Speaking with Bloomberg in Stockholm on Thursday, Nvidia Chief Executive Officer Jensen Huang defended CoreWeave's financial footing. He said, "CoreWeave's strength is improving every day," and added, "I'm optimistic. Their cost of capital is actually decreasing." Nvidia is more than just a supplier here. It is CoreWeave's second-largest shareholder, holding about a 10% stake.
Huang's remarks helped erase an earlier slide, and at 2:18 p.m. in New York the shares were up 2.1%. The bounce came one day after the sharpest drop since February, after a co-founder discussed attempts to secure funding from the "unlimited" pools of insurers' money. Even so, the credit market sent a louder warning. Costs to insure the debt on five-year contracts jumped as much as 74.5 basis points, reaching 1,194.5 basis points at an intraday record, while swaps implied odds of default above 60% over the next five years.
Bond traders also marked down CoreWeave's 2032 notes. Those notes, purchased at par by investors four months ago, were indicated near 78 cents on the dollar on Wednesday, prompting Elon Musk to post "yikes" on his social platform. Through the week, the bonds were indicated at deeply distressed levels.
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CoreWeave is a data center player at the heart of the AI infrastructure rush and a major Nvidia customer. The company has leaned heavily on borrowing, often with support from suppliers including Nvidia, which has stirred worries that circular financing could overstate demand. Wall Street estimates point to $12.9 billion of sales this year, with revenue expected to more than double next year.
Balancing those forecasts, CoreWeave carries in excess of $40 billion of debt, with a large share due within the next five years. Interest and principal payments are sapping liquidity, free cash flow has deteriorated further, and losses are projected to exceed $2.5 billion this year.
The anxiety is spilling beyond one balance sheet. Concerns that AI spending has sprinted ahead of returns fed a broader selloff this week. The Philadelphia Stock Exchange Semiconductor Index has dropped roughly 9% of its value, and the message for anyone paying for cloud and AI services is straightforward: the buildout is massive, but the financing behind it is getting stress tested in real time.
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