Investor caution around AI valuations has intensified amid mounting debt for data center buildouts and disappointing returns from frontier large language models. Recent weeks brought sharp tech selloffs exceeding $1 trillion in market value, IMF warnings of potential systemic risks from hyperscaler leverage, and OpenAI cutting its targeted valuation to $1.25 trillion for a $30 billion round after revenue fell short of prior projections. Distress signals include junk-rated bonds, elevated yields on neocloud debt, and slowing growth at rivals like Anthropic ahead of its November IPO. Traders are watching whether cheaper open-source models from China and persistent cash burn at major labs accelerate a correction before planned 2027 listings.