Wall Street’s boom is sitting on a shaky foundation

October 19, 2026 — 10:59am

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The maths of the boom in artificial intelligence is starting to undermine its foundations, with the implosion in the share price of a leading neocloud last week, and soaring bond yields, highlighting the most vulnerable point in a fragile financial edifice.

Last week the share price of neocloud CoreWeave plummeted 15 per cent and the yield on its bonds – bonds it issued with a yield of 9.675 per cent in June – rocketed to 15 per cent, trading at less than 80 per cent of their face value.

CoreWeave wasn’t alone. The share prices and bonds of other neoclouds – companies that are built specifically to provide computing power to train AI models – were also ravaged.

Earlier this month, data centre operator Firmus yanked what would have been Australia’s second-largest initial public offering after investors balked at the $44 billion valuation and the very pricey capitalisation of revenues and earnings from projects that are still on drawing boards.

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Stephen BartholomeuszSenior business columnist

Senior business columnist

It probably wasn’t a coincidence that the plunge in the value of CoreWeave’s shares and bonds came in the wake of the Firmus debacle and accelerated as last week’s data showed the US inflation rate is also accelerating, presaging higher US interest rates.

The business model for the neoclouds – indeed for most of the AI industry – is novel.

They commit to building or leasing data centres and installing the massive computing power necessary for AI, using contracts to rent out that capacity to AI frontier labs and the hyperscalers as the backing for........

© Brisbane Times