Key Highlights

● HubSpot fell Friday with software peers, and no company-specific news or analyst action was reported.

● CoreWeave's debt load above $50 billion became a focal point of the AI-financing worries.

● The S&P 500's run of 55 sessions without a large daily decline ended Friday.

● Netflix reports Oct 20, and Meta, Tesla, IBM and SAP report Oct 21.

Caught in the software slide

HubSpot (NYSE:HUBS), which sells customer relationship management, marketing, sales and service software to small and midsize businesses, fell on Friday. The Russell 1000 member moved with the sector, and a market roundup listed it alongside Samsara (NYSE:IOT), Asana (NYSE:ASAN) and Braze (NASDAQ:BRZE) among software names that plummeted during the session.

No company-specific news, filing or analyst action on HubSpot was reported on Friday. The decline reflected the day's sector-wide pressure rather than any new development at the Cambridge, Massachusetts-based company.

The AI-financing question

The selling had a clear theme. Market commentary described investors shifting from asking what artificial intelligence can do to asking how the infrastructure behind it will be financed. Debt-funded AI infrastructure companies were hit hardest, led by CoreWeave (NASDAQ:CRWV), whose debt load of more than $50 billion has become a focal point for the market.

That anxiety spread into application software. Market data showed 41 of the 45 stocks in a software basket fell, wiping out roughly $130 billion in value, and the iShares Expanded Tech-Software ETF tumbled into the close. Salesforce (NYSE:CRM), a direct rival to HubSpot in customer software, fell, according to market reports. ServiceNow (NYSE:NOW) slid, and Snowflake (NYSE:SNOW) tumbled late in the day.

"The AI group is now splitting between companies that can fund the buildout themselves and those that have to borrow," wrote one market commentator. "That is a change in character, and it's another reason the leaders no longer look like a safe haven."

Rates, the Fed and the tape

Borrowing costs remain a pressure point for growth stocks whose value rests on future earnings. The 10-year Treasury yield eased to roughly 5.1 on Friday, though it had climbed above 5.3 earlier in October, its highest level since 2002. Federal Reserve Chair Kevin Warsh declined to preview the Oct 28 decision at an IMF gathering in Bangkok. "I don't prejudge meetings," he said.

Stocks opened higher and turned lower as selling built through the afternoon. The Nasdaq Composite fell 572.99 points to 26,140.03, the S&P 500 dropped 84.62 points to 7,659.44 and the Dow Jones Industrial Average slipped 175.28 points to 52,002.41. No closing level for the Russell 1000 was available. The S&P 500's run of 55 sessions without a large daily decline came to an end, according to market reports, and the Nasdaq posted its worst week since June. Energy, utilities and consumer staples led the gainers as money rotated toward defensive sectors.

HubSpot Watches AI-Credit Pressure Ease

The coming week brings a heavy slate of technology earnings that could shape sentiment toward software. Netflix (NASDAQ:NFLX) reports Tuesday, Oct 20, after the close. Meta Platforms (NASDAQ:META), Tesla (NASDAQ:TSLA), Lam Research (NASDAQ:LRCX), Texas Instruments (NASDAQ:TXN), IBM (NYSE:IBM) and SAP (NYSE:SAP) report on Wednesday, Oct 21, after the close. One senior market analyst said "upcoming Big Tech earnings will still need to demonstrate that the enormous investment in AI is translating."

Economic data include housing starts on Oct 20 and S&P Global's purchasing managers' indexes along with University of Michigan consumer sentiment on Oct 23. The Fed's next decision follows on Oct 28, and the PCE inflation report and first estimate of third-quarter GDP arrive Oct 29. HubSpot investors will be watching whether the software group stabilizes once the pressure on AI-infrastructure credit eases.