CoreWeave stock and bonds tumble as AI borrowing concerns intensify

CoreWeave’s equity continued its decline, slipping 6% in early trading after a 15% drop the previous day, making it one of the sharpest losers in a global tech sell-off. Simultaneously, yields on its April 2031 bonds surged above 16%, a level typically linked to financial distress, prompting a “yikes” comment from Elon Musk on social media. The company, carrying roughly $50 billion of debt, now sees its default-insurance cost rise to about 1,000 basis points, suggesting a 63% probability of default within five years, up from 30% a year earlier.

CoreWeave, backed by Nvidia chips, leads a group of “neocloud” providers that rely heavily on borrowing to fund costly hardware, leaving them vulnerable to any slowdown in AI demand. Gartner analysts warned that up to 80% of neoclouds could disappear by 2030 and that trillions of dollars of AI infrastructure spending may be impaired. Co-founder Brannin McBee said the firm is seeking an investment-grade rating to unlock “unlimited” capital, while CEO Mike Intrator argued the backlog covers obligations despite market skepticism.