This week technology stocks came under broad selling pressure after U.S. inflation data came in higher than expected, rekindling expectations of further Federal Reserve rate hikes and the prospect of more expensive financing. The market jitters hit companies building AI infrastructure particularly hard, because investments in data centers and chips are front-loaded and their payback can take years.
CoreWeave in the spotlight
CoreWeave's shares plunged about 15.5% on Wednesday; Nebius and Dell each fell around 11%, and Oracle dropped nearly 9%. Together those four companies lost roughly $80 billion of market value. CoreWeave became the focal point because its business — leasing Nvidia-based compute capacity to customers such as Microsoft, OpenAI and Meta — is extremely capital-intensive and largely financed with debt.
The company reported nearly $104 billion of contracted future revenue at the end of June, while planning $35–39 billion of capital expenditures this year. Analysts expect roughly $13 billion of revenue for the company, while CoreWeave remains unprofitable. As of the end of June the company had $35.1 billion of debt.
Bond market and CDS moves
The bond market reaction was even more pronounced: yields on one CoreWeave bond maturing in 2031 jumped to about 16%, and the bond's price fell to roughly 79% of par. Prices of credit-default swaps (CDS) tied to the company approached 1,000 basis points; Reuters-cited calculations implied near a 63% probability of default within five years, compared with about 30% a year earlier. (CDS-based measures depend on specific assumptions and include risk premia.)
Co-founder Brannin McBee told the Financial Times that CoreWeave seeks an investment-grade rating, which he said could open the door to “unlimited” capital. Current bond-market pricing sits far from that scenario. CEO Mike Intrator sought to reassure employees in an internal message, pointing to the company's contract backlog as covering debt obligations; markets remain uncertain about how much cash will remain after operating and financing costs as revenues materialize over several years.
Nvidia's role and commitments
Nvidia is a key supplier and holds about a 10% stake in CoreWeave. Under an agreement with an initial value of $6.3 billion, Nvidia will purchase unused capacity from CoreWeave customers under specified terms through April 13, 2032. That commitment helps mitigate underutilization risk but is a conditional capacity purchase rather than an across-the-board debt guarantee.
Nvidia CEO Jensen Huang sought to calm markets on Thursday, saying CoreWeave's financial position is improving day by day and its cost of capital is decreasing, and that Nvidia need not provide a financial bailout. Partly on the back of his remarks, CoreWeave shares rose 5.9% on Thursday, recouping some of the prior decline.
Analysts' views
Brad Zelnick of Deutsche Bank argued that the quality of CoreWeave's contracts provides significant protection because most of the backlog consists of long-term take-or-pay agreements, under which customers must pay for reserved capacity irrespective of actual usage. Zelnick estimated that 60–65% of the backlog at the end of Q2 was tied to investment-grade customers, which could make project financing easier. Deutsche Bank maintained a buy rating and a $150 price target.
Bank of America also kept a buy rating with a $140 target, while forecasting negative free cash flow of $23.8 billion in 2026, $24.8 billion in 2027 and $18.2 billion in 2028, with profitability only later. Bernstein highlighted the continuous need for capital as the main risk and keeps an underperform rating. Overall, Refinitiv data show that of 45 analysts covering CoreWeave, 31 recommend buy, 12 hold and 2 sell; the average analyst target is $142.30.
What this says about the AI story
The events of the week underscored that the AI rally of recent years has been driven by confidence in rapid growth that depends on ongoing access to capital. More expensive or harder-to-get financing can slow infrastructure buildouts because providers such as CoreWeave front-load capacity — often financed with debt — to meet future orders. That in turn can affect chip and server manufacturers whose valuations reflect expected future orders dependent on customers' ability to invest. Tensions among debt-funded providers can therefore weaken growth prospects even for leading suppliers. The CoreWeave episode serves as a broader warning for the sector.
