Ed Yardeni Says AI Bubble Is Deflating Without Bursting Amid Increasing Funding Scrutiny Around CRWV, NBIS: ‘The Bond Market Is Going To Regulate'

Veteran Wall Street investor and Yardeni Research President Ed Yardeni dismissed fears of an imminent artificial intelligence bubble collapse Monday, arguing that tighter credit conditions could curb excessive spending without derailing the broader AI investment boom.

Bond Markets Could Restrain AI Spending

"I think air is coming out of the bubble without the bubble bursting, which is the best solution to all these concerns," Yardeni said during CNBC’s Power Lunch, responding to questions about stretched AI valuations and mounting financing risks.

Yardeni argued that lenders were increasingly scrutinizing AI companies rather than indiscriminately financing expansion.

"The bond market is going to regulate the availability of capital to the AI trade," he said, adding that credit investors were becoming more selective about borrowers, sometimes moving faster than rating agencies.

His remarks follow growing concerns about CoreWeave’s debt, as lenders question whether AI infrastructure investments can generate sufficient returns.

Musk Predicts Widespread Neocloud Industry Consolidation

The debate follows Elon Musk’s weekend X posts, which triggered an initial Monday selloff among neocloud stocks.

Musk warned that debt markets had "almost entirely shut off access to money" for companies lacking substantial revenue outside AI data centers, predicting "guppy-level death and consolidation" across more than 200 providers.

Great Hill Capital chairman Thomas Hayes agreed, telling Reuters that companies needed additional revenue streams because financing costs threatened investment returns. Meanwhile, Gartner projected this month that 80% of neocloud providers could cease operating independently by 2032.

Yardeni Expects AI Companies To Cooperate

CoreWeave Inc. (NASDAQ:CRWV) fell 1.6%, Nebius Group NV (NASDAQ:NBIS) declined 4%, IREN Ltd. (NASDAQ:IREN) lost 1.5% and Applied Digital Corp. (NASDAQ:APLD) slipped 2% during Monday’s session. CoreWeave and Nebius subsequently staged intraday rebounds.

Yardeni acknowledged that excessive competition could cause failures but argued that interconnected AI businesses would support struggling operators. "There will be some failures here, but this is an ecosystem, sort of a band of brothers and sisters where they’re all going to bail each other out," he said.

He suggested Anthropic could use its anticipated IPO proceeds to assist distressed neoclouds, an expectation rather than an announced commitment. That outlook contrasts with analyst warnings that GPU-backed financing may no longer suffice as borrowing conditions tighten.

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