Analysis:Why CoreWeave is in the crosshairs of the AI scare

CoreWeave, a US cloud company backed by Nvidia, has seen its shares decline over 15% this week due to concerns about an AI bubble. This dip in the stock price follows third-quarter reports from major players hinting at delays in data center projects and slower growth in capital expenditure. Neocloud firms like CoreWeave, which heavily borrow to finance their infrastructure, are considered weaker links in the AI ecosystem.

CEO Mike Intrator admitted markets can sometimes misunderstand and act irrationally, while stressing the company has a strong pipeline of demand. The company's debt stands at $50 billion, and its bond yields have jumped 500 basis points to near 16%. Critics argue that these firms rely too heavily on debt financing, which could lead to repayment problems if data center construction slows down.