What's causing the latest AI stock sell-off? Plus, TSMC earnings and Tesla's new Roadster

The 8:30 Hosts Julie Hyman, Pras Subramanian, and Jake Conley tackle the day's biggest stories, including what may be feeding into the latest tech stock rout, Anthropic's (ANTH.PVT) reported revenue, Taiwan Semiconductor Manufacturing Company's (TSM) latest earnings results, and the anticipation behind Tesla's (TSLA) new Roadster event.

WelcomeThe 80sjust a gem from our producer John left just before the show. Welcome to the 8:30. Welcome to day two of the great tech sell-off of2026.

it arrived? The latest great tech,

is that what we're calling it? Is this the selloff we've all been waiting for?

I decided to call it that like right as I was speaking. So I like that. That's, that's what we're going to call it the great tech selloff, the great AI selloff of.2026 and it is entering day two. It's still happening. Some of the selling pressure that we saw from yesterday is abating to some extent. For example, core weave, which helped trigger and exacerbate the selling yesterday, is not down as much in pre-market trading as it was yesterday, but it is still down. Bond yields sort of ramped up quite dramatically yesterday during the day after that CPI report that we covered yesterday morning that was.Hotter than estimated. Then they came down a little bit as the sell-off in stocks actually prompted the sort of more classic relationship of flight to safety bonds that we saw selling in stocks and buying in bonds. And also there had been a 53 session streak without the S&P 500 falling at least 1%. That ended. The Russell 2000 is now.Down 11% from its highs. That means it's in a correction. Semiconductors have been on a long losing streak, so this sort of gaining steam and maybe culminating in yesterday and today's selling, we shall see. The Dow futures, by the way, are up this morning, but Nasdaq futures time to buy are deeply in the red. Time to buy, says. I mean, certainly,

you know there will be people who come back in,

you know who's saying that this.Morning, Dan Ives. Is time to buy. Dan was out with a note talking about that he's not of the show daunted by what's going on and that he says, you know, it's not the first time that we've seen this. It's not the last time we'll see this, but it does feel like that sentiment is shifting. Whether it will remain shifted is another question, but definitely yesterday felt like.You know that all of the concern over the debt that is out there, the yields that are out there, and whether there is going to be too big of a gap to fill between what is being spent and what will be earned, that that sort of came to a head, and there was a report out by Gartner yesterday, by the way, that also fanned the flames of all of this, the latest report to come out and say that gap cannot be filled between the spend.And the revenue, so all like I'm throwing a lot in there because there wasa lot of sort of it's

a grab bag war, but this is what we were talking about, you know, at 5:30 this morning on our morning meeting on the way up of every single time some big technological change has occurred that has fundamentally changed the market, changed the world, and it ends up working out, there are still losers.On the way up, and there tend to be far more losers than there are winners. Today, yesterday, it feels like we're kind of starting to see the split between the hyper scalers and the neo clouds kind of come home to roost. If you take the hyper scaler side, yes, they're issuing the lion's share of the debt, but they're also well funded, they're well capitalized. They have balance sheet strength to stand on. Then you look at the neo clouds like Coreweave, like Nebius, like some of these other companies, they are issuing a ton of debt.But it's unclear whether they actually have the financing to support it. The spreads on some of that debt are getting pretty wide. The bets on possible default rates are ticking up. Kreweave's debt is trading far below, I think it's trading about 78 cents on the dollar as of this morning. That's as low as it had against being issued at par. All of this is to me flashing a bit of red on the more speculative side of the trade. Yes,

I mean.We were talking about this sort of the, the, the, the, the drip of the bad news with core we've talked, you know, Chama noting the, the, the 80% sort of the, what is it, the, the debt was marked down 20%, right, at some point, um, and then.And Elon Musk responding yikes to that, right? So that it's like if he's responding, like I said, what's going on here?

Well, but aswe talked about yesterday, he also tweeted and was like, we've got this under control. We're

sort of him trying to say like it is the more speculative players. It is the more heavily,

too. It's the Gartner, you're right, right, it's the Gardner thing where it's the neoclouds are the ones that are in trouble, uh, again, this is like, you know, this is a Wall Street Journal story today about, about, um.About a data center conference in Las Vegas, I don't know if you guys saw this, and basically the headlines like, are we screwed? Like people are openly asking about this because we, we haven't even touched on the political part about can you even build these things. But right now we're focused on the coral reefs of the world, and you know, I thought it's remarkable a couple of things, right?The CEO talking about or was the co-founder talking about how we want to be, we want to be an investment grade, we want to tap that insurance money, that private credit insurance money, which is like the spigot that everyone wants, right? And then you have to think the CEO then later saying talking about the the the market action saying this is irrational, this is irrational.

He said there will be periods of time when the market misunderstands and acts irrationally. We are confident in our business model, our customers.The extraordinary quality of our execution, right?

