CoreWeave continues to face pressure due to its massive debts, which have raised concerns. However, Jon Gray, President and Chief Operating Officer of Blackstone, believes that this so-called "new cloud" (neocloud) company will be able to weather this storm.
On Thursday, Gray stated in an interview with CNBC's Squawk Box that currently, CoreWeave and its similar "new cloud" companies are facing challenges, and the issue lies in the capital required to fulfill their commitments.
"Some of these companies have very talented CEOs, and CoreWeave is a great example of that," said Gray. "They will find ways to overcome difficulties, but that is precisely the challenge they face. Their underlying businesses are actually quite strong."
Over the past week, as investors began to worry about how CoreWeave will continue to finance its data centers and what the cost of financing will be, the company's stock price has fallen, bond yields have risen, and credit default swap spreads have widened. The company's total debt is approximately $51.6 billion, which includes about $35 billion in notes, bonds, and loans.
However, Gray stated that the demand for computing power remains strong. He said that this is evident in the private companies held by Blackstone. At the same time, there are constraints on supply and delivery.
"For these new cloud companies, if they can survive this phase, the computing power pricing has already increased by 50%," he said, "Their older generation of chips are more valuable than people originally thought. Moreover, the prices of their data center leases are also lower than the market average."
CoreWeave's stock price fell by 3.55% on Thursday, with a cumulative decline of 14% over the past week.
Blackstone's Performance
Gray was interviewed by CNBC after Blackstone announced its third-quarter results. Blackstone's financial report had a mixed performance. Its stock price rose by 4% on Thursday.
Blackstone's revenue for the quarter was $3.22 billion, lower than the $3.28 billion expected by analysts surveyed by LSEG. However, its adjusted earnings per share were $1.32, which is higher than the market consensus of $1.26.
Gray stated that due to high energy prices and rising yields on U.S. Treasury bonds, "from a market perspective, this is a challenging quarter." However, he noted that the company still delivered results for its customers.
"Overall, our flagship strategies have outperformed comparable public market indices, and that is what we are most concerned about," he said.
Despite some headwinds such as rising capital costs, government deficits, and the displacement of some capital due to AI infrastructure construction, Gray still expects a strong performance in the fourth quarter and for 2027. However, he says the good news is that the fundamentals of the economy and corporate profits remain strong.
Gray also expects that once the market and geopolitical situation calm down a bit, initial public offerings (IPOs) will resume. He said that investors just need to be a bit patient.
"We adopt a long-term approach. We are very confident about how we allocate capital for investors, the growth of these companies, and the growth of these assets, and that is precisely where our confidence comes from," he said.
"At some point, a wider window will open; when that moment arrives, we and others will sell more."
