CoreWeave stock, bond set for weekly plunge as rate-hike fears hit AI bet
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Oct 16 : CoreWeave's shares and bond were set for steep weekly losses on Friday, underscoring investor worries over the cloud-computing company's $50 billion debt load that has rippled across the AI industry.
The Nvidia-backed company came into focus this week after the latest inflation data boosted bets on interest-rate hikes, raising the chances of higher payout on borrowings by data center and AI infrastructure firms with huge debt.
CoreWeave shares fell more than 11 per cent on Friday, taking their weekly losses to nearly 25 per cent. If the current levels hold, they are set for their worst week in over 11 months.
"Its not just CoreWeave, there's several (companies) that are falling into this category because of concerns that the revenue is just not going to be there to turn a profit and maintain the amount of debt that these companies are taking on," said Todd Schoenberger, chief investment officer at CrossCheck Management.
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Investor worries over CoreWeave's massive debt load had a contagion affect that impacted rival Nebius Group, whose shares were set for their steepest weekly fall in two months.
Nebius dropped 10 per cent and data center operators Applied Digital and IREN slipped 9 per cent each.
The selloff is a stark reminder that AI companies' reliance on debt is becoming a risk for investors and punctures the notion that companies at the heart of the AI boom are immune to macroeconomic headwinds.
CoreWeave's stock has already lost about a fifth of its value, or nearly 9.6 billion, so far this month.
The steepest decline this week came on Wednesday, when the stock dropped 15.5 per cent. Short sellers made around $806 million, the fourth best single day for CoreWeave shorts since the stock listed in March 2025, according to data analytics firm ORTEX.
DEBT MARKET JITTERS
The yield on CoreWeave's October 2031 maturity dollar bond briefly surged past 16 per cent on Thursday. It is set to decline for a fifth straight week, down about 3 cents on the dollar this week.
The cost of insuring against CoreWeave's debt has surged past 1,000 basis points to record highs this week, according to data from S&P Global Market Intelligence.
Still, several analysts were not ready to throw in the towel. Evercore analysts maintained their outperform rating on CoreWeave stock.
"The markets appear to be extrapolating a higher secondary-market bond yield as evidence the business model has stopped working, which we don't think is the case," they wrote in a note.
Given the circular nature of AI financing and Nvidia's stake in CoreWeave, Brian Reynolds, chief market strategist at Reynolds Strategy, said Nvidia could also offer buy it.
"At a small premium to the current stock price, but far below where the stock had been trading in the past," he said. "We understand that this may not be a likely option, but... it may not be far-fetched."
Nvidia is CoreWeave's second-largest investor and its CEO Jensen Huang recently gave the cloud company a vote of confidence, saying its financial strength was "improving every day".
But his endorsement is yet to lift CoreWeave's stock, a contrast from June when his support for Marvell Technology sent shares soaring.
Other analysts argued the rout in CoreWeave should not be seen as a sign that the AI rally is coming to an end.
"You cannot take CoreWeave as the poster child for AI," said Tommaso Leodari, chief investment officer at Dubai-based hedge fund Index & Cie.
Exchange traded funds managed by Cathie Wood's ARK Invest have been lapping up CoreWeave shares over the last two sessions, with total purchases exceeding 381,000 shares.
Retail investors have also bought into the weakness, buying up net $66 million worth of the stock so far this week, which is the second highest weekly figure on record, according to Vanda data.
Separately, regulatory filings showed CoreWeave CEO Michael Intrator and entities linked to him have sold nearly $1 billion of stock, mostly under prearranged trading plans, since the company's IPO in March 2025,
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