Late last year, cautious investors fretted over the circular financing as a risk factor for fueling the artificial intelligence bubble. Despite being viewed as high risk vendor financing, technology investors dismissed the risk.
Nvidia’s (NVDA) latest $2 billion investment in CoreWeave (CRWV) potentially reignites those concerns. The chip firm will buy $2 billion of CRWV stock at $87.20 a share. On Monday, CoreWeave stock jumped by around 15%, only to close up by 5.7%, or $98.28.
CoreWeave’s CEO, Michael Intrator, said that Blackwell gives the lowest cost architecture for inference. That enables the firm to move its AI systems into large-scale production.
Risks
CoreWeave is leveraging its balance sheet to buy AI hardware. In its September 2024 quarter, it held long-term debt of $3.4 billion. By the quarter ending in September 2025, debt increased to $10.3 billion. Revenue grew, but quarterly basic earnings per share are still negative.
CoreWeave and other firms will need to supply multiple generations of Nvidia infrastructure. Earlier this month, CoreWeave, along with Nebius (NBIS) and Super Micro Computers (SMCI), said they would offer customers Nvidia’s latest AI technology: Vera Rubin NVL72.
Your Takeaway
Nvidia is the winning supplier. Customer demand for the newest technology will likely increase. That puts buyers at risk of holding aging technology. Customers will slow the paper losses by lengthening the depreciation rates. That is an acceptable accounting practice if the older hardware is still usable for over 5 or more years. But AI advances so fast that customers might need to replace AI servers sooner than that.
