SHARES of Nvidia-backed CoreWeave steadied on Thursday after a sharp slump, as investors worried about the debt financing behind the artificial intelligence build-out.
The loss-making cloud company has about $50 billion in debt and has become a focus of concerns that the data-center boom is being fueled by credit, straining newer players and pressuring cash flows even at giants such as Alphabet and Meta Platforms.
CoreWeave’s slump fueled a global rout in AI stocks, underscoring investor doubts about whether future revenue from the technology can keep pace with the spending.
Nvidia CEO Jensen Huang, whose company is CoreWeave’s second-largest investor with about a 10% stake, played down the fears. “CoreWeave’s financial strength is improving every day,” Mr. Huang told reporters at a Stockholm event, adding that he does not see a need for Nvidia to backstop the company. “I’m optimistic. Their cost of capital is actually decreasing.”
CoreWeave stock was last up 5% after slipping as much as 8.3% to its lowest level since May 2025.
“The market is waking up to the fact that AI demand and a profitable business model are two very different things,” said Axel Rudolph, chief technical analyst at IG Group.
“It looks more like investors questioning how the build-out is being funded than a sudden collapse in appetite for AI computing. But if the cost of capital keeps rising, even strong demand may not be enough to protect the most heavily leveraged players.”
The jitters come as investors await Anthropic’s IPO, which would be a test of whether the Claude AI model maker’s rapid revenue growth can ease worries about runaway AI spending.
The market selloff has already led some companies such as smart ring maker Oura to push back their listings.
The yield on CoreWeave’s April-issued bonds was trading around 15% on Thursday, above the level that typically signals distress, drawing a “yikes” from Elon Musk on social media. The bond was last down 0.3 cents on the dollar to 79.15 cents, according to Tradeweb data.
The cost of insuring its debt against default has climbed to around 1,000 basis points, implying a nearly 63% chance of default in five years, up from about 30% a year ago. That is despite a deal under which Nvidia will buy any unsold CoreWeave capacity through April 13, 2032.
Options traders also ramped up bearish bets. Volume in put options, which give investors the right to sell shares at a certain price, hit a record high on Wednesday, according to Chris Murphy, co-head of derivatives strategy at Susquehanna.
“People are using put options to hedge negative credit sentiment, and we’ve seen consistent and aggressive put buying all week,” Mr. Murphy said.
Investors bought contracts that would profit if CoreWeave shares fell below $42.50, $50, and $60 in the coming weeks, while others used more complex trades to reduce the cost of some of those bearish wagers by taking on some risk tied to much lower share-price levels later in the year, according to Murphy and TradeAlert data.
CoreWeave, which went public in March 2025, leads newer cloud providers known as neoclouds that rent out computing power from scarce and costly Nvidia processors to meet soaring demand, often borrowing heavily to buy the chips. It counts Microsoft and OpenAI among its customers, according to media reports.
That leaves neoclouds exposed to any cooling in AI demand, critics have said, while the chips lose value as newer ones arrive, forcing another round of heavy spending to replace them.
CoreWeave raised its annual capital spending forecast by $4 billion to as much as $39 billion in August. It is expected to post revenue of nearly $13 billion this year and a loss of $2.13 billion, according to analysts’ estimates.
Worries about the build-out, on which US tech giants are expected to spend more than $700 billion this year, have in recent days rippled through the stocks that have been the biggest winners since ChatGPT’s November 2022 launch.
The Philadelphia Semiconductor Index, a closely watched gauge of chip stocks, has erased over $1.6 trillion in market value in an 11.6% slide over the past six sessions. The Nasdaq has declined more than 3% in the period.
On Thursday, tech shares fell across Asia, Europe and the US, dragging broader markets lower on fears that rising interest rates could hurt the sector.
‘UNLIMITED’ POOLS OF CAPITAL
The CoreWeave selloff came as its co-founder Brannin McBee told the Financial Times that the company was seeking an investment-grade rating that would open the door to “unlimited” capital.
The same day research firm Gartner said about 80% of neoclouds could shut down by 2030 and that more than $3.5 trillion of AI spending could face impairment if AI providers keep up their current pace of investment.
“In 2026, AI providers are expected to spend nearly $1 trillion on AI infrastructure, and are forecast to invest an additional $6 trillion between 2027 and 2030,” said Will Sommer, analyst at Gartner.
“However, our research indicates enterprise and consumer AI revenue will be insufficient to support profitable returns on all planned AI capital expenditures during this period.”
CoreWeave CEO Mike Intrator pushed back on the concerns in an internal memo on Wednesday seen by Reuters, telling employees the company’s deal backlog more than covers its debt obligations and that markets can sometimes “misunderstand and act irrationally”. — Reuters