- CoreWeave’s stock is down 29% this month, and the spreads in its credit default swaps are widening.
- The company’s elevated bond yield is prompting investors to question what additional financing options are available.
- “Sentiment is decidedly negative,” Andrew Keches, credit analyst at Barclays, wrote in a note to clients this week, referring to AI bonds.
CoreWeave is facing a crisis of confidence on Wall Street that’s playing out in real time among equity and bond investors.
With interest rates spiking and AI buildout concerns mounting, debt-heavy neoclouds like CoreWeave are being viewed by many market participants as the most vulnerable trade in the artificial intelligence space.
“Sentiment is decidedly negative,” Andrew Keches, a credit analyst at Barclays, wrote in a note to clients on Tuesday, referring broadly to corporate debt in tech. Keches highlighted the “speed at which AI vibes are shifting on a day-to-day basis.”
CoreWeave, which went public in March of last year and reached a peak market cap of about $90 billion three months later, is now valued at roughly $34 billion, with its stock down 29% this month. Its unsecured debt, meanwhile, is sporting a yield of about 15%.
The spread on CoreWeave’s five-year credit default swaps, which are insurance against default, is up 164% in the past year and 30% in October. It last stood at nearly 1,067 basis points, or 10.67%.
CoreWeave declined to comment.
The story is playing out across the neocloud sector. Shares of Nebius are down 27% this month, while IREN’s stock is down 32%. In Australia, shares of data center operator NextDC plunged 40% on Wednesday after the company slashed its annual earnings forecast. Earlier this month, Australian data center company Firmus scrapped its planned IPO, citing market volatility and conditions.
U.K. neocloud Nscale is now under the microscope as investors wait to see whether the Nvidia-backed company will go through with its IPO. The company filed to go public on the New York Stock Exchange last month.