CoreWeave shares tumble as bond yields near 15% on concern about AI borrowing binge - CNBC
CoreWeave shares and bonds dropped significantly as investors grew concerned about the company's heavy debt load used to fund AI infrastructure. CEO Mike Intrator defended the company's financial position, despite public skepticism from high-profile investors like Chamath Palihapitiya.
Why it matters
The market reaction reflects growing investor anxiety regarding the sustainability of the massive capital expenditures currently fueling the AI industry.
CoreWeave's stock and bonds were both hit on Wednesday as investor fear grew that some technology companies are borrowing too heavily for the artificial intelligence build-out.
Shares of the so-called neocloud nosedived 15.5%, while yields on its debt jumped higher. The yield to maturity on its 9.625% bond due in 2032 is sitting at 14.8%, while that of its 9.75% bond due in 2031 is around 14.9%. Bond yields move inversely to prices.
CEO Mike Intrator dismissed the market moves in a memo obtained by CNBC.
"When you are building a new type of technology company there will be periods of time when the market misunderstands and acts irrationally," he wrote. "We are confident in our backlog which more than supports all of our debt obligations."
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