CoreWeave, Nebius and IREN shares slide as worries over AI borrowing grow

what happened

CoreWeave shares were down 15.22% by 10:30 a.m. ET as pressure on its bonds intensified. According to the Financial Times, the yield on a CoreWeave bond due in 2032 neared 15% on Tuesday, climbing roughly 1.5 percentage points in a single week. Rival cloud operators also fell: Nebius Group lost 10.05% and IREN dropped 9.57%, GuruFocus reported.

The central problem is leverage. This year CoreWeave has gathered more than $35 billion through chip-backed loans, high-yield notes, convertible debt and share offerings. By the end of June, its debt plus lease commitments stood near $52 billion. Second-quarter interest expense rose by more than double from a year earlier, to $640 million, while debt equaled roughly 5.8 times annualized second-quarter EBITDA. S&P rates the company's financial risk as aggressive.

CreditSights analyst Jordan Chalfin told the FT that investors fear a gap between CoreWeave's long-dated data center leases and its shorter customer agreements. He questioned why clients would keep renewing if capacity ends up oversupplied. Analysts polled by Visible Alpha expect negative free cash flow of about $25 billion this year. The company's third-quarter report is due November 11.

why it matters

For the AI infrastructure segment, the episode shows how dependent fast-growing cloud operators are on borrowed money and how sensitive their bond yields have become. The November report will show whether the debt burden looks manageable.

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