CoreWeave CEO Michael Intrator appears after the company’s initial public offering on the Nasdaq Marketsite in New York on March 28, 2025.
Michael Nagle | Bloomberg | Getty Images
coreweave is facing a crisis of confidence on Wall Street that is unfolding in real time among stock and bond investors.
Debt-heavy neoclouds like CoreWeave are seen by many market participants as the weakest deals in the artificial intelligence space amid soaring interest rates and growing concerns about building AI.
“Sentiment is clearly negative,” Barclays credit analyst Andrew Kechis said in a note to clients on Tuesday, referring broadly to corporate bonds in the tech industry. Mr. Kesh emphasized “the speed at which the atmosphere of AI is changing day by day.”
Coreweave, which went public last March and reached a peak market cap of about $90 billion three months later, is now valued at about $31 billion, with shares down 35% this month after plunging 8% on Thursday. Meanwhile, unsecured bonds have a yield of about 15%.
CoreWeave stock price trend this month
Spreads on Coreweave’s five-year credit default swaps, which provide insurance against default, have risen 171% over the past year and rose 36% in October. Last time it was 1115 basis points (11.15%).
Coreweave declined to comment.
This story is playing out across the neocloud space. shares of Nevius This month, it’s down 32%. IREN’s Stocks are down 39%. In Australia, shares in data center operator NextDC plunged 40% on Wednesday after the company cut its full-year profit forecast. Earlier this month, Australian data center company Farmus called off its planned initial public offering, citing market volatility and conditions.
UK neocloud Nscale is currently under the microscope as investors wait to see if the Nvidia-backed company will go ahead with an IPO. The company filed to list on the New York Stock Exchange last month.
A representative for Nscale declined to comment.
On hold until midterm exam
CoreWeave is the largest of these and is closely tied to the US AI market. Nvidia It is the company’s top institutional investor, owning about 9% of the stock, according to FactSet. And more than two-thirds of CoreWeave’s revenue last year was microsoft.
This puts the spotlight on CoreWeave’s financial health and viability. The company has about $20.7 billion in debt through 2030, with another $14.9 billion due after that, and future financings are expected to come at higher interest rates.
Continued concerns about the political backlash facing data centers have effectively halted the high-yield bond market until after the midterm elections in two weeks, credit desk officials told CNBC. One source, speaking on condition of anonymity due to the sensitivity of the matter, said bond investors “hope to see permitting and regulatory requirements substantially resolved” before raising capital.
“Given the recent disruption, the pause makes sense,” Seth Meyer, global head of client portfolio management at Janus Henderson, said in an interview.
Coreweave CEO Mike Intrater, who co-founded the company in 2017 initially as a cryptocurrency mining venture, sent a memo to employees on Thursday, obtained by CNBC, to allay concerns. Mr. Intrater emphasized that the company maintains a wide range of financing options.
“Our financing model is a combination of infrastructure-backed debt, debt, equity, and customer advances,” Intrater wrote. He added that the company has “further flexibility to raise equity capital over time depending on market conditions and capital needs.”
CoreWeave had $5.5 billion in cash and equivalents at the end of the second quarter. The company is scheduled to announce its third quarter financial results next month. Analysts expect negative free cash flow to grow to $10.1 billion in the current period, the highest since the company began reporting quarterly financials, according to FactSet.
One of the issues being discussed in the lead-up to the report is how much more capital CoreWeave will need to raise. Rob Oliver, a software analyst at Baird, estimates it to be around $30 billion by 2027.
“Earnings may work on financing measures to boost confidence,” Oliver said in an interview. “But we don’t need that capital until the first quarter.”
Another question is whether Nvidia will step in if necessary.
Nvidia, which supplies the graphics processing equipment CoreWeave rents, invested $2 billion in January for a 10% stake. The acquisition price was $87.20 per share. Despite jumping 6% on the day of the announcement, the stock is currently trading at $61.82.
Nvidia CEO Jensen Huang said last week that Coreweave doesn’t need a backstop, but some investors say further participation from the chip giant could be needed if credit conditions continue to deteriorate.
Nvidia did not respond to requests for comment.
analyst of goldman sachs, JP Morgan Chase and barclays issued a bullish comment on the company this week, saying its GPU-backed loans and Microsoft and Meta. Goldman analysts highlighted the company’s strengths in the market compared to many of NeoCloud’s competitors.
“Not all Neoclouds are created equal,” they wrote in raising their rating from Hold to Buy. “CoreWeave could be in the top quartile, if not the top decile, of neoclouds when measured by performance and execution ability.”
—CNBC’s Michelle Fox and Jordan Nove contributed to this report.
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