CoreWeave's stock and bonds fell sharply on Wednesday as investors grew concerned about heavy borrowing by technology companies funding artificial intelligence infrastructure buildouts.
CoreWeave shares dropped 16%. Yields on its debt spiked higher, with the yield to maturity on its 9.625% bond due 2032 reaching 14.8% and its 9.75% bond due 2031 climbing to around 14.9%. Higher bond yields indicate falling prices and reflect increased investor anxiety about repayment risk.
Luis Alvarado, co-head of global fixed income strategy at Wells Fargo Investment Institute, attributed the shift to changing market dynamics. "The era of easy money, which we experienced in the first nine months of the year, is starting to disappear and dissipate," Alvarado said. "Now the extra dollar or the marginal dollar is going to be more looked at with a microscope into the concessions that the issuer is giving you back."
Tech investor Chamath Palihapitiya flagged CoreWeave's soaring yields on social media Tuesday, noting the 2032 bond yield "touched 15%." Elon Musk responded with "yikes." Palihapitiya cited concerns about whether the AI buildout is creating a private credit bubble, pointing to how lightly lenders have priced AI risk.
Paul Meeks, head of technology research at Freedom Capital Markets, characterized CoreWeave's balance sheet as "relatively bad" compared to neocloud peers due to higher borrowing levels and ongoing data center construction. Meeks does not share broader concerns about repayment capacity. "It's definitely not a deteriorating situation," he said. "Maybe it's not improving, and I didn't really expect it to improve until these data centers get up and running." CoreWeave reports quarterly results in November.
Other technology stocks fell alongside CoreWeave. Oracle shares dropped nearly 7%, with yields on its 6.25% bond due November 2032 rising to 7.24%. Nebius, another neocloud stock, fell 9%. Dell cratered 10%. The Nasdaq Composite declined 1.4% overall on Wednesday.
Companies racing to build AI infrastructure have sharply increased borrowing. JPMorgan estimated hyperscalers will spend $800 billion this year on such buildouts, with spending expected to exceed $1 trillion annually by 2027.