COREWEAVE-STOCKS-MAIN:CoreWeave's slump spotlights growing burden of debt behind AI boom
COREWEAVE-STOCKS-MAIN:CoreWeave's slump spotlights growing burden of debt behind AI boom
By Aditya Soni, Anhata Rooprai and Laura Matthews
Oct 15 (Reuters) - Shares of Nvidia-backed CoreWeave steadied on Thursday after a sharp slump, as investors worried about the debt financing behind the artificial intelligence build-out.
The loss-making cloud company has about $50 billion in debt and has become a focus of concerns that the data-center boom is being fueled by credit, straining newer players and pressuring cash flows even at giants such as Alphabet and Meta Platforms.
CoreWeave's slump fueled a global rout in AI stocks, underscoring investor doubts about whether future revenue from the technology can keep pace with the spending.
Nvidia CEO Jensen Huang, whose company is CoreWeave's second-largest investor with about a 10% stake, played down the fears. "CoreWeave’s financial strength is improving every day," Huang told reporters at a Stockholm event, adding that he does not see a need for Nvidia to backstop the company. "I'm optimistic. Their cost of capital is actually decreasing."
CoreWeave stock was last up 5% after slipping as much as 8.3% to its lowest level since May 2025.
"The market is waking up to the fact that AI demand and a profitable business model are two very different things," said Axel Rudolph, chief technical analyst at IG Group.
"It looks more like investors questioning how the build-out is being funded than a sudden collapse in appetite for AI computing. But if the cost of capital keeps rising, even strong demand may not be enough to protect the most heavily leveraged players."
The jitters come as investors await Anthropic's IPO, which would be a test of whether the Claude AI model maker's rapid revenue growth can ease worries about runaway AI spending.
Averytin News Financial update.