Cipher Digital Inc (NASDAQ:CIFR) shares are sinking Thursday as investors fret over the debt that AI cloud companies are piling up to build compute capacity, and hot inflation data fuels bets on more Fed rate hikes.
- Cipher Mining stock is dropping as AI debt worries and hot inflation data pressure AI cloud companies.
Cipher Falls as AI Cloud Debt Worries Persist
AI cloud services stocks are under pressure again. The worry that keeps resurfacing is how much debt the compute buildout requires.
CoreWeave Inc (NASDAQ:CRWV) has become the clearest example. Its stock has faced heavy selling this week as climbing bond yields heightened fears about its borrowing-fueled growth.
Producer Prices Jump 1.3% in September
Inflation readings this week add to the strain. The consumer and producer price reports back the case for additional Federal Reserve rate hikes, which would put more stress on high-yield credit markets.
Thursday’s report from the Bureau of Labor Statistics showed U.S. producer prices climbing 1.3% in September from the prior month. Economists had forecast just 0.5%. Producer prices were 6.3% higher than a year earlier, well above the 5.3% consensus.
August’s upwardly revised figure was 5.6%, and September’s annual pace is the fastest since December 2022. Excluding food and energy, core producer prices gained 0.7% month-over-month, versus a 0.3% forecast, and 5% year-over-year, versus 4.4% expected.
Wednesday’s consumer price report was also hotter than expected. Headline inflation moved up to 3.7% from 3.4%, topping the 3.6% forecast. Core consumer prices rose 0.3% on the month and 2.6% on the year, each a tenth above projections.
Cipher belongs to the AI cloud and data center group that investors are scanning for debt risk. If the Fed hikes again, borrowing costs would climb and high-yield credit markets would tighten, the markets where capital-intensive buildouts often raise funds. Cautious lenders could slow projects or make them pricier to finance.
CIFR Shares Are Dropping
CIFR Price Action: Cipher Digital shares were down 5.94% at $9.35 at the time of publication on Thursday. The stock is trading at a new 52-week low, according to Benzinga Pro.
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