CoreWeave (CRWV) stock fell 15% Wednesday morning, a day after a chart of its rising borrowing costs gained traction on X.
On Tuesday, venture capitalist Chamath Palihapitiya released a chart showing that the yield on $1.25 billion in CoreWeave bonds maturing in 2032 “touched 15% today, then closed at a new high” of 14.5%.
“Is the development of AI creating a private credit bubble?” » asked Palihapitiya.
Musk, owner of the platform, responded with a single word: “Yeah.”
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At 12:06:09 p.m. EDT. Open market.
A bond’s yield increases as its price falls, so a yield close to 15% means investors want a high yield for lending money to CoreWeave.
The selloff extended to other AI cloud stocks. Nebius (NBIS) fell about 10% and Oracle (ORCL) fell another 7%.
187.25 -19.61 (-9.48%)
At 12:06:06 p.m. EDT. Open market.
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CoreWeave leases Nvidia (NVDA) chips to AI companies and pays for much of that hardware with debt. The company’s interest expense rose to $640 million in the second quarter, up from $267 million a year earlier, and lost $626 million during the quarter, according to data from Yahoo Finance. Revenue more than doubled during the same period, to $2.58 billion.
Total debt reached about $52 billion at the end of June, up from about $15 billion a year earlier.
The company is clearly looking for cheaper money. CoreWeave is seeking insurers’ vast capital reserves to finance its construction, the Financial Times reported Wednesday.
Co-founder Brannin McBee, who heads CoreWeave’s financing, told the FT that the investment grade ratings on more of its chip-backed debt would allow it to borrow from insurers, whose capital “is unlimited. It’s all the money in the world that’s in the insurance tranche”.
McBee said CoreWeave would continue to take out chip-backed loans: “I don’t view this as scary debt at all. I view this as debt acceleration and significant debt.”
Not everyone is convinced. If the AI spending boom reverses, “the value of stocks will be zero,” DA Davidson analyst Gil Luria said on the Prof G Markets podcast. Luria, who rates the stock neutral with a $100 price target, estimates that CoreWeave borrows at about 9% and earns about 1% on its investments.
If it closes near these levels, Wednesday would be CoreWeave’s lowest close since July 29. The stock is down about 56% from its 52-week high of $150, set on Oct. 16, 2025, and down about 7% this year.
In September, CoreWeave CEO Michael Intrator told Yahoo Finance that the local crackdown on data centers would not slow demand for AI: “The demand for compute will not be changed by a jurisdiction banning building data centers here.
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