CoreWeave shares, bonds headed for steep weekly losses as AI borrowing concerns mount

Oct 16 — CoreWeave's shares and bonds were headed for steep weekly losses on ​Friday, as investors grew uneasy about the debt financing behind the AI build-out in the face of rising borrowing ‌costs.

The firm's shares dipped 4.1% in premarket trading on Friday, after jumping 5.9% in ⁠the last session.

Here are ​some details:

• As of last close, ⁠the shares were down more than 15% this week, on ‌course for their ‌biggest weekly decline in about two months

• AI infrastructure ⁠stocks fell this week as hot ⁠inflation raised borrowing-cost worries

• "A hot inflation print triggered a sharp selloff in CoreWeave because its business model is a highly indebted play on future data center demand," BCA Research analysts said

• "Although the rest of the tech complex is also sensitive ‌to the pace and magnitude of ​AI adoption and use, it is, on average, considerably less sensitive to interest rates"

• Shares of rival Nebius Group fell 1.5% on Friday morning, also set for their steepest weekly fall in two months

• CoreWeave is a loss-making cloud company that has about $50 billion in debt

• The yield on CoreWeave's October ​2031 maturity 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

• Cost of insuring against CoreWeave's debt surged past 1,000 bps to record highs this week - S&P Global Market ‌Intelligence data

• As of ​last close, CoreWeave shares were on ‌track to erase ⁠a fifth ​of their value this month

(Reporting by Shashwat Chauhan in Bengaluru; Editing by ​Mrigank Dhaniwala)

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