CoreWeave Inc. Caught in a tug-of-war between bulls and bears among investors: One side believes that rising bond yields could stifle the upward trend in trades related to the (AI) theme of artificial intelligence; the other side argues that the demand for computing power will soon make these concerns a thing of the past.
The stock price of this cloud computing service provider plummeted by 20% in the first three trading days of this week, with a decline of over 15% on Wednesday; at the same time, the price of its bonds dropped to levels that usually indicate trouble. On Thursday morning, the cost of default protection for CoreWeave bonds rose to a record high during the session, and swap pricing indicated that the probability of the company defaulting within the next five years exceeded 60%.
By Thursday afternoon, the panic seemed to have eased, and the stock price of CoreWeave turned upward. Jensen Huang, the CEO of CoreWeave's shareholder and supplier NVIDIA, expressed confidence in the company. In addition, Deutsche Bank also referred to this wave of selling as a "buying opportunity." CoreWeave closed 5.9% higher on that day.
However, on Friday, concerns resurfaced, causing the CoreWeave stock price to fall by 12%, resulting in a 25% decline for the week and marking the worst single-week performance since November.
"The macroeconomic environment has created a market where selling comes before talking," said strategist Roundhill Financial ETF Thomas DiFazio. "In the short term, it's difficult to be confident that the alarm has been lifted."
As a so-called new cloud service provider, CoreWeave plays a central role in the infrastructure construction required for the development of AI technology. The safety of its debt is a key concern for investors, as the company relies on issuing bonds to finance the construction of data centers. With the rise in U.S. Treasury yields and persistent high inflation, the cost of such financing is rapidly increasing.
As a result, the stock price has experienced significant fluctuations. Since its initial public offering in March 2025 ( IPO ), the stock has risen by more than 50% in total; however, the IPO at that time was not smooth, and NVIDIA had to provide backing support. But this year, the stock has fallen by 14%, and it has dropped by 67% compared to its peak in June 2025.
However, as the demand for AI computing power services continues to exceed supply, the upward trend for CoreWeave is also quite clear. Moreover, DiFazio indicates that there are almost no signs that this situation will change soon.
Of course, CoreWeave is not the only stock that has been sold off this week. The Philadelphia Semiconductor Index (SOX) fell 11% this week, down about 24% from its June high. The Nasdaq 100 Index also fell 5.5% this week, recording its worst single-week performance since April 2025.
However, CoreWeave is considered one of the stocks with the highest risk in the trading related to AI due to the company's heavy reliance on high-yield bonds for financing its data centers.
Bloomberg industry research analyst Robert Schiffman believes that if the market financing channels for CoreWeave tighten, the company's close relationship with NVIDIA could provide a source of funds for it. However, Jensen Huang denied this idea on Thursday, stating that CoreWeave does not need assistance.
"The strength of CoreWeave is growing every day," Jensen Huang told Bloomberg at an event in Stockholm, "I am very optimistic. Their cost of capital is actually decreasing."
State Street Investment Management, the head of global research strategy, stated that despite the various risks brought about by rising interest rates and AI expenditures being at extremely high levels, the fundamental backdrop of CoreWeave remains encouraging.
"We are still in a very early stage of the AI capital expenditure cycle, so I don't think interest rates will be an insurmountable obstacle. However, they will indeed change the considerations behind continued debt issuance. The key lies in whether we can achieve substantial growth in the future to support this debt financing," said Bartolini. "The long-term demand trend is the driving force behind this capital expenditure cycle, and I believe that demand will likely continue regardless of how interest rates change."
Responsible Editor: Ding Wenwu
