Applied Digital Corp (NASDAQ:APLD) shares are falling Wednesday as investors fret over AI financing following a jump in CoreWeave’s bond yield. A hot inflation report is also weighing on rate-sensitive stocks.
- Applied Digital stock is feeling bearish pressure. Why are APLD shares down?
CoreWeave Bond Yield Spike Draws Musk’s Attention
CoreWeave Inc’s (NASDAQ:CRWV) $1.25 billion of bonds due in 2032 saw their yield climb to 15% at the peak, before ending the day at 14.5%, its highest finish so far. Venture capitalist Chamath Palihapitiya shared a chart of the move on social media.
Elon Musk weighed in early Wednesday with a one-word reply: “Yikes.”
Palihapitiya attached a bigger warning to the chart: AI spending may be building a “private credit bubble.” Palihapitiya expects six major tech companies, including Alphabet and Oracle, to lift capital expenditures from $470 billion in 2025 to over $1.3 trillion by 2027. Borrowed money is covering the difference, Palihapitiya said, in the form of debt, leases and similar deals.
The direct lending market for U.S. borrowers grew from $96 billion in 2010 to about $2.4 trillion in 2025. Pricing worries Palihapitiya as well. Companies borrowing for AI pay a 6.2-point premium over the base rate on average, while other private credit borrowers pay 6.1 points. Palihapitiya said such a small difference suggests lenders may be undercounting AI’s risks.
Investors might see CoreWeave’s 15% yield as evidence that lenders now want much higher returns from AI companies. In that case, Applied Digital could face tougher questions about its own funding. Palihapitiya’s warning points to another risk. If lenders have been charging too little for AI risk, borrowing could cost more across the whole group.
Hot CPI Hits Rate-Sensitive Stocks
Inflation data piled on to investor concerns. Consumer prices in September were 3.7% higher than a year earlier, compared with the 3.6% rise economists predicted. Core prices, which exclude food and energy, were up 2.6% against a 2.5% forecast. Rate-sensitive stocks sold off in premarket trading Wednesday.
Treasury yields leaped, the dollar gained and gold dropped. Skyler Weinand, chief investment officer at Regan Capital, said inflation is proving sticky and keeps moving the wrong way.
Higher Treasury yields tend to weigh on growth stocks, particularly those valued on future earnings potential. Because Applied Digital is viewed as a long-term AI infrastructure investment with substantial spending on data centers, power, and compute capacity, higher interest rate expectations can pressure its valuation and dampen investor sentiment across the sector.
APLD Shares Are Slipping
APLD Price Action: Applied Digital shares were down 9.36% at $20.35 at the time of publication on Wednesday. The stock is trading near its 52-week low of $19.00, according to Benzinga Pro.
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