AI Stocks Plunge as Inflation Raises Data Center Costs

AI-related stocks experienced a significant decline during the third week of October 2026. Higher-than-expected inflation increased financing costs, threatening the debt-fueled investment required for data center expansion. This volatility highlighted the risks of massive capital expenditure across the sector.

CoreWeave, an independent data-center operator, saw its shares plunge 24%, wiping out all year-to-date gains. Memory-chip maker Micron dropped 11%, while South Korean firms Samsung Electronics and SK Hynix fell twice as much. Even as Nvidia's share price increased by 15%, its valuation dropped from 23 to 15 times predicted earnings.

Investment analysts suggest the current market volatility is an earnings problem rather than a price problem. While infrastructure build-outs have generated soaring profits, the long-term viability of the sector depends on whether AI can produce sustainable productivity gains. These gains must justify an estimated $9 trillion investment by 2032, which would represent 3.2% of annual U.S. GDP.