Shares of CoreWeave Inc. have lost more than a quarter of their value in the past week, as mounting anxiety over artificial intelligence spending and the company's debt load rippled across global markets and dragged down a broad range of AI-linked stocks.
The cloud-computing firm's stock fell as much as 7% in premarket trading Thursday, following a 15.46% drop during the previous session. The declines came as investors questioned whether the enormous sums being poured into AI infrastructure will ever generate adequate returns, and whether CoreWeave's borrowing costs have reached levels typically associated with financial distress.
The selloff was not confined to CoreWeave. Semiconductor companies with exposure to the AI boom also suffered. South Korea-based Sk Hynix saw its U.S.-listed shares fall more than 6% during the day, while Sandisk dropped over 5% in premarket trading. South Korea's Kospi index fell more than 7% on Thursday, and the Nasdaq-100 declined over 2% on Wednesday, reflecting the breadth of the retreat from AI-adjacent names.
A significant catalyst for the downturn came from market research firm Gartner, which on Wednesday predicted that more than 80% of neocloud providers could close by 2030 due to cost pressure and what it described as a lack of a differentiating business model. Gartner expects much of the neocloud market to consolidate over the next four years.
The firm also warned that over $3.5 trillion of AI infrastructure spending could be exposed to impairment by the end of the decade. Its research found that relying on enterprise and consumer AI revenue alone would not be enough for many AI companies to achieve profitable returns.
«Through 2030, AI data center owners would need to generate a cumulative $8.5 trillion in revenue to cover announced capital spending, financing costs, and a 12% return on invested capital, which we assume to be the hurdle rate of investment capital,» said Will Sommer, a senior director analyst at Gartner.
CoreWeave's specific financial structure has drawn particular scrutiny. Bernstein analyst Madison Rezaei noted in a report that the company's unsecured bond yields have approached 15%, levels typically associated with distress. Rezaei said the market is demanding substantially more compensation to hold CoreWeave's unsecured credit, with its 2032 bond now yielding approximately 14.8% against a 9.625% coupon.
CoreWeave CEO Mike Intrator has pushed back against the market's assessment, telling staff in an internal memo that the company has more than enough deals in its backlog to manage its debt. According to Bloomberg, which cited the memo, Intrator placed the blame on the market rather than the company's business model.
«When you are building a new type of technology company, there will be periods of time when the market misunderstands and acts irrationally,» Intrator said. «We are confident in our business model, our customers, the extraordinary quality of our execution, and the relentless discipline around the financial engine we have built.»
Intrator also pointed to CoreWeave's rivals as part of the problem, blaming their «weakness and delays surrounding the attempted IPOs and debt financings» for shaping how investors view the company.
The stock's performance this year has lagged the broader market. As of Wednesday's close, CoreWeave shares were down 17.07% year to date, compared with a 14.88% increase for the Nasdaq Composite. The divergence underscores how quickly sentiment has shifted around companies whose fortunes are tied to the buildout of AI data centers, an area that until recently attracted seemingly insatiable investor enthusiasm.
The week's trading suggests that enthusiasm is now being tested by harder questions about debt sustainability, revenue generation, and the number of competitors that can survive in the neocloud space. For CoreWeave, the immediate challenge is convincing creditors and shareholders that its backlog of customer contracts is sufficient to service obligations that the bond market is pricing as increasingly risky.