CoreWeave (CRWV) shares closed at $65.78 on Wednesday, down about 15%, as yields on its unsecured bonds surged toward 15%. The yield on its 9.625% bond due in 2032 reached 14.8%, while the 9.75% bond due in 2031 was near 14.9%, after the 2032 notes briefly touched 15% on Tuesday. The move followed a post by venture capitalist Chamath Palihapitiya flagging a potential private credit bubble in AI infrastructure, to which Elon Musk responded with a one-word comment: 'yikes'.
The selloff extended across AI and tech names, with Oracle closing down nearly 9% and its 2032 bond yield rising to 7.24%, Nebius falling 10%, Dell dropping about 11%, and the Nasdaq Composite closing down 1.9%. Hotter-than-expected September inflation data added to concerns about Federal Reserve rate hikes and borrowing costs. CoreWeave CEO Mike Intrator pushed back in a memo, saying that 'when you are building a new type of technology company there will be periods of time when the market misunderstands and acts irrationally,' and that the company's backlog 'more than supports all of our debt obligations.'
CoreWeave's second-quarter revenue more than doubled to $2.58 billion and its backlog reached about $104 billion, but net interest expense rose to $640 million from $267 million a year earlier, contributing to a $626 million net loss. The company expects to spend $35 billion to $39 billion on infrastructure in 2026, and S&P rates it B+, in junk territory. The Financial Times reported that CoreWeave is exploring financing from life insurance companies, while debt and lease obligations stood at about $52 billion as of June. Other AI financing deals have stumbled: Firmus canceled a planned $5.5 billion stock offering, and AirTrunk reportedly delayed a $1.5 billion offering.
ARK Invest bought 188,665 CoreWeave shares on the dip, worth about $12.4 million to $14.7 million depending on the trade report. The firm also sold 31,432 Palantir shares, valued at about $6.56 million, as Palantir stock fell 3.7% but remains up more than 60% since early August. ARK sold positions in Personal Genome Diagnostics, 10X Genomics, Toast, and Shopify, while buying Meta Platforms, Cerebras Systems, Freenome, Kodiak AI, and Scribe Therapeutics. Wall Street rates CoreWeave a Moderate Buy with 20 Buy, 5 Hold, and 2 Sell ratings and an average price target of $143.96, roughly 119% above Wednesday's close. CoreWeave shares slipped another 3.5% after hours.
