CoreWeave had a brutal week. Its bonds slipped into distressed territory — when investors demand 1,000 basis points more in yield than government bonds — and shares fell more than 20 percent after Chamath Palihapitiya publicly questioned whether the AI buildout was a private credit bubble.
To make matters worse, cofounder Brannin McBee told the Financial Times the company wants its debt to be investment-grade so it can borrow from insurers, whose capital he described as "unlimited." That statement spooked investors further, raising fears that the already heavily indebted company plans to borrow even more.
CoreWeave owes more than $35 billion as of its second quarter, having pioneered the use of GPUs as loan collateral. The company lost over a billion dollars in the first half of the year. Yet it sits on $103.7 billion in remaining performance obligations from customers including Microsoft, OpenAI, and likely Nvidia — contracts that can't be easily cancelled.
The anxiety around CoreWeave has spilled over to other AI infrastructure companies. Oracle's shares fell nearly 10 percent in the same period, with bond sell-offs following. The neocloud business model — borrowing heavily to buy GPUs and selling compute — faces fundamental questions about long-term viability as more supply comes online.
