Credit Markets Flag CoreWeave Default Risk as AI Debt Surges

Credit markets are signaling significant default risk for CoreWeave's debt, with bonds yielding 15% and credit default swaps implying over 50% odds of default within five years, contrasting sharply with bullish equity sentiment. CoreWeave exemplifies a broader divergence where credit investors are deeply skeptical of AI-related companies that report explosive revenue growth but negative cash flow. The market is increasingly struggling to absorb the surge of AI-related debt issuance. While equity indexes remain near all-time highs despite concerns like elevated inflation, Middle East hostilities, a weak housing market, and rising interest rates, credit markets are warning of potential trouble ahead in 2027.