AI-linked stocks have suffered another week of selling, with investors embracing a broad risk-off stance on the sector—but not for the reasons most had anticipated.

The Global X Artificial Intelligence & Technology ETF (NYSE:AIQ) has now dropped nearly 10% since its early November peak, putting it on course for its first correction since April.

Concerns about a potential AI bubble have long centered on whether demand would justify the sector's explosive valuations.

But this week, a different picture has emerged.

Wall Street analysts now warn that demand is actually real and too strong, creating overwhelming pressure on physical infrastructure—data centers, transformers, turbines—that simply can't scale fast enough.

CoreWeave Sounds the Alarm: Demand For AI Far Exceeds Capacity

The wake-up call came from CoreWeave Inc‘s (NASDAQ:CRWV) latest earnings update.

Despite surging orders and a ballooning backlog, the company's stock sank 30% this week after admitting it cannot deliver infrastructure quickly enough.

"We continue to operate in a highly supply-constrained environment, where the demand for CoreWeave’s best-in-class AI cloud platform far exceeds available capacity," said CEO Mike Intrator during the company's earnings call.

CoreWeave added $25 billion ...