CoreWeave shares and bonds are headed for steep weekly losses as investors worry about the debt financing behind the AI build-out. Rising borrowing costs and a hot inflation print hit the loss-making cloud company, which carries about $50 billion in debt.
CoreWeave's shares and bonds were headed for steep weekly losses on Friday, as investors grew uneasy about the debt behind the AI build-out while borrowing costs rose. The shares dipped 4.1% in premarket trading after jumping 5.9% in the previous session.
Shares on course for their biggest weekly drop in about two months
As of the last close, the stock was down more than 15% this week, heading for its biggest weekly decline in about two months. It was also on track to erase a fifth of its value this month.
AI infrastructure stocks fell this week as hot inflation raised borrowing-cost worries. Rival Nebius Group fell 1.5% on Friday morning and is also set for its steepest weekly fall in two months.
Debt makes CoreWeave more sensitive to rates
BCA Research analysts described the selloff as triggered by a hot inflation print, saying CoreWeave's business model is "a highly indebted play on future data center demand". They added that the rest of the tech complex is, on average, considerably less sensitive to interest rates.
Bond yield passes 16%
The yield on CoreWeave's October 2031 dollar bond briefly surged past 16% on Thursday. The bond is set to decline for a fifth straight week, down about 3 cents on the dollar this week.
The cost of insuring against CoreWeave's debt surged past 1,000 bps to record highs this week, according to S&P Global Market Intelligence data.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
