Following a brutal selloff in tech stocks over the past week, OpenAI slashed the target on its latest fundraising round to $20 billion from $30 billion, sources told the Financial Times. That also cut its expected valuation to $1.25 trillion from $1.4 trillion.

The funding round was also upstaged by Anthropic, according to the report, as OpenAI’s arch-rival prepares to go public next month. Ahead of its IPO, Anthropic filed an S-1 on Monday that showed revenue has soared and its cash flow turned positive in the first half of this year.

OpenAI didn’t immediately respond to a request for comment.

The timing couldn’t have been worse. Quarterly earnings reports from hyperscalers this week spooked investors. Alphabet saw its cash flow sink deeper into negative territory in the third quarter, with the Google parent also joining Meta and Amazon in charging ahead with massive spending plans. On Thursday, Alphabet fell about 12%, its worst day on record.

To be sure, there were other positive signs as well, in addition to Anthropic’s bullish S-1. Microsoft reported strong cloud growth and stayed cash flow positive, though it said its capital spending will accelerate, while AI chip maker SK Hynix blew away earnings forecasts.

But the narrative had already turned bearish, especially after AI debt fears sent shares and bonds of “neocloud” companies tumbling earlier this month.

At the same time, OpenAI was seeking more capital just as other AI giants tapped financial markets heavily. This past week alone, Elon Musk said SpaceX closed $40 billion in debt financing, Meta announced plans to raise $95 billion in equity, and Microsoft raised $25 billion in a bond sale.

The prospect of hyperscalers continuing to hemorrhage funds was too much for S&P Global, which cut its outlook on Meta to “negative” from “stable” late Friday, citing negative cash flow and uncertainty around capital expenditure ​plans.

The credit ratings agency maintained Meta at AA- but warned ⁠the social media leader’s leverage could top 1.0x as soon as 2027, which is the downgrade threshold for the current rating. That’s up from about 0.1x in 2025 and primarily reflects its strategy of leasing data center capacity rather than from its debt issuance.

Meanwhile, S&P sees Meta’s capex reaching $140 billion this year, topping $225 billion in 2027, hitting $252 billion in 2028, and then flattening out from there. As a result, it expects free operating cash flow to remain negative: -$22 billion this year, -$71 billion in 2027, and -$39 billion in 2028.

Of course, other hyperscalers are spending heavily and running cash deficits, but S&P also said Meta’s ability to monetize its AI investments is more limited than that of its peers.

“While we believe the company intends to monetize these investments via improved advertising tools that support faster ad revenue growth, as well as from the development of new revenue streams stemming from its introduction of agentic apps such as Muse, it is unclear when these revenue streams will generate material contributions that exceed their rising costs over the next few years,” S&P said.

Meta’s rivals, however, are monetizing their data centers by leasing compute capacity, including to frontier model labs and enterprise customers, it added.

In a statement to Fortune, a Meta spokesperson said the company disagrees with S&P’s assessment of its AI monetization capabilities, pointing to “significant product and business opportunities” ahead.

“Meta is already delivering stronger engagement, better recommendations, and greater returns for businesses as a result of AI investments,” the spokesperson continued. “We believe the technology and infrastructure we’re building now will open new revenue streams, create long-term shareholder value, and bring us closer to delivering personal superintelligence to everyone.”

The bearish environment on Wall Street also comes as rising bond yields have sent borrowing costs sharply higher, the political backlash against data centers is expected to help Democrats retake Congress, and the Iran war could re-escalate after midterm elections.

Still, some bullish voices aren’t convinced the AI boom is about to go bust, and even think some retrenchment is a good thing.

According to market veteran Ed Yardeni, the AI investment boom faces financial, physical, and political constraints. If any of these constraints worsen, stocks could dive further, especially considering that AI is now a major driver of corporate earnings and GDP growth, he said in a note this week. 

“However, we view these constraints as healthy for the durability of the AI boom!” he added.

For example, if the supply of capital doesn’t flow as easily, it could lead to more efficient allocation, lowering the risk of overinvestment. Yardeni expects hyperscalers to retain access to financing—thanks to their strong balance sheets—and keep spending.

In his view, it all comes down to the U.S. economy, which he said has performed remarkably well over the past few decades. Even the midterm elections are unlikely to derail it, regardless of which party controls Congress.

“Further AI jitters therefore could set up buying opportunities rather than signal the end of the boom,” he said.