WS #16765
The AI narrative is facing a severe reality check as capital expenditure turns heavily debt-funded. Meta is kicking off a multi-part bond sale potentially reaching $97.5B, while Oracle eyes similar debt/equity raises, pushing the tech debt premium to a 23-year high. This leverage stress is manifesting in sharp price declines for high-multiple AI stocks, with Oracle down 50% and Western Digital down 52%. Palantir has been downgraded as the 'AI party pauses,' indicating that even strong revenue growth is no longer sufficient to justify valuations in a high-rate, high-leverage environment. Shopify reported Q3 non-GAAP EPS of $0.49, beating estimates by $0.03, with Q4 revenue growth guidance in the low-thirties, signaling robust e-commerce demand. Expeditors Intl also delivered a strong quarter with Q3 GAAP EPS of $2.65, beating by $0.42, and revenue of $4.11B, up 42.2% year-over-year. These results stand in contrast to the broader tech weakness, highlighting strength in digital commerce and global logistics.
AI Capex Stress & Tech Selloff
The AI narrative is facing a severe reality check as capital expenditure turns heavily debt-funded. Meta is kicking off a multi-part bond sale potentially reaching $97.5B, while Oracle eyes similar debt/equity raises, pushing the tech debt premium to a 23-year high. This leverage stress is manifesting in sharp price declines for high-multiple AI stocks, with Oracle down 50% and Western Digital down 52%. Palantir has been downgraded as the 'AI party pauses,' indicating that even strong revenue growth is no longer sufficient to justify valuations in a high-rate, high-leverage environment.
Shopify reported Q3 non-GAAP EPS of $0.49, beating estimates by $0.03, with Q4 revenue growth guidance in the low-thirties, signaling robust e-commerce demand. Expeditors Intl also delivered a strong quarter with Q3 GAAP EPS of $2.65, beating by $0.42, and revenue of $4.11B, up 42.2% year-over-year. These results stand in contrast to the broader tech weakness, highlighting strength in digital commerce and global logistics.