The stock of artificial intelligence (A.I.) data centre operator CoreWeave (CRWV) plunged 15% on Oct. 14 as debt concerns gripped the technology sector.
CoreWeave’s stock was down another 7% in premarket trading on Oct. 15 as investors grow nervous about the amount of debt companies are taking on to fund the A.I. buildout.
Other stocks tied to A.I. data centres and the energy needed to power them are also down sharply, including named such as Nebius Group (NBIS) and IREN (IREN).
The selloff has been sparked by news that the yield on CoreWeave’s bonds reached 15% as their price sank in the secondary market.
The sinking bond prices that pushed up the yield means that investors are demanding more compensation for the credit risk associated with CoreWeave.
CoreWeave is widely viewed as a proxy for how risky the A.I. trade is due to the company’s debt-funded expansion.
CoreWeave is a New Jersey-based company that operates 51 A.I. data centres and leases them out to other companies. CoreWeave’s growth has largely been funded by debt.
Management at CoreWeave said that the company’s revenue backlog should more than support the payment for all of its debt obligations.
The company said that its revenue backlog reached $104 billion U.S. at the end of this year’s second quarter, up 246% from a year earlier.
As of June 30, CoreWeave’s debt stood at $35.1 billion U.S.
CoreWeave is set to spend $260 billion U.S. from 2027 through 2030 to reach its goal of achieving eight gigawatts of data-centre power capacity.
CRWV stock has declined 53% over the last 12 months to trade at $65.78 U.S. per share.
