CoreWeave Shares Tumble as Bond Yields Surge Near 15%
CoreWeave's stock and bonds fell sharply on Wednesday as investor concerns about AI-related debt grew. Yields on its bonds climbed towards 15%, reflecting increased risk aversion.
Shares of CoreWeave plunged over 16% on Wednesday, while yields on its corporate bonds surged, signaling growing investor anxiety over the level of debt being taken on for artificial intelligence infrastructure build-outs. The yield on its 2032 bond reached 14.8%, and the yield on its 2031 bond neared 14.9%.
Investor sentiment appears to be shifting away from the initial AI boom excitement. Luis Alvarado, co-head of global fixed income strategy at Wells Fargo Investment Institute, stated that investors are now demanding higher compensation for risk. "The era of easy money, which we experienced in the first nine months of the year, is starting to disappear," Alvarado commented.
Tech investor Chamath Palihapitiya highlighted the soaring bond yields on X (formerly Twitter) late Tuesday, prompting a "yikes" response from Tesla and SpaceX CEO Elon Musk. Palihapitiya had previously published an analysis questioning if the AI build-out was creating a private credit bubble.
The concerns are not limited to CoreWeave, as other tech companies also saw stock declines. Oracle shares dropped nearly 7%, and Nebius shares fell 9%. The broader technology sector weighed on the market, with the Nasdaq Composite losing 1.4% on Wednesday.