Investing.com -- Wall Street suffered a broad selloff Thursday, with the Nasdaq 100 plunging as much as 6% and the S&P 500 falling as much as 3.8%, as an intensifying liquidation of artificial intelligence and data-center stocks raised fresh questions about the financing behind the industry’s massive infrastructure spending boom.

The market’s biggest concern is becoming increasingly circular: AI stocks are being sold, weakening confidence in the industry’s ability to raise capital, just as Anthropic prepares for what could become one of the largest initial public offerings in history. If the offering struggles, investors may become even more concerned about how the next phase of AI infrastructure spending will be financed.

The selling has also spread beyond technology, with investors increasingly choosing to reduce risk rather than rotate into other parts of the market.

AI infrastructure trade loses its buyers The selling has been particularly severe among the companies supplying the infrastructure behind the AI boom, including semiconductor manufacturers, data-center operators, power providers and so-called neocloud companies.

During October’s bouts of volatility, investors generally viewed weakness in the group as a buying opportunity, maintaining that robust demand for computing power would eventually overcome concerns about valuations, financing costs and construction delays.

That attitude appears to have changed significantly over the past two sessions. Investors who previously bought the dips are increasingly stepping aside, while others are liquidating positions amid mounting performance pressure and uncertainty over the industry’s next phase.

The deterioration in sentiment accelerated Wednesday after Bloomberg reported growing concerns at Microsoft about the neocloud industry, which has attracted tens of billions of dollars in contracts to supply computing capacity to major technology companies. Delays, regulatory obstacles and elevated costs have complicated the business models of these operators, many of which have borrowed heavily and committed enormous sums to building capacity in anticipation of future demand.

The market is increasingly questioning not simply how much AI infrastructure will ultimately be needed, but how quickly it can be delivered, who will finance it and whether the economics will justify the investment.

Anthropic IPO becomes a critical test The deterioration in AI stocks is particularly problematic for Anthropic, which is preparing for a potential public offering that could become one of the largest in history.

The company filed for an IPO on October 26 and is targeting a potential listing before Thanksgiving.

The offering could raise approximately $100 billion at a valuation of $1.5 trillion or more, according to reports, although Anthropic has not yet established formal offering terms. The timing is becoming increasingly challenging.

The liquidation of AI infrastructure stocks over Wednesday and Thursday is raising doubts about whether public-market investors will be willing to commit such enormous sums at the valuations previously discussed. The concerns were underscored by Vital Knowledge Media, which wrote on X that data-center "pick-and-shovel stocks have been in liquidation mode Wed and Thurs," with the extremely ugly price action raising "serious doubts about whether Anthropic can raise ~$100B at a $1.5T+ valuation by Thanksgiving."

Vital Knowledge warned that if Anthropic cannot complete the offering on those terms, investors could become even more nervous about capital expenditure across the AI industry, given that the funding is critical to sustaining the infrastructure spending boom. The observation captures the increasingly negative feedback loop gripping the sector: falling AI stock prices threaten the prospects for Anthropic’s mega-IPO, while doubts about the IPO raise fresh questions about the financing available for future data-center investment.

Anthropic’s latest regulatory filing, amended on November 2, illustrates why the financing question matters so much.

The company reported third-quarter revenue of approximately $16.96 billion, up more than twelvefold from a year earlier, but also disclosed a net loss of $23.29 billion. More strikingly, Anthropic disclosed approximately $895.4 billion in aggregate purchase commitments and lease agreements, substantially all related to computing power and infrastructure.

Approximately $447.5 billion is expected to be incurred by the end of 2030, while nearly $70 billion is due within the 12 months following September 30. These commitments highlight the extraordinary capital requirements of the AI race.

They also expose Anthropic to financing risks beyond its own balance sheet, as some infrastructure providers depend on third-party financing to acquire chips and develop computing capacity. In its filing, Anthropic warned that if such financing becomes unavailable or more expensive, contracted capacity could be delayed, repriced, reduced or not delivered.

A disappointing IPO, a reduced fundraising target or a delay could therefore reinforce concerns about the availability of capital across the AI ecosystem.

Hedge fund concerns add to market anxiety The broader retreat from risk is also unfolding against a backdrop of growing concerns about potential problems among leveraged investment firms.

Bloomberg reported Thursday that hedge fund Walleye Capital plans to return part of its capital to clients, according to a client letter.

The report adds another source of uncertainty for investors already concerned about crowded positions, leverage and liquidity. However, returning capital to clients does not in itself indicate financial distress, forced liquidation or a fund blowup.

The significance for markets is more about the broader sentiment surrounding risk-taking than evidence of a systemic problem at the firm. Still, the prospect of additional selling or reduced risk-taking by investment funds can weigh on market confidence, particularly when investors are already trying to unwind crowded trades.

Combined with the liquidation of AI infrastructure stocks and growing uncertainty surrounding Anthropic’s planned offering, the news adds to an increasingly defensive market environment.

Investors retreat rather than rotate The pressure is no longer confined to the AI infrastructure trade.

While Wednesday’s selling in the pick-and-shovel stocks spread to other technology names, Thursday’s decline has been considerably broader. Rather than moving into alternative sectors, investors appear increasingly inclined to reduce exposure altogether. The selloff reflects a broader reassessment of the economics underpinning the AI boom.

Demand for computing power remains substantial, and Anthropic’s extraordinary revenue growth demonstrates the commercial momentum behind the technology. But investors are becoming less willing to accept enormous capital commitments without clearer evidence of the returns. With third-quarter earnings season nearing its end, corporate results are providing fewer catalysts capable of offsetting the pressure.

The dominant question has shifted toward whether the AI investment cycle can sustain its extraordinary pace and whether public-market investors remain willing to finance it. For now, the market is demanding more than promises of future AI growth.

It wants evidence that the spending will pay off.