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CoreWeave faces high bond yields as neocloud stocks slide
CNBC reported Monday that CoreWeave and Nebius have lost about half their value in a month, with some CoreWeave 2031 bond yields above 16% ahead of earnings.
- New headline Was: “CoreWeave confronts 'doom cycle' narrative as neocloud credit risk overshadows growth”
- Our desk filed its story
CoreWeave is due to report quarterly results on Tuesday and fellow AI cloud operator Nebius on Thursday, CNBC reported Monday, after both companies lost about half their market value over the past month1.
The outlet said the so-called neoclouds rely on debt to buy AI hardware and now face skeptical lenders as the AI trade has weakened on Wall Street1.
Last Thursday those stocks fell sharply and helped drive the Nasdaq's steepest drop in 19 months, CNBC said, with Nvidia, Advanced Micro Devices and Micron also down on concern that opposition to AI infrastructure would slow buildouts1.
Democrats won governors' races in Georgia, Iowa, Nevada, Ohio and Texas last week, and voters rejected data centers in all but one of 41 related ballot measures, according to CNBC1.
CoreWeave Chief Executive Mike Intrator wrote on LinkedIn that the company does not currently anticipate any impact to existing customer commitments or backlog from shifts in the political landscape1.
Yields on some CoreWeave bonds maturing in 2031 rose above 16%, and the spread on five-year credit-default swaps climbed above 1,240 basis points, up 50% in a month, CNBC reported1.
Anastasia Amoroso of Partners Group told CNBC on Friday that neoclouds would be most affected because, unlike Amazon and Microsoft, the largest of them are unprofitable and depend on a small number of customers1.
At the end of June, CoreWeave had $5.5 billion in cash and $35 billion in debt, including $1.3 billion due March 2028 at 15% interest and $3.2 billion due August 2030 at 11%, CNBC said, citing the company's earnings statement1.
Morningstar analyst Luke Yang told CNBC the company is unlikely to go bankrupt soon and can fund existing contracts, but growth over five years will need more capital, and the beaten-down stock makes equity issuance harder1.
Paul Meeks of Freedom Capital Markets described a cycle in which worried creditors force the company to borrow at high rates to fund infrastructure; he estimated revenue could rise from $5 billion in 2025 to $42 billion in 2028 if the path holds1.
LSEG-compiled estimates cited by CNBC call for CoreWeave quarterly revenue of about $3.55 billion, up roughly 160% from a year earlier, and Nebius revenue of about $908 million; CoreWeave declined to comment and Nebius did not respond1.
