Is It Time to Sell CoreWeave Stock? Nvidia CEO Jensen Huang Doesn't Think So.
Key PointsSpiking bond yields has some investors worried.
CoreWeave's stock has experienced a recent decline, losing nearly a quarter of its value from October 12th to October 16th. This sell-off is attributed to rising debt yields, indicating market apprehension about the company's ability to repay its obligations. However, Nvidia CEO Jensen Huang, a significant investor in CoreWeave, remains optimistic about the company's prospects.
Huang stated that the company's cost of capital is actually decreasing, contradicting the market's bearish sentiment. CoreWeave is a cloud computing provider that supplies services to major companies like Microsoft and Meta Platforms, requiring substantial capital investment for data centers and equipment. The company has raised capital through both issuing shares and debt, but the latter has faced challenges due to higher yields.
CoreWeave's bonds are now yielding over 15%, classified as distressed debt, which is unfavorable. Despite this, Huang believes the market's concerns are misplaced, as AI development continues unabated. The investor argues that CoreWeave's debt situation may be overblown and that the company's revenue growth and commitment to meeting its obligations could lead to positive outcomes for stockholders.
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