Artificial intelligence cloud computing service provider CoreWeave (CRWV) suffered a dual decline in its stocks and bonds this week, with more than $10 billion in market value wiped out over four trading days amid market concerns over its deteriorating credit and high-debt expansion model. The stock fell as much as 9.5% in early trading on Thursday before rebounding to close up 5.94%; an indicator measuring its credit risk rose to a record high, and the prices of its high-yield bonds continued to decline. Its corporate bonds had already fallen into distressed territory on Wednesday, triggering market concerns about debt repayment and future financing capacity.
Deutsche Bank analyst Brad Zelnick proposed in a report that this round of sharp selling in both stocks and bonds lacks corresponding fundamental negative news. He believes the market underestimates CoreWeave’s high-quality customer base, business execution capability, order monetization capability, and leading computing infrastructure. These fundamentals have not fundamentally changed due to fluctuations in the credit market, and therefore he maintains a “Buy” rating on the stock. Deutsche Bank acknowledges that CoreWeave still needs continuous fundraising to build AI data centers, but its massive backlog of orders can provide support for financing, and capital can be raised gradually rather than through large-scale short-term financing.
Gartner has issued a risk warning about the AI infrastructure investment boom. The institution believes that the current pace of AI infrastructure construction has exceeded the level that business revenue can support, and that a large amount of investment faces the risk of failing to recoup costs. Gartner estimates that by 2030, more than $3.5 trillion in AI-related spending will face asset impairment. Computing expansion will bring problems such as rising costs, service homogenization, and intensified competition. It is expected that by 2030, more than 80% of emerging AI cloud service providers will find it difficult to operate independently, and the industry will undergo large-scale consolidation, with some companies being acquired or exiting the market. Companies such as CoreWeave and NEBIUS, which are highly dependent on computing demand, face particularly significant risks.
The simultaneous decline in CoreWeave’s stocks and bonds represents the market re-examining the investment logic of AI infrastructure. Growth in AI computing demand brings expansion opportunities for specialized cloud service providers, and Deutsche Bank believes that CoreWeave’s customer and order advantages are sufficient to support financing growth. However, the construction of AI data centers requires sustained massive capital investment, and debt costs, industry competition, and uncertainty over investment returns have led the market to question the long-term profitability of emerging cloud vendors. The views of Deutsche Bank and Gartner stand in opposition: the former believes the decline exceeds what fundamentals justify and represents an investment opportunity, while the latter predicts that the industry faces pressure for business model adjustment and consolidation.
At present, CoreWeave’s credit risk continues to rise, and investors are focusing on three major issues: whether the company can complete new financing at a reasonable cost, whether its backlog of orders can be smoothly converted into revenue, and whether computing demand can cover massive infrastructure investment.
The core of the disagreement lies in whether CoreWeave can continue low-cost financing and convert orders into stable revenue sufficient to cover large capital expenditures. Whether the company’s stock price can stabilize depends, on the one hand, on whether AI computing demand can remain strong, and on the other hand, on whether the high-capital-investment model can prove to be sustainable in the long term.