The perfect storm behind the Nasdaq's rout — plus, some of the bright spots in the market

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Stocks are falling on Thursday , with chip stocks and AI infrastructure names getting hit the hardest on growing concerns about the scarcity of capital to fund the AI buildout. The Nasdaq is leading the way lower, sinking 2.5%. The issue started to get a lot more attention last Monday when Broadcom CEO Hock Tan warned about how a capital crunch could become AI's next bottleneck. It then played out through CoreWeave 's bonds selling off, making it tougher for the neocloud to raise new debt to fund its expansion plans. While Meta Platforms posted strong earnings on Wednesday evening, its results were overshadowed by free cash flow going negative for the first time since its 2012 initial public offering, and the company's SEC filing that mentioned the company's long-term forecast requiring the need to raise "hundreds of billions of dollars over a period of several years beginning as early as fall 2026." Meta also noted the "increasingly challenging environment for raising capital." Even Nvidia CEO Jensen Huang acknowledged the challenges of raising sufficient capital to support aggressive AI investment plans for neoclouds, saying Thursday that the "demand of the capital is much greater than the availability of the capital." However, Huang expressed confidence that the funding gap for neoclouds would eventually be resolved. More on Meta's capital needs, which is contributing to its 7.5% decline on Thursday. The SEC filing mentioned above was about how the company formed a special committee to review the establishment of its Class C common stock. The idea behind the Class C shares is to create a vehicle that Meta can raise funds to support acquisitions and investments without diluting CEO Mark Zuckerberg's voting power. Zuckerberg maintaining control of the company he founded is not the main gripe of investors nowadays (as it had been in the past. The current concern is about the "hundreds of billions of dollars" that must be raised, as well as an acknowledgement of how timing is important to secure capital before "competitors saturate various funding options." The filing called out Alphabet and SpaceX , the yet-to-go-public AI labs Anthropic and OpenAI, as well as other notable companies that recently raised capital to fund the same AI growth. This disclosure underscores the growing race among AI companies to secure financing before their competitors do. We saw something similar in June, when Alphabet moved quickly to raise about $85 billion through equity sales just days ahead of SpaceX's blockbuster IPO. By the way, markets tend to struggle when they know they need to absorb excess supply. We don't raise these concerns to sound overly bearish on the AI buildout, especially when signs continue to point to strong demand. AI adoption is not slowing down. In fact, we went against the selloff on Thursday and nibbled on some GE Vernova shares, marking our first AI-related purchase in weeks. But understanding why certain stocks are falling is important to identifying what needs to happen to support the next rally. In the market background , the rally in bonds on Thursday is worth highlighting as investors flock to safety. The 10-year Treasury yield dipped below 5% for the first time since Sept. 23. The drop in yields is helping high dividend yield stocks like Kimberly-Clark and rate-sensitive groups like housing and Home Depot outperform in an otherwise rough day for stocks. Both KMB and HD are Club names. Thursday's rotation is being reflected in the nearly flat Dow Jones Industrial Average . The two most important earnings reports after the closing bell are Western Digital and Bloom Energy . Western Digital's comments will provide insight into demand and shortages for storage products used in AI data centers, while Bloom Energy provides a window into whether data center operations are accelerating near- and long-term investments in power infrastructure. Before Friday's bell, American Express and SLB report their quarterly results. On the data side, Friday morning brings October S & P Global U.S. manufacturing and services PMI and October University of Michigan survey of consumer sentiment and 1-year inflation expectations. 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