CoreWeave shares fell over 20% this week as rising bond yields sparked investor fears of default. While the stock got a brief boost after Nvidia’s CEO showed confidence, the market remains cautious. Thomas DiFazio said, “The macro backdrop has created a sell-first, ask-questions-later market,” as high financing costs persist.
Synopsis
CoreWeave Inc. is navigating turbulent stock trends due to climbing bond yields and investor trepidation over its debt, raising fears of default. Although a temporary boost followed optimistic comments from Nvidia's CEO, the overall sentiment leans towards caution. Analysts believe that while funding needs are pressing, robust AI demand could mitigate rate worries. Furthermore, CoreWeave's alliance with Nvidia may be a vital source of financial support in these unpredictable conditions.
CoreWeave Inc. has become caught in a tug of war between investors who see rising bond yields as a potential rally killer for the AI trade and those who think demand for computing power will make those concerns seem passe before long.
The cloud-computing services provider’s shares plunged 20% in the first three sessions of the week, including more than 15% on Wednesday, as its debt tumbled to levels that typically indicate distress. On Thursday morning, the cost of protecting CoreWeave bonds against default rose to the highest intraday level on record, while swaps priced in a more than 60% chance of a default within the next five years.
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But by Thursday afternoon, the sense of panic appeared to be alleviating as the stock bounced into the green with Jensen Huang, chief executive of Nvidia Corp., which is a CoreWeave shareholder and supplier, expressing confidence in the company. In addition, Deutsche Bank called the selloff a “buying opportunity.” The shares ended the day up 5.9%, their best performance in over a month.
On Friday, the stock fell as much as 9.4% and is on track for a weekly drop of more than 20%, its biggest since November.
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“The macro backdrop has created a sell-first, ask-questions-later market,” said Thomas DiFazio, exchange-traded fund strategist at Roundhill Financial. “In the short run, it is hard to say with a straight face that the all-clear is here.”
As a so-called neocloud provider, Coreweave is at the heart of the infrastructure buildout needed to develop artificial intelligence technology. The safety of its debt is a key issue for investors because its spending on building data centers is being funded by issuing bonds. With Treasury yields climbing and inflation remaining stubbornly high, the cost of that financing is rising fast.
All of which has led to a bumpy ride for CoreWeave shares. The stock is up more than 50% since its troubled initial public offering in March 2025 that had to be backstopped by Nvidia. But it’s down 12% this year and 66% since hitting a peak in June 2025, and it’s less than $30 from its debut price.
However, the upside for CoreWeave is pretty obvious, as demand for AI computing services continues to outstrip supply. And there are few signs that dynamic is going to change any time soon, DiFazio said.
That was the view taken by Deutsche Bank analyst Brad Zelnick, who has a buy rating on the stock and is urging investors to snap up the shares before they fully rebound.
CoreWeave has “a strong customer base, established record of execution, backlog conversion and leading infrastructure performance,” Zelnick wrote in a research note on Thursday. “While more capital will be needed, this can happen at a steady pace and is backed by robust customer backlog.”
Of course, CoreWeave wasn’t alone in this week’s selloff. The Philadelphia Stock Exchange Semiconductor Index, known by its ticker SOX, has dropped 9.7% this week, leaving it down 22% from a June peak. Server makers Dell Technologies Inc. and Hewlett Packard Enterprise Co. have both fallen sharply.
But CoreWeave is considered one of the riskiest stocks in the AI trade because of its heavy reliance on high-yield debt to finance its data centers. The company secured investment-grade ratings for its chip-backed debt for the first time in March and the goal is to keep winning similar ratings, co-founder Brannin McBee told the Financial Times on Wednesday, which just underscores how much more CoreWeave plans to borrow.
The company’s close relationship with Nvidia could provide a source of capital if its market access tightens, according to Bloomberg Intelligence analyst Robert Schiffman. But Huang pushed back against that idea on Thursday, saying there’s no need for a bailout.
“CoreWeave’s strength is improving every day,” Huang told Bloomberg at an event in Stockholm. “I’m optimistic. Their cost of capital is actually decreasing.”
Still, even with all the risks posed by higher interest rates and the stratospheric level of AI spending, the fundamental backdrop remains encouraging for CoreWeave, according to Matt Bartolini, global head of research strategists for State Street Investment Management.
“We’re still very early on in the AI capex cycle, so I don’t think rates will be the barrier that’s hard to jump over, but it does change the calculus behind the continued issuance of debt, and ensuring whether the financing of that debt can be met with credible growth in the future,” Bartolini said. “The secular demand story is what’s funding the capex cycle, and I think demand is likely to continue irrespective of what’s happening with rates.”
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