CoreWeave stock drops 16% as bond yields spike on AI debt fears

CoreWeave stock fell 16% on Wednesday as yields on its bonds jumped, reflecting investor concern over excessive debt taken on by technology companies to build AI infrastructure. The 9.625% bond maturing in 2032 yielded 14.8%, while the 9.75% bond maturing in 2031 yielded about 14.9%, with rising yields indicating falling bond prices. Wells Fargo's Luis Alvarado said AI sentiment has shifted, with investors demanding greater compensation for risk. Other AI-linked stocks also fell, including Oracle, Nebius, and Dell, dragging the Nasdaq Composite down 1.4%. CoreWeave reported net interest expense of $640 million in the second quarter, more than double the prior year, and raised over $10 billion in unsecured debt and convertible bonds. The International Monetary Fund warned Tuesday that an AI-related market correction is one of three risks that could trigger a sharp tightening of financial conditions.