Saxo Bank’s Charu Chanana said there is insufficient evidence of a systemic AI credit crisis, even as investors question the sustainability of the financing model behind AI infrastructure.
- Chip stocks slipped even as TSMC’s third-quarter revenue rose 51% year over year, beating market forecasts.
- Saxo said investor focus is shifting to whether companies can turn strong demand into sustainable cash flow and earnings growth.
- The firm noted that yields on some CoreWeave bonds have approached 15%, which does not necessarily signal an imminent default.
Semiconductor and memory chip stocks extended their losing streak on Thursday as concerns over mounting debt and rising financing costs for artificial intelligence (AI) infrastructure projects continued to weigh on the sector.
Nvidia (NVDA) fell over 2%, Advanced Micro Devices (AMD) dropped 4%, while Micron Technology (MU) and SanDisk (SNDK) slipped roughly 4% and 6%, respectively, extending losses from earlier in the week.
In a Thursday note, Saxo Bank Chief Investment Strategist Charu Chanana said there was insufficient evidence of a systemic AI credit crisis, even as investors increasingly questioned the sustainability of the financing model behind the infrastructure boom.
Saxo Warns AI Financing Squeeze Could Hit Chip Suppliers
However, Chanana warned that financing pressures in the AI infrastructure industry could eventually affect semiconductor suppliers if companies are forced to scale back investment.
The bank noted that infrastructure providers depend on financing and large customer contracts to fund expansion, while equipment suppliers rely on those customers continuing to build capacity.
If rising borrowing costs force infrastructure operators to moderate spending, Saxo said the impact could spread beyond chipmakers to industrial equipment, power infrastructure and construction companies.
Saxo pointed to AI cloud provider CoreWeave (CRWV), where yields on some bonds have approached 15%. Elevated bond yields do not necessarily signal an imminent default. However, repricing of CoreWeave’s debt suggests that investors are becoming less willing to finance AI infrastructure growth at any cost, the note stated.
Record TSMC Earnings Fail To Halt Chip Selloff
The selling continued despite Taiwan Semiconductor Manufacturing Co. (TSMC) reporting a strong quarter. The chip manufacturer’s fiscal third-quarter (Q3) revenue rose 51% to NT$1.49 trillion, beating market forecasts. In dollar terms, sales rose 41%.
Early Thursday, TSM forecast fourth-quarter revenue would rise up to 61% from a year ago, after posting its sixth consecutive quarter of record earnings.
According to the Saxo strategist, strong demand is no longer enough to sustain elevated stock valuations, with investors increasingly scrutinizing profitability, financing costs and returns on investment.
Chanana pointed to strong operating performance across the semiconductor industry, including Micron’s revenue growth, ASML’s higher sales outlook and TSMC’s September revenue increase.
The focus is shifting toward whether companies can translate strong demand into sustainable cash flow and earnings growth, rather than simply announcing larger infrastructure investments, the note said.
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(Exchange Rate: 1NT = 0.031 USD)
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