CoreWeave Rises 6% as Debt Concerns Linger
The AI infrastructure company is making progress in Copenhagen, but high interest costs and expensive bonds are keeping pressure on the balance sheet. Nvidia’s role as both shareholder and customer is drawing more attention.
Key Takeaways
- CoreWeave shares rose more than 6% on Tuesday after the company said most of its datacenter capacity in Copenhagen is now operational.
- Investors remain worried about the heavy debt load; net interest expense rose to $640 million in the second quarter, up from $267 million a year earlier.
- Despite the risks, analysts are upbeat: 22 of the 30 recommend buying, with an average price target of $130.92 versus $58.54 on Tuesday morning.
CoreWeave shares rose more than 6% Tuesday morning after the crypto company focused on AI infrastructure said most of its planned datacenter capacity in Copenhagen is now operational. That gave investors another look at progress in the company’s expensive buildout, but concerns about the balance sheet remain high.
Expensive Growth Keeps Weighing On It
CoreWeave rents powerful Nvidia chips to companies building artificial intelligence. That takes billions in investment, and a big chunk of it has been funded with debt. Net interest expense came in at $640 million (€574 million) in the second quarter, compared with $267 million (€239 million) a year earlier.
The bond market is also showing that investors are not reassured. On a $2.75 billion (€2.5 billion) bond issue, CoreWeave pays 9.75% interest through 2031, but the market price has fallen. That pushed the potential annual yield up to 15.76%. It suggests buyers are demanding a hefty premium for the risk that CoreWeave may not be able to meet its obligations smoothly.
Cramer Puts Nvidia Under Pressure
The rising concerns led CNBC host Jim Cramer to challenge Nvidia CEO Jensen Huang on Tuesday. If Huang really has confidence in CoreWeave, Cramer said, then Nvidia should also buy those high-yield bonds itself and take on some of the risk.
Huang defended CoreWeave earlier this month. He told Bloomberg that he is optimistic and that the company’s cost of capital is actually coming down. Nvidia already owns about 10% of CoreWeave and also has a $6.3 billion (€5.7 billion) agreement to buy unused computing power through 2032. Buying existing bonds would increase that exposure, but it would not give CoreWeave any new funding.
Why This Matters
CoreWeave is one of the clearest tests of the AI hype in the capital markets. The mix of fast growth, heavy debt, and expensive financing shows how closely investors are now watching AI companies. For European readers, that matters because the sector is also drawing more capital here, and financing costs could start playing a bigger role.
The pressure on CoreWeave fits into a broader trend where investors are becoming more skeptical of AI companies that fund most of their growth with debt. JPMorgan sees AI financing tightening and already warned that lenders are no longer relying on the AI label alone, but want proof of cash flow and debt repayment.
Despite the concerns, analysts on Wall Street remain mostly positive. According to TipRanks, 22 of the 30 analysts rate the stock a buy, with a 12-month average price target of $130.92 (€117). That is well above the $58.54 (€53) where the stock stood Tuesday morning, although estimates range widely from $39 (€35) to $250 (€224).
