CNBC Daily Open: Is the AI sector losing its rose-colored glow?

Saul Van Beurden, Wells Fargo Co-CEO of Consumer Banking & Head of AI and Bret Taylor, Sierra Co–founder and OpenAI Chairman speaking at the CNBC AI Forum in Dallas, Texas on Oct. 1st, 2026. Carla Thorpe | CNBCHello, this is Hui Jie writing to you from Singapore. Welcome to another edition of CNBC's Daily Open.A line from Netflix's Bojack Horseman goes: "When you look at someone through rose-colored glasses, all the red flags just look like flags."For much of this year, investors viewed the AI trade through rosy lenses. This week, they put down the glasses and what they saw was clearly not pleasing.Credit stress at CoreWeave, concerns over corporate AI spending and another hot inflation report erased more than $1 trillion from 20 of the world's largest AI and semiconductor stocks this week.What you need to know todayCaution seems to be the name of the game in the AI sector now as investors worry about the amount of money that companies are splashing on AI. One example is CoreWeave, which is facing spiraling credit stress that has come into the spotlight amid a broader sell-off in AI-related names.Yields on CoreWeave debt have continued to climb, with the yield to maturity on its 9.75% bond due in 2031 reaching 15.78%. Yields generally rise when investors view a bond to be more risky. Meanwhile, the spread on its five-year credit default swaps, which are insurance against default, at one point soared above 1,140 basis points. A spread level of 1,000 basis points or above is generally a sign of credit distress, said Gavan Nolan, executive director of fixed income pricing at S&P Global Market Intelligence.The worries around AI funding led to a rotation out of the sector, with major AI names like Nvidia losing 1.84% while AMD sank 1.5% and Intel lost about 2.8%. Dell Technologies sank 6.8%.Collectively, 20 of the most valuable global AI and semiconductor stocks have shed more than $1 trillion in value so far this week, as interest rate hikes, AI financing and intensifying competition weighed on sentiment.AI safety The worries were not just limited to funding. Nvidia chief Jensen Huang also reiterated warnings around AI safety, saying the chipmaker "absolutely must" work with Chinese AI companies on monitoring risks around the "potentially dangerous" technology."We absolutely should work with each other so that we advance the technology safely," he told CNBC during a media briefing on Wednesday evening in London.Discussions around AI safety have intensified in recent months, after researchers from AI labs including OpenAI and Anthropic called for a slowdown in developing the tech and warned of existential risks to humanity.Hardware demandDespite these concerns, the sector's hunger for chips doesn't seem to be letting up, as seen in Taiwan Semiconductor Manufacturing Company's record quarter. TSMC posted record profit for a sixth straight quarter on Thursday and expects fourth-quarter revenue to be 58% higher than a year earlier, driven by strong demand for its advanced chipmaking technologies.Last year, TSMC said it had the capacity to make more than 17 million 12-inch equivalent wafers. But customers want more."The competition is extremely fierce," said Jordan Klein, an analyst at Mizuho Securities. "It's a game of who can get the most leverage and supply."Inflation worriesHanging over all of these developments is inflation. Just a day after consumer inflation figures for September in the U.S. came in above expectations, producer price growth also surpassed expectations, underscoring the continued inflationary pressure from energy amid the U.S. war with Iran.The PPI climbed 6.3% year on year, marking it's fastest increase since December 2022 and far above the 5.5% expected by economists polled by Dow Jones.Over in Bangkok, Federal Reserve Chair Kevin Warsh will appear alongside IMF Managing Director Kristalina Georgieva on Friday morning, his last scheduled public remarks before the central bank's blackout period ahead of the Oct. 27-28 policy meeting. With resurgent inflation and traders weighing the Fed's next move, any signal on the rate path could ripple through the equities, bond and currency markets. — Lim Hui Jie, Anniek BaoAnd finally...Netflix Chief Content Officer Bela Bajaria is leaving, will be replaced by Peter RiceNetflix on Thursday announced Bela Bajaria will be replaced as the company's chief content officer by former Disney exec Peter Rice, effective Oct. 26.Rice most recently oversaw Disney's cable channels, news programming and coverage of major sporting events.In his new role, Rice will oversee the company's global content organization, including scripted and unscripted series, film and live events.Before Rice was at Disney, he held roles at 21st Century Fox and Fox Searchlight Pictures. Netflix in its announcement called him "one of the entertainment industry's most respected creative executives." — Laya Neelakandan