CoreWeave shares fall 16%, bond yields near 15% — CNBC

Shares of AI cloud infrastructure provider CoreWeave fell 16% on Wednesday, while yields on its bonds maturing in 2031 and 2032 rose to nearly 15%. This came amid growing investor concerns over the amount of debt technology companies are taking on to build AI infrastructure, CNBC reports.

Bond yields rise

The yield to maturity on CoreWeave’s 9.625% coupon bonds due in 2032 stood at 14.8%. For the 9.75% coupon notes due in 2031, the figure was about 14.9%.

Rising bond yields mean falling bond prices. Luis Alvarado, co-head of global fixed-income strategy at Wells Fargo Investment Institute, said investors are increasingly demanding compensation for risk. According to him, the period of easy access to money that lasted through the first nine months of the year is beginning to come to an end.

Pressure on the technology sector

Technology investor Chamath Palihapitiya drew attention on X on Tuesday evening to the rising yield on CoreWeave’s 2032 bonds. He wrote that the figure reached 15% and ended trading at a new high. In response, Tesla and SpaceX CEO Elon Musk wrote: “yikes.”

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Palihapitiya also raised the question of whether the large-scale construction of AI infrastructure is creating a bubble in the private credit market. He said that, in his view, lenders are setting too small an additional premium for risks associated with artificial intelligence.

The pressure also spread to other technology companies. Oracle shares lost nearly 7% on Wednesday, while the yield on its 6.25% coupon bonds maturing in November 2032 reached 7.24%. Shares of another AI cloud infrastructure provider, Nebius, fell 9%, while Dell declined 10%. The Nasdaq Composite index lost 1.4% that day.

According to JPMorgan estimates, hyperscalers will spend about $800 billion on infrastructure development this year, and their annual spending could exceed $1 trillion by 2027.