I’m still trying to wrap my head around the nuts and bolts of the AI build out.
Yesterday, I learned that China is developing its AI “in the cloud” – some of which is provided by Amazon and Google and some of which is provided by Chinese electronics companies for national security reasons. This allows the AI developers to avoid spending capital on their own data centers.
Different companies provide different aspects of the AI build-out. The AI bubble will affect them differently. While Amazon and Google have businesses that produce positive cash flow the companies that have to borrow to build data centers are suffering from investors’ recognition of the bubble.
https://www.wsj.com/tech/ai/coreweave-stock-market…
CoreWeave’s Staggering Fall From Market Grace Highlights AI Bubble Fears
The data-center provider’s terrible six-week slide picked up speed when a famous short seller piled concerns on top of delays
By Robbie Whelan, The Wall Street Journal, Dec. 15, 2025
…
CoreWeave’s business model involves using high-interest debt to buy thousands of advanced AI chips from Nvidia, installing them in server racks inside data centers that it leases from third-party landlords, then renting access to the chips to AI companies. …
Some critics point to the high levels of debt it has taken on to finance its data-center build-out, while others worry that the company depends on just a handful of large customers, such as OpenAI, Microsoft and Meta, for the bulk of its revenue. CoreWeave saw sales more than double in the most recent quarter to nearly $1.4 billion, from $583 million a year earlier, but the company is unprofitable and lost $110 million in its most recent quarter…
The rapid pace of growth has raised questions about how and when major capital investments are going to produce healthy profits. They also underscore the intensity of the frantic rush to build enough computing infrastructure to satisfy demand… [end quote]
https://www.cnbc.com/2025/12/15/ai-infrastructure-…
AI infrastructure selloff continues on Wall Street as Broadcom, Oracle shares slide
by Ari Levy, CNBC, Published Mon, Dec 15 20252:58 PM ESTUpdated Mon, Dec 15 2025
Shares of Broadcom, CoreWeave and Oracle all dropped on Monday, extending last week’s declines.
While the artificial intelligence boom shows no signs of easing, investors have grown concerned about how it will all be financed.
Oracle has lost almost half its value since the stock peaked in September… [end quote]
The “Magnificent 7” represent 40% of the value of the S&P500. How will this affect them?
Wendy