And and to saying to us and the relentless discipline around the financial engine we have built, that's Mike from Michael and Trader, the CEO

there. So it's, it's, it is sort of, first of all, you're like you, you don't want your CEO saying these things. You don't. That means that's not good. It's usually a bad sign. I don't you want trying to calm market. It doesn't calm the market, right? Makes us

worried when you have to put out a defensive statement. People are not going to read that as a

bullet. It's always a worrying thing, so.Uh, you know, is this a little blip? Is this something more profound? Is it just localized to these, these smaller neo cloud players? I think that's what we're all asking. I mean, D, uh, De Laria, DA Davidson has a lot of comments. I know we can, we can go everywhere with this, but I don't want to take everything out of it. No,

no, no, but yeah, but he talked, he had somegreat points,

yeah, yeah, basically saying, quote, in an interview with Bloomberg, they've run out of the ability to borrow even at 9%, right?And if Corby is borrowing at 9%, the best return they get is 5%. It doesn't matter what much they scale, they're destroying value at everyturn.

OK, so that's, so that takes me to Thorsten Slack's note this morning. Thorsten Slack, chief economist of Apollo, parent company of Yahoo Finance, comes out with his daily note, and today's note is in his view, why investors aren't more worried about rising interest rates. He says they haven't slowed the.Data center build out we've seen yields higher, but the forecast for Capex growth keeps going up, and he says the reason why, the reason is quote, is that many AI investors expect AI investments to return more than 10%, well above the 4% Fed funds rate. So in other words, as long as your return is higher, it's fine if rates go higher. People

problem.Is what you just highlighted when some of these, some of these companies that are not as high quality in the eyes of lenders as the hyper scales of the world, they're not borrowing at 4% or 5% or 6%, they're borrowing at levels far above that, and the expected yield, the expected revenue growth is not that. So that's when you obviously run into a problem, and I say obviously, but like the market has not.Been behaving as though that is obvious untilnow.

This is, this is another point that Gil Luria made, you know, saying the more leverage we introduce, the more risk you build into the system. And this is not just on the neo clouds. Look at even like a company like Volta that's building some of these data centers and dealing with the power. JPMorgan having to market a debt package to fund Volta at 11% yield. That is huge.

Sothen you also add a layer in the fact that CPI came in hotter than expected, right? And I think it's um.It's Miller Tayback, right? We're talking about how was it? no, Chris Zacharelli North Light Asset Management, right? The market was hoping September would be one and done, and this morning's data makes the scenario much less likely, basically meaning you're gonna have back into a rate hiking cycle, right? And, and you're trying to raise debt in that cycle, uh, becomes extremely more extensively more expensive, uh, than what you normally do. And then you talk about, you mentioned the 5% versus 9%. You know, if you're a portfolio manager, if you're a chief investment officer, you.To really make the case of investing in this in this in this debt is really hard, right, to make that case that yes, yes, yes, it's a good deal right now. It's good we'll yielding really, really cheap, yeah, right, but it's going to yield a lot

scary the growth, yeah, yeah, exactly. I want to go back to Dan Ives who of course is defending tech as he says. He says we don't dismiss the macro higher yields. That's aIt's a fair question, he says, but rates are a financing question, not a demand question. The structural need for does not reset, excuse me, because the 10 year moves 75 basis points. So he's saying the demand is there. It's just a matter of matching the financing with the demand.

But this is something we've talked about and we were talking about this morning.Yes, the buildout, the Capex at the top, the biggest level of the AI buildout is probably a bit rate insensitive. No one's saying that's going to slow down, but the trade itself is not rate insensitive. People are going to get spooked when spreads on this debt blowout. That's going to get spooked. And when you've got a 10 year as high as it is, a 30 year as high as it is, it makes that more and more uncomfortable, especially if you're not.A Google or an Amazon or Microsoft

and what's more, I would challenge to some degree this assumption that we don't have a demand problem at all, that there's zero demand problem, and I want to bring up another graphic or chart that I've been paying attention to which is from Ara Khazarian over at RAM where they track token spending. Here it is. Look at those two right bars. This is token spending.That's not the chart that you want to see if you are, say, an anthropic or an open AI, i.e., it slowed way down the amount of spend, growth. Now at the same time, token spend is going down, but total AI spend, he says, is going up. So that implies that token prices are going down, but total spend is going up. So this kind of speaks to the Jevin's paradox thing like, OK, even if prices are coming down for this stuff.Maybe you know you have more people using it, I guess, but I still think the demand picture is just not as crystal clear as it's made out to be, particularly when we're talking about to your point of like who are the winners and losers going to be,

and I just want to kind of stepping out of the enterprise space and just thinking about the fact.We're 20 something days out from the midterms. Uh, Libby Cantrell, I love, I'm gonna beat this horse until it is dead, until those races happen. Libby Cantrell, the head of public policy over at PIMCO, out this morning pointing out that data centers right now poll worse in local municipal areas than nuclear reactors.I believe it, I believe it. What does that tell you about the absolute pushback you're gonna get and how legislators are gonna have to listen to that.