TLDR
CoreWeave stock dropped approximately 16% on Wednesday as investors reviewed debt risks tied to AI infrastructure spending.
CoreWeave’s bonds maturing in 2031 and 2032 yielded nearly 15%, reflecting falling bond prices.
CoreWeave’s second-quarter net interest expense reached $640 million, more than double the previous year’s $267 million.
Oracle, Nebius, and Dell shares also declined as concerns over AI borrowing spread across technology stocks.
The IMF warned that an AI market correction could trigger tighter financial conditions as technology companies increase borrowing.
CoreWeave ( CRWV ) stock fell about 16% on Wednesday, October 14, as its bond yields approached 15%. The decline followed growing concern over debt used to finance artificial intelligence data centers. Several other AI-related stocks also came under pressure as investors reviewed the cost of expansion.
CoreWeave, Inc. Class A Common Stock, CRWV
CoreWeave Stock Falls as Bond Yields Climb
The company’s 9.625% bonds due in 2032 yielded 14.8% in Wednesday’s bond trading, CNBC reported. Its 9.75% notes due in 2031 yielded about 14.9%. Bond prices fall when yields rise.
Investor Chamath Palihapitiya said the 2032 bond yield reached 15% on Tuesday. He posted a chart on X. Elon Musk responded with the word “yikes,” according to CNBC.
Wednesday’s inflation report added another concern for borrowers. A recent report showed October Federal Reserve rate hike expectations rising after U.S. annual inflation reached 3.7% in September.
Debt Payments Draw Investor Attention
CoreWeave reported $640 million in net interest expense during the second quarter. That compared with $267 million in the same period last year. The increase added to questions about future debt payments.
During the quarter, CoreWeave raised more than $10 billion through unsecured debt and convertible bonds. It also secured a $3.1 billion term loan. These funds supported its expansion of AI computing capacity.
JPMorgan estimates large cloud providers will spend $800 billion on AI infrastructure this year and more than $1 trillion annually by 2027. Separately, 42 AI stocks drove 67% of S&P 500 price returns since early 2024, a recent analysis found.
Wider AI Selloff Reaches Other Stocks
Oracle shares fell nearly 7%, Nebius lost about 9%, and Dell dropped 10% during Wednesday’s selloff. The Nasdaq Composite also declined 1.4%. Oracle’s 6.25% bonds due in November 2032 yielded 7.24%.
Luis Alvarado of Wells Fargo Investment Institute told CNBC investors now demand higher returns for taking AI-related lending risks. Freedom Capital Markets analyst Paul Meeks said concerns over CoreWeave’s ability to pay its debts were unwarranted.
Other technology shares had already weakened. On Tuesday, Applied Materials stock fell more than 8% despite continued demand for AI chips and plans to increase manufacturing capacity.
The International Monetary Fund warned Tuesday that an AI market correction could tighten global financial conditions. It said large cloud providers now account for 10% of global investment-grade bond issuance, up from less than 1% in 2024. CoreWeave expects its next quarterly results in November.
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