CoreWeave Is Projected to Have a 6.3x Gross Leverage Ratio by Year End. The Market Is Worried About the Neocloud's Balance Sheet.

Investors are expressing concerns about CoreWeave, a neocloud company focused on building data centers to support the AI revolution. The market is worried about the company's balance sheet, projecting a 6.3x gross leverage ratio by year-end. CoreWeave has accumulated significant debt to fund its data center expansion, with total debt reaching $27.6 billion as of the second quarter.

The company's adjusted EBITDA hit nearly $2.7 billion during the same period. Wall Street analysts anticipate CoreWeave's debt to increase to $47.6 billion by the end of 2026, while adjusted EBITDA is expected to reach approximately $7.6 billion by year-end. The higher bond yields have made capital markets more challenging for AI stocks, potentially leading to difficulties in raising funding.

CoreWeave has 51 active data centers, providing 1.5 GW of compute, and added eight additional data centers in 2023. Despite generating $2.7 billion in adjusted EBITDA, the company's debt significantly outweighs its shareholder equity of $5 billion. Fitch Ratings noted that 65% of CoreWeave's Q1 revenue came from its top two customers, which could pose risks if these customers experience problems.

CoreWeave's CEO, Mike Intrator, remains confident in the company's backlog, which he believes supports its debt obligations.