Neoclouds, AI stocks slide again as Nvidia turmoil rattles sector

By Shashwat Chauhan

Nov 13 (Reuters) - Shares of AI-related US companies dropped again on Friday, with neoclouds among the worst hit, fueled by fresh jitters over AI financing following Nvidia CEO Jensen Huang's abrupt exit.

The tech-heavy Nasdaq-100 .NDX declined 2.2%, on pace to erase almost $870 billion in market value if the losses hold through the close. The Philadelphia SE Semiconductor index .SOX also shed 6%, facing a more than $670 billion wipeout for the day.

CoreWeave CRWV.O and Nebius Group NBIS.O, neocloud firms backed by Nvidia, slumped 10.8% and 12.1%, respectively, extending their sharp declines from Thursday when longtime CEO Huang stepped down after revelations of extramarital affairs.

Nvidia, under Huang, has financed infrastructure built around its chips, a strategy that has driven demand but also raised questions about circular funding flows between the chipmaker and its customers.

"It's a short-term death blow to the industry because the amount of vendor financing and financing guarantees that Nvidia and Jensen Huang stepped into are now over," said Thomas Hayes, chairman of Great Hill Capital LLC.

Further, Nscale, a British cloud provider also backed by Nvidia, amended its IPO filing to say it expects to report a net loss of $1.7 billion in the nine months ended September 30, wider than the $433.3 million net loss a year ago.

Chip stocks, widely regarded as among the biggest winners of the AI boom, also dropped. Advanced Micro Devices AMD.O fell 10.2% and Broadcom AVGO.O lost 6.7% after both gained for the last five sessions.

Memory chipmaker Micron Technology MU.O shed 5.6% while data storage companies Western Digital WDC.O and Sandisk SNDK.O dipped 7.7% and 9.3%, respectively.

Photonic product makers Lumentum LITE.O and Coherent COHR.N, along with AI server makers Dell DELL.N and HPE HPE.N, fell between 6.2% and 10.7% each.

Utilities and equipment suppliers exposed to the AI boom, including GE Vernova GEV.N, Constellation Energy CEG.O and Vistra VST.N, eased about 2% to 3.3% each.

AI hyperscalers were also mostly lower, barring Meta Platforms META.O, which rose 1.3%. Oracle ORCL.N, Alphabet GOOGL.O, Amazon.com AMZN.O and Microsoft MSFT.O fell between 0.1% and 3.6%.

Nvidia's quarterly earnings and AI lab Anthropic's much-awaited public markets debut are set for next week and could prove to be catalysts for sentiment towards AI.

"You have no idea what to expect from Nvidia. That's the problem. This company is pure uncertainty right now," said Steve Sosnick, chief market analyst at Interactive Brokers.

(Reporting by Shashwat Chauhan in Bengaluru; Additional reporting by Darshan Kumar and Anjana J. Nair; Editing by Joyjeet Das)

((Shashwat.Chauhan@thomsonreuters.com;))