AJB Capital

AI data center stocks got hammered last week. CoreWeave fell about 25%. The cost of insuring its debt against default, through credit default swaps, climbed past 11% a year. Its bonds sold off until they yielded close to 15%. A hot inflation report raised the odds of another rate hike, and the companies that borrow to build data centers took the worst of it.

While that was happening, two executives at Applied Digital (APLD) were buying. Applied Digital builds AI data centers in North Dakota and leases them to tenants that include CoreWeave. On Friday, the day the stock fell 11.5%, President Jason Zhang bought 300,000 shares at $18.86, about $5.7M. CEO and Chairman Wes Cummins bought 55,803 shares at $18.04, a penny under the close. It's his first open-market buy since 2023.

The stock finished the week at $18.05, down 24%. Two of the people with the best view of Applied Digital's tenants and its debt put $6.7M into it on the worst day of the selloff.

Inflation came in hotter than expected this morning, driven mostly by energy. Consumer prices rose 0.6% in September, lifting the annual rate to 3.7% from 3.4% in August. Gasoline jumped 9.1% in the month and accounted for more than half of the increase. Gas is up 34% from a year ago, energy overall is up 20% and fuel oil is up 74%. Airfares are up 22%.

Grocery prices went the other way. Food at home fell 0.1%, with meat, poultry, fish and eggs down 0.5%, dairy down 0.9% and milk down 2%.

Core prices, which strip out food and energy, rose 0.3% against 0.2% expected, and the annual rate climbed to 2.6%. That’s the number the Fed watches, and it keeps an October hike on the table. The Fed can raise rates and make borrowing more expensive, but it can’t produce more oil. Higher fuel costs work their way into airfares, deliveries and restaurant bills no matter where rates sit.

Stocks opened lower, and our momentum readings are taking the hit. Equal-weight S&P is negative at -26. Small caps are