Wall Street weighs prospect of an AI slowdown on data center buildout

The data center boom in the U.S. has largely been tied to the growth prospects of two companies — Anthropic and OpenAI — and the seemingly unending demand for their models and services. Now Wall Street is weighing what a potential slowdown in model development could mean across the industry.

Oracle has undergone a huge transformation over the past 18 months to capitalize on the artificial intelligence opportunity, laying off employees in slower-growth areas while pouring billions of dollars into compute and data centers.

Industrial heavyweights like GE Vernova, Caterpillar and Vertiv have invested heavily in providing the energy equipment essential to powering AI servers, while neoclouds such as Nebius and CoreWeave have become central players in supplying hyperscalers with compute and access to AI infrastructure.

For all those companies and others like server makers Dell and Hewlett Packard Enterprise, ongoing success hinges on the buildout continuing and chips and AI systems remaining in high demand. One tech investor, who asked not to be named in order to speak candidly on the matter told CNBC, "Any significant delay could cost them."

That chatter ramped up on Monday, as AI infrastructure stocks sold off following a proposal over the weekend from Anthropic CEO Dario Amodei to slow the pace of frontier model development.

Amodei wrote that a slowdown in AI development doesn't mean "halting model training or technical progress."

Still, GE Vernova's stock dropped almost 9% on Monday, as Caterpillar sank more than 4%, Vertiv fell close to 8% and Oracle slipped almost 4%.

Rishi Jaluria, an equity analyst at RBC Capital Markets, told CNBC that a slowdown in model development and training is likely a headwind for Oracle's cloud infrastructure business, which has been the driver of the stock.

As data centers face increasing pressure, including from the burgeoning nationwide backlash, a rush to secure AI debt is expected over the next six weeks, according to two people familiar with the situation who asked not to be named because the talks are private.

Amazon is the latest hyperscaler to go back to the debt market, raising roughly £4.25 billion (nearly $6 billion) last week. Alphabet also tested the European market in May, raising about $10 billion in a euro bond sale.

One source said any new debt deals announced this fall will be priced at a significantly higher rate than previous issuances.

"Fixed income investors are demanding more reward," the person said.