum. Until then, downside risks remain, particularly for more volatile altcoins.
