CoreWeave's boss has told his staff the market is behaving "irrationally" after the company's bonds sank to levels that normally signal trouble. If you rely on AI tools, it matters: CoreWeave rents out the Nvidia chips many AI firms run on, and what it pays to borrow decides how fast it can add more. If borrowing gets costlier, the company could have to charge more for that computing, and that cost can trickle down to the AI services built on it.
In a memo that Bloomberg reviewed, as relayed by TipRanks, CEO Mike Intrator argued that the company's backlog of signed contracts is big enough to more than cover its debt. He also wrote that when you build a new kind of tech company, the market sometimes misreads it and overreacts. He pointed a finger at rivals, too, saying delays in their IPOs and debt deals have bled into how people see CoreWeave.
What the bond market is saying
When a bond's price falls, its yield rises. Venture capitalist Chamath Palihapitiya shared a chart showing one CoreWeave bond due in 2032 yielding close to 15% this week. Bonds the company sold in June paid under 10%. That doesn't change the interest on debt CoreWeave already owes, but it hints that fresh borrowing could be far pricier. The stock fell about 15% on Wednesday, and other AI infrastructure names slipped with it.
Growth on one side, interest on the other
The business is booming. Quarterly revenue more than doubled, and the contract backlog sits around $104 billion. But interest costs more than doubled too, the company lost money, and total debt has roughly tripled in a year to about $52 billion. There's a catch to the backlog argument, as TipRanks notes: that money arrives over several years, and CoreWeave has to build and deliver the computing first.
Looking for cheaper money
Co-founder Brannin McBee said better credit ratings on more of its chip-backed debt would open the door to cheaper financing, and that he doesn't see such loans as "scary debt at all." Elsewhere, two other AI infrastructure firms, Firmus and AirTrunk, canceled or postponed stock offerings.
Intrator told staff he'll address the concerns on the next earnings call, though our sources don't give a date. If AI compute gets pricier or scarcer, would you notice it in the tools you use?
Sources
- 1.CoreWeave (CRWV) CEO Says Market Is Acting “Irrationally” after Stock Plunges 15% · TipRanks
- 2.'Yikes': CoreWeave stock tanks on bond yield woes, CEO blames market acting 'irrationally' · Yahoo Finance
- 3.Market Chatter: CoreWeave CEO Says Share Drop Due to Market Acting 'Irrationally' · Yahoo Finance
- 4.CoreWeave CEO says market 'acts irrationally' as he defends 'financial engine': report · Seeking Alpha via TradingView
Reported by the WattsUpNext desk from the sources linked below. Spot an error? Tell us at corrections@wattsupnext.com.
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