CoreWeave Stock Drops 25% as Nvidia CEO Defends AI Cloud Firm's Debt Strategy

CoreWeave's stock has fallen about 25% from Oct. 12 to Oct. 16, driven by spiking debt yields to 15%, signaling market concerns over its ability to repay obligations. Nvidia CEO Jensen Huang, whose company holds roughly 10% of CoreWeave's float, remains optimistic, saying its cost of capital is decreasing. CoreWeave, an AI cloud computing provider serving clients like Microsoft and Meta, relies heavily on debt to fund expensive data center infrastructure since it lacks a diversified core business. The secondary bond market's "distressed debt" classification reflects fears about its unprofitability, though rapid revenue growth could help close the gap. Huang's comments highlight a mismatch between secondary market pessimism and primary bond issuance terms, suggesting creditors see lower risk. The broader sell-off aligns with market-wide AI skepticism, but hyperscalers' continued investment indicates the AI build-out thesis remains intact.