AI-Powered Stocks Crash Amid Hyperscaler Commitment Concerns

Behind-the-meter power stocks experienced a sharp decline on Tuesday, driven by a coordinated de-risking move out of AI-levered industrials. FTAI Aviation (NASDAQ: FTAI), GE Vernova (NYSE: GEV), and Caterpillar (NYSE: CAT) were among the hardest hit, with FTAI down 6%, GE Vernova off 6%, and Caterpillar lower by 5%.

The selloff was not due to company-specific news but rather a response to a Wall Street Journal analysis of hyperscaler power commitments. The report found that nine top tech companies had approximately $3 trillion in off-balance-sheet commitments, mostly related to AI, and growing faster than traditional capital expenditures.

Treasury markets added pressure to the sector with the 30-year yield hitting a 19-year high on Tuesday. Despite this, the underlying fundamentals for these companies remain strong, with GE Vernova exiting Q2 with a $176 billion backlog and Caterpillar posting its first-ever $20 billion quarter.