AI rally fades away from Wall Street as a tiny IPO makes big waves

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Hello, this is Leonie Kidd, with today's edition of Morning Squawk.

Wall Street's AI relief rally hit a wall in Asia and Europe, turning the neoclouds dark on the horizon. It puts more emphasis on earnings today, with Netflix and SpaceX in the spotlight. 

Happening now: Tech on, Tech off

U.S. stock futures are giving up some of their overnight optimism following the bounceback for AI stocks on Monday, as a sharply negative session in Asia shows jitters remain around technology stocks. 

A negative close for CoreWeave, as well as elevated yields on Oracle debt, expose persistent credit concerns in the AI trade.  

International selling: South Korea's Kospi has led broad declines in Asia, closing in bear market territory. Meanwhile, across Europe, technology stocks pushed indices into the red during the morning session. 

Problematic IPO: South Korean AI data center firm, Elice, debuted as a small IPO on the country's secondary market, but shares made a big nosedive, falling over 30% in the trading debut.  

• Why it matters: Other data center firms have cancelled their IPO plans, including Nvidia-backed Firmus, Blackstone-backed AirTrunk and Softbank unit SB Energy.

• Analysis: Gartner's chief forecaster, John Lovelock, who authored the report that fueled last week's rout, stands by his view, saying, "Everyone in the AI race is running for a last-man-standing position. Pretty much every market that Gartner is tracking in our AI race is likely to collapse down to a duopoly."

Big movers: Neoclouds on the horizon

Jonathan Raa | Nurphoto | Getty Images

• It's been 39 years since Black Monday, but Jim Cramer says the market can learn important lessons from it amid the AI sell-off. He also says investors should look out for hedge fund liquidations and their role in the recent declines. 

Earnings Alert: Streaming and space

• Netflix stock has traded lower after its last five quarterly reports.