15.10.2026 - Big AI Sell-Off
Selling pressure across the global AI sector is intensifying, with memory chip manufacturers among the hardest-hit companies. Rising debt burdens, increasing competition from China and concerns about future oversupply are weighing heavily on investor sentiment.
The sell-off accelerated on Wednesday following stronger-than-expected US inflation figures, which reinforced concerns about persistently elevated interest rates and financing costs.
Technology stocks have come under pressure globally, with SK Hynix, Samsung Electronics and Micron Technology among the notable casualties.
Two developments have added to the selling pressure:
Chinese competition: Growing concerns about competition from China's memory chip manufacturer CXMT and its potential impact on global supply and pricing.
Potential oversupply: A commentary published in a South Korean business newspaper raised concerns about a possible memory chip oversupply by 2029, putting additional pressure on valuations.
Meanwhile, financial stress within the debt-funded AI investment boom is becoming increasingly visible.
CoreWeave — Debt Concerns Intensify
CoreWeave shares and bonds came under heavy selling pressure as investors questioned the sustainability of the company's debt-financed AI infrastructure expansion.
Shares plunged 15.5% on Wednesday, followed by another 6% decline today. Meanwhile, bond prices tumbled, pushing yields on CoreWeave's debt maturing in 2031 and 2032 to nearly 15%, signaling distressed debt levels.
These elevated yields reflect growing investor concerns about CoreWeave's debt burden, refinancing risks and the sustainability of its highly leveraged business model.
Anthropic — Growth Slows Ahead of Planned IPO
According to the Financial Times, Anthropic reported 45% revenue growth to USD 16.8 billion in Q3, ahead of its planned IPO.
Although demand for its AI products continued to expand, growth slowed significantly from the 146% reported earlier in 2026 and fell short of some market expectations.
Annualised revenue is also expected to remain below the closely watched USD 100 billion threshold.
Markets:
Equities: Globally, Tech stocks tank led by AI names, while value stocks hold up well
Bonds: Government bond yields fell on unwinding short positions - US 2y yield fell to 4.76% (from 4.95%!), US 10y yield above 5.09% (from 5.33%!), Japan 10y yield 2.93% (from 3.0%)
Commodities: Oil prices remain high, WTI at USD 95/barrel and Brent around USD 105/barrel;
Precious metals rebounded, gold at USD 4’150/oz, silver below USD 57/ozCurrencies: US dollar falls after yesterday’s jump - Japanese Yen slightly stronger USDJPY 158
Cryptos: falling - Bitcoin around USD 80k
Volatility: The VIX index showed first reactions moving above 17 (last opportunity for hedging!)
My View: No surprise to me. What we are witnessing now is precisely the risk I have been warning about for weeks.
The combination of slowing growth, extraordinary valuations, excessive borrowing, enormous capital expenditure and rising financing costs is increasingly challenging the assumptions underpinning the AI investment boom.
The situation already looks severe. Yet I believe this is only the first crack in a much larger problem that has been building beneath the surface.
The only uncertainty was what would ultimately trigger the sell-off. The underlying problems are anything but new.
Excessive debt, increasing competition, potential overcapacity and overly optimistic growth expectations are classic ingredients of an investment cycle that has overshot. And this time, investor expectations, valuations and positioning have gone to extremes as well.
The Unwinding Has Started
For now, value and defensive stocks are holding up relatively well. I suspect investors are unwinding crowded positions, selling AI-related stocks while covering short positions in previously underperforming sectors.
A similar pattern appears to be unfolding in US Treasuries. The sharp decline in Treasury yields may largely reflect short covering rather than any fundamental improvement in the economic outlook.
These technical movements can be powerful, but they do not necessarily indicate a sustainable change in market sentiment.
The Next Risk — Margin Calls and Contagion
My greatest concern is what happens if the AI sell-off accelerates. Substantial leveraged exposure to AI-related investments could trigger margin calls, forcing investors to liquidate positions to meet collateral requirements.
Forced selling does not distinguish between attractive and unattractive investments. Investors sell what they can, not necessarily what they want. This could rapidly spread selling pressure into other sectors and asset classes, including those currently demonstrating resilience.
Should forced deleveraging accelerate, the risk of a genuine market crash would increase dramatically.
The Critical Question — Where Does the Money Go?
Will US Treasuries regain their traditional safe-haven status, or will concerns about America's enormous debt burden, persistent inflation and elevated financing costs undermine investor confidence?
If both equities and Treasuries come under sustained selling pressure, the situation could become considerably more dangerous.
I also see potential for renewed US dollar weakness, while gold, precious metals and the Swiss franc could benefit from increasing safe-haven demand.
My Conclusion
Investors have been far too complacent about the risks building beneath the surface. Over the past few days, I have repeatedly warned that investors may be facing one of their last opportunities to reduce risk exposure before a potentially much broader market correction. The first cracks in the AI investment boom are now becoming visible, exposing the vulnerabilities created by excessive leverage, crowded positioning and extraordinary growth expectations.
What looks like a severe correction today could be only the beginning of a much broader market adjustment.
The coming hours and days will be crucial in determining whether the unwinding remains orderly or develops into a broader financial market crisis.
The first cracks are appearing. The real test may still lie ahead.
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