CoreWeave stock, bond set for weekly plunge as rate-hike fears hit AI bet
CoreWeave's shares and bond are expected to face significant weekly declines, raising concerns about the cloud-computing firm's $50 billion debt load, which has spread to the AI industry. The company's share price fell more than 8% early Friday, dropping over 22% this week, and could see its worst week in over 11 months if losses persist.
CoreWeave's woes are not isolated, as other AI infrastructure firms also faced drops. Todd Schoenberger, chief investment officer at CrossCheck Management, noted that CoreWeave's massive debt load is causing a ripple effect, impacting its rivals. This sell-off underscores the risks investors face as AI companies increasingly rely on debt.
CoreWeave's stock has already lost nearly 10% of its value this month, with the sharpest decline occurring on Wednesday. Short sellers profited $806 million in a single day, the fourth best day for CoreWeave shorts since its March 2025 listing. Bond yields on CoreWeave's October 2031 maturity dollar bond surged past 16% on Thursday, with the cost of insuring against the debt reaching record highs.
Despite the sell-off, some analysts maintain a positive outlook on CoreWeave, arguing the rout should not signal the end of the AI rally. ETFs managed by Cathie Wood’s ARK Invest and retail investors have shown continued interest in the stock, with total purchases exceeding 381,000 shares and $66 million in net purchases.
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