AI Infrastructure Stocks Are Getting DESTROYED - Should You Sell?

Melvin (0:00)

At the end of the second quarter, company reported $104.2 billion in backlog compared to around $30 billion a year earlier. And since then, it also announced $25 billion more in additional commitments. Just think about how ridiculous that growth is.

Elchid Youssef (0:17)

What's up, everybody, it's Elchid Youssef here, and welcome to Milk Road Stocks, the daily market show that kept begging for a dip to buy, finally got one, and is now way too scared to touch it. Today is October 15th, 2026, recording on October 14th. Is CoreWeave about to go bankrupt? One of its bonds hit a 15% yield, and Elon replied, yikes, on X, and the stock has fallen dramatically in the last couple days, dragging every other neocloud down with it. And the strange part is that CoreWeave's average borrowing cost has actually dropped since 2023, from 14.9 to 8.3 last quarter, and its backlog is still more than $100 billion.

So today, Melvin, our leading portfolio manager, is gonna do a solo pot. He's gonna go deep into this one and explain what that 15% yield actually means and why Jensen Huang naturally needs NeoClouds to succeed. At the end, he's also gonna talk about what he's bought on today's dip. And if you wanna see those trades, you want the cheat sheet, you can go straight to his portfolio in Milk Road PRO, which costs just a dollar at the link below. I'm not in this episode. He did it late at night by himself, and it's a fantastic show, so make sure you watch him through. Otherwise, enjoy it.

Melvin (1:24)

Hey guys, what an absolutely brutal week this has been for the AI infrastructure trade. Neo clouds are selling off pretty much every high beta stock is currently getting destroyed. CPI this morning came in hotter than expected, and on top of that, we had two straight days of FUD coming out of China, surrounding the memory industry, and now over the last two days, the entire conversation has shifted towards CoreWeave and its borrowing cause, with bond yields briefly hitting 15% and investors suddenly freaking out at the possibility of a bankruptcy. Then on top of that, today, this is October 14th, I'm recording this at 10:30 PM.

Just a couple of hours ago, Anthropic released their current revenue run rate for Q3.

Anthropic roughly generated 16.8 billion. That's up 46% from 11.5 billion that they had in Q2, so that's nearly 5.3 billion in additional revenue in three months. And Anthropic also told Investor it was profitable on an adjusted basis and cash flow positive during the quarter as well. So I think we can safely assume that Anthropic's ARR is currently about $17 billion, half way through October, but the market does not seem to like this because currently of this recording, markets are down after hours. It's not, I think it's not happy because the sales side was accepting, expecting roughly $1.8 billion more. But that's okay. Now we have routers reporting that Anthropic is projected to hit $110 billion by the end of the year. This is projecting from Anthropic itself. And this will be huge obviously for Anthropic if they can achieve this. And on top of that, Cosby is currently being sold off as well because there's new reports out of Korea that there will be an oversupply of memory.

Man, like I feel like the markets cannot catch a break right now. Don't worry about this because everything will be fine. I personally think so because we've been through this time and time again. Market just likes these cool off moments to take a breather so it can run higher. Also, I genuinely feel like we're waking up to another headline every day that's essentially sending the AI infrastructure sector lower. A lot of these headlines are just way out of proportion. Now, don't get me wrong, there are legitimate concerns about interest rates, debt, and how these companies are going to finance their massive infrastructure build-out. But I think the market is confusing by financing concerns with a slowdown in actual AI demand and those are very two different things. In today's episode, I want to focus on what's happening with the CoreWeave, because I think this entire situation is misunderstood by a lot of investors. We're going to break down why CoreWeave bond yields are suddenly at 15 percent, what that means for the company, how much debt it has, and whether its massive backlog is enough to support its future obligations.

I also want to go through their financials and also explain why the bears are worried. It's not just them. A lot of the neoclouds are caught up in this trade. You have Nebius that are down almost 8 percent today. You have Applied Digital, Cypher, you name it, Wi-Fi, everything got caught up. Even optical names got caught up. This was just a high beta broader sell-off. I want to come in here and explain what exactly is going on. Let's start with CoreWeave. I think the entire CoreWeave situation is blown out of proportion, and we're seeing panic across Neocloud sectors. Everything is affected by this. But what's interesting is that sell-off isn't necessarily happening because AI demand is slowing down. It's happening because investors are starting to get worried that how all this AI infrastructure is going to get financed. CoreWeave has suddenly become the center of this conversation. Because if you look at this slide, CoreWeave bond yields touched 15 percent to, this is yesterday, then closed at a new high. For those who haven't been following what's happening, CoreWeave dropped more than 15 percent to yesterday